Court Opinion

ID: 9679416
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:52:22.98678+00
Date Added: 2024-06-11T18:17:13.426928
License: Public Domain

D. C. Riley, J.
(dissenting). It is an accepted maxim that pacta sunt servanda, contracts are to be kept. The majority has determined that this particular contract has not been kept. They hold that there is sufficient evidence to support the trial court’s finding that defendant’s conduct amounted to a de facto termination of the contract because the assignment made performance under the agreement a practical impossibility. The majority does not cite any authority which supports its position that a de facto termination occurs when an assignment allegedly makes performance a practical impossibility and when, as here, the contract provided the defendant with a right to assign its interest. I respectfully dissent.
The Restatement Contracts, 2d, § 317(2), states:
"A contractual right can be assigned unless
"(a) the substitution of a right of the assignee for the *301right of the assignor would materially change the duty of the obligor, or materially increase the burden or risk imposed on him by his contract, or materially impair his chance of obtaining return performance, or materially reduce its value to him, or
"(c) assignment is validly precluded by contract.”
The general presumption then is that a contractual right may be assigned.
Plaintiff, Auto Electric, the obligor, is arguing that the assignment materially impaired its chance of obtaining return performance. Plaintiff contends the assignment, being improper, was a breach of contract or caused termination of the agreement, thereby invoking the contract provision requiring defendant to purchase plaintiffs inventory.
I do not agree. Both parties were established in business when they entered into the contract. Presumably, the plaintiff could have chosen to sell any one of a number of snowmobile lines available in the country. The record is void of any indication that the parties dealt at anything less than arms length while negotiating this contract.
"In construing contracts, the primary rule of construction is to ascertain the intent of the parties.” Amoco Oil Co v Kraft, 89 Mich App 270, 273; 280 NW2d 505 (1979). The intent of the parties in this case is realized by a plain-meaning interpretation of the contract provision that the contract "shall be personal to the Distributor [plaintiff] and nonassignable by it but may be assigned by Rockwell [defendant]”. (Emphasis added.) Plaintiff then had knowledge that defendant may assign its interest.
The Restatement Contracts, 2d, § 323, states:
*302"Obligor’s Assent to Assignment or Delegation
"(1) A term of a contract manifesting an obligor’s assent to the future assignment of a right or an obligee’s assent to the future delegation of the performance of a duty or condition is effective despite any subsequent objection.” (Emphasis added.)
Plaintiff is now objecting to a situation which, by earlier approval, it sanctioned. The comment to § 323 is insightful in this case:
"a. Effect of assent. The assent of the obligor is not ordinarily necessary to make an assignment effective. But his assent may operate to preclude objection based on a change in his duty, burden or risk or in his chance of obtaining return performance. See § 317.” (Emphasis added.)
I conclude that when two business parties, at arms length, enter into a contract, they are bound by the intent manifested in the plain meaning of their terms. The assignment by defendant was agreed to by plaintiff and that assent precludes a subsequent objection based on a change in plaintiff’s chance of obtaining return performance.
The majority overlooks this legal position and decides this case on its facts, finding a de facto termination because performance of the contract was a practical impossibility. Defendant, and subsequently its legal assigns, stood ready and able to perform under the. contract. Defendant assigned the contract to a German subsidiary around March of 1974, and it was later assigned to a Minnesota corporation, around October of 1974. The assignments, especially to the German subsidiary, inconvenienced plaintiff. However, in light of its agreement by the contract to such an assignment, no termination by practical impossibility can be found.
*303The trial court stated it was not necessary to decide if there was a breach of contract or a de facto termination. The majority finds sufficient evidence to support the latter finding since assignment made performance a practical impossibility. Their language conjures up the respectable doctrine of impossibility of performance. This doctrine, however, is not a plaintiffs sword claiming defendant breached or terminated the contract but a defendant’s shield to a charge that the contract has been breached or terminated. 17 Am Jur 2d, Contracts, § 404.
I am left with a firm and definite conviction that a mistake has been committed. Tuttle v Dep’t of State Highways, 397 Mich 44, 46; 243 NW2d 244 (1976). Therefore, I conclude that the trial court erred in its findings of fact which are clearly erroneous. I would reverse.