Court Opinion

ID: 9481567
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:23:59.639285+00
Date Added: 2024-06-11T17:48:25.475892
License: Public Domain

RYAN, Circuit Judge
(dissenting).
The court has held that the district court erred in submitting the defendants’ defense of impracticability of performance to the jury. I disagree.
The court concedes, correctly I think, that the Michigan Supreme Court “might” recognize the impracticability doctrine, but the court says, “it would not do so in the circumstances of this case as a matter of law.” Despite the court’s use of the verb “might,” I assume it means the Michigan Supreme Court, in all probability, “would,” if asked, adopt the doctrine of impracticability of performance as defined in Restatement (Second) of Contracts § 261. The strongest indication of that, since the Michigan Supreme Court has not spoken on *1123the matter, is the Michigan Court of Appeals decision in Bissell v. L.W. Edison Co., 9 Mich.App. 276, 156 N.W.2d 623 (1967), in which the impracticability defense is recognized. In declaring that the Michigan Supreme Court would not apply the doctrine “in the circumstances of this case,” I take the court to mean the “facts” of this case. The court cannot mean that the impracticability doctrine can never be applied in a ease involving unforeseeable, extreme, and unreasonable economic circumstances. There is simply no authority to be found in the Michigan cases, or indeed in the commentary to section 261 of the Restatement (Second) of Contracts, to suggest that no change in economic circumstances, no matter how catastrophic, would ever be sufficient to invoke the impracticability defense. Indeed, the majority opinion observes that the commentary to section 261 “provides extensive guidance for determining when economic circumstances are sufficient to render performance impracticable.” (Emphasis added.)
It appears that the majority opinion rejects the impracticability defense “in the circumstances of this case” because, in the court’s view, the economic reverses confronted by International Harvester were not so “extreme and unreasonable,” severe, or catastrophic as to excuse performance of the franchise agreement with the plaintiffs. Although claiming to recognize that whether impracticability of performance has been proved is a question of fact for the jury, Michigan Bean Co. v. Senn, 93 Mich.App. 440, 287 N.W.2d 257 (1979), the court appears to disagree with the jury that International Harvester was confronted with economic circumstances sufficiently disastrous to justify discharge for impracticability. There were “alternatives,” the court says, “which might have precluded unilateral termination of the contract.” One such alternative open to International Harvester, the court suggests, might have been “to terminate [the] Dealer Agreements by mutual assent under the termination provisions of the contract and share the proceeds of the sale of assets to Case/Tenneco with its dealers.”
Whether the “alternative” the court suggests ever occurred to International Harvester’s management, or, if considered, was a feasible business solution, is entirely irrelevant on this appeal because it is the jury, not this court, that is empowered to determine whether International Harvester proved impracticability of performance as that defense was defined by the trial court.
The district court correctly recognized that the standard for determining whether there was a jury submissible issue of impracticability is set forth in Restatement (Second) of Contracts § 261 (1981):
§ 261. Discharge by Supervening Impracticability
Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.
The “event” International Harvester relies upon is a sudden, massive, near total collapse of the farm equipment industry that was nationwide, drove two major suppliers into bankruptcy, and resulted in losses to International Harvester of over $2 billion in four years.
There is no quarreling with the defendants’ version of the facts for purposes of reviewing the plaintiff’s motion for judgment notwithstanding the verdict. In reviewing the district court’s refusal to grant International Harvester’s motion for judgment notwithstanding the verdict, we are obligated to apply the Michigan standard. In Michigan,
a judgment notwithstanding the verdict on a defendant’s motion is appropriate only if the evidence is insufficient as a matter of law to support a judgment for the plaintiff. In reaching a decision, the trial court must view the evidence in the light most favorable to the plaintiff and give the plaintiff the benefit of every reasonable inference that could be drawn from the evidence. If, after viewing the evidence in this manner, reasonable peo-*1124pie could differ, the question is one for the jury and judgment notwithstanding the verdict is proper.
Jacobs v. St. Clair County, 163 Mich.App. 230, 234, 414 N.W.2d 161 (1987).
When all facts and reasonable inferences therefrom are taken in a light most favorable to International Harvester, they reveal a sudden, unforeseen, nationwide collapse of the farm implement industry so severe and so widespread that International Harvester, after losing over $2 billion in four years, was faced, in its business judgment, with no alternative but bankruptcy or selling off its farm implement division. Those are the facts as we must view them for purposes of this appeal. The question for us, then, is whether “reasonable people could differ” that those facts amounted to “an event, the non-occurrence of which was a basic assumption on which the contract was made.” Restatement (Second) of Contracts, supra. Manifestly, they could. The majority opinion is an indication of that.
Since there is nothing in the jurisprudence of the impracticability defense to suggest that a market collapse of the kind shown by International Harvester is not, as a matter of law, within the doctrine, we are not free to disturb the jury’s verdict.