Court Opinion

ID: 6430180
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:07:30.380904+00
Date Added: 2024-06-11T15:52:09.534103
License: Public Domain

Hammond, J.
Although the contract provides for the allotment of a “ location ” in the plaintiff’s store within which the license to sell music shall be exercised by the defendant, and although in the thirteenth clause the licensee covenants that “ it will not assign or transfer this lease or contract or sub-let said premises, nor any part of the same, and that in case said party of the second part [the licensee] shall violate this covenant and agreement, party of the first part shall have the right to re-enter said premises and remove party of the second part and its property,” and although in the fourteenth clause it is provided that under certain circumstances therein set forth “ party of the first part shall have the right forthwith to declare this contract null and void, and to re-enter the premises above described and remove party of the second part and its property therefrom,” still the contract gives no interest in the land. It is not a lease, but a license; and the use of those terms which are appropriate and common in leases cannot change its real nature in that respect.
. By its conveyance to Phillips of its rights under this contract and of its stock of music then in the plaintiff’s store, the defendant violated the thirteenth clause of the contract; and by its letter to the plaintiff under date of March 28,1906, it notified the plaintiff that whether or not the contract prohibited it “from assigning or transferring the contract,” or prohibited “ a sublet*47ting, . . . [was] a matter which ... [it was] ready to contest with . . . [the plaintiff] ; as also . . . [its] liability under said contract with . . . [the plaintiff] of August 30th, 1904, as ... [it did] not intend to proceed personally any further under said contract, nor to make . . . [the plaintiff] any payments thereunder.”
Upon the receipt of this letter, the plaintiff was face to face with the following state of things: The contract had several months longer to run. The defendant had sold to Phillips its stock and fixtures then in the plaintiff’s store, together with the “ good will of the trade and business of the music department of said store and the trade name,” and had assigned and transferred to him all its “right, title and interest in and to” the contract; and it had given to the plaintiff notice of this transaction with Phillips, and also that it was ready to contend that the transaction was not prohibited by the contract; and further, that it intended to contest its liability under the contract, and in' any event would go on no further.
The plaintiff did not want Phillips in the place of the defendant and declined to recognize him. In its letter of March 23, 1906, it says that it looks to the defendant “ to protect the conditions of the contract.” The transaction with Phillips was a plain violation of the thirteenth clause. The defendant had not only broken the contract, but refused to go on further with it. The breach went to the essence of the contract.
Under these circumstances what could the plaintiff do ? Where a breach goes to the very essence of the contract, or where a party utterly refuses to proceed further under it, the innocent party may on the one hand consent to a rescission or consent that it shall no longer be in force and release the party who has repudiated it, or on the other hand he may hold the guilty party to the contract and sue for damages. And he may bring his action at once, even before the expiration of the time during which the contract was to run, and recover full damages. Nor is he compelled to hold himself ready to perform. The utter refusal of the other party to go on excuses him from holding himself in readiness. Indeed in many cases it is his duty to make a reasonable use of his time and opportunity so as to reduce the damage. Parker v. Russell, 133 Mass. 74. *48Paige v. Barrett, 151 Mass. 67. Cutter v. Gillette, 163 Mass. 95. Speirs v. Union Drop Forge Co. 174 Mass. 175; S. C. 180 Mass. 87, and cases cited. See also National Machine & Tool Co. v. Standard Shoe Machinery Co. 181 Mass. 275. It is to be noted that the plaintiff’s right to take either one of these courses is not based upon the fourteenth clause of the contract, but upon the general principles of law applicable to contracts of this kind. But this right to regard the contract as wholly repudiated and to bring an action for full damages does not arise upon every breach of a contract. A breach may be so slight as not to go to the essence of the contract, in which case the only remedy of the injured party may be an action of damages for that breach. A very familiar illustration of this principle may be found in actions upon building contracts.
The purpose of the insertion of the fourteenth clause was doubtless to avoid any question as to whether the breach (if any should occur) was of such gravity, or bore such a relation to the essence of the contract, as to justify a rescission of it by the party of the first part, and also to authorize it even upon the slightest deviation from the contract to eject at once the party of the second part. That at any rate was the legal effect of the clause. The relation of the parties was such as manifestly to make such a provision desirable, at least so far as respects the party of the first part. It was not needed for the case of any such actual refusal to go on as appears in this case, although of course it was applicable to such a case, but was of much wider application.
Under these circumstances and with these rights both under the general law and under this fourteenth clause, the plaintiff wrote to the defendant the letter of April 4,1906. After stating that Phillips had shown the plaintiff what purported to be a bill of sale of the goods and fixtures in the music department of the store, and also an assignment of the contract of August 30,1904, and that he had made a demand upon the plaintiff for permission to remove the goods and fixtures, the letter continues as follows: “We beg to notify you that this sale and assignment constitute a violation of the contract referred to and render the said contract void, and we shall hold you responsible in damages for breaking said contract. And our failure to oppose the *49removal of the goods and fixtures by Mr. Phillips is not to be considered as a waiver of our claim against the Shapiro, Remick Company for failure to fulfil the terms of the said contract.”
What is the fair construction of this letter ? Which of the rights was the plaintiff asserting, — the right at common law to consider the contract utterly repudiated by the defendant and to seek full damages for the breach, or simply the right under the fourteenth clause to annul the contract and declare it terminated? One thing is plain, and that is that the plaintiff intended to hold the defendant responsible for damages. If the contract was avoided under the fourteenth clause there could be no claim for damages subsequent to the date of the letter. Another thing is clear, and that is that the plaintiff did not intend that its consent to the removal of the goods and fixtures by Phillips should be considered as a waiver of the claim against the defendant for failure to fulfil the terms of the contract. It is true that the letter says that the transaction with Phillips constituted a violation of the contract and rendered it null and void, but we think that the fair construction of the sentence is that this act itself of the defendant avoided the contract and not that the plaintiff was itself exercising the right conferred upon it by the fourteenth clause to avoid it. Reading the letter in the light of the circumstances under which it was written, we are of opinion that the plaintiff was not acting and did not intend to act under the power conferred upon it by the fourteenth clause to declare the contract void, but was asserting and intending to assert a right under the general law to regard the contract as broken in its essence or as repudiated by the defendant and to recover full damages therefor. There is nothing in this conclusion which is inconsistent with the case of Sutton v. Goodman, 194 Mass. 389, upon which the defendant relies. That case was decided upon principles peculiar to leases, and is not to be taken as affecting the general principles applicable to the breach of contracts in general. It has no application to a case like this.
The act of the plaintiff in making use of the floor space was no waiver of its right to recover full damages. It was not only the right but the duty of the plaintiff to exercise reasonable *50diligence to use the space abandoned by the defendant so as to decrease the damages.
It follows that the ruling of the judge that the plaintiff, by its letter of April 4, 1906, had exercised its option to declare the contract void and that the plaintiff’s right to damages based on the loss for rentals after that date was gone, was erroneous. The plaintiff was entitled to the ruling requested by it.

Exceptions sustained.