Court Opinion

ID: 9588170
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:31:09.150497+00
Date Added: 2024-06-11T14:56:26.164916
License: Public Domain

OPINION OF THE COURT BY
KOBAYASHI, J.
Appellant, Golf Carts, Inc., appeals from the judgment of the trial court entered in favor of appellee, Mid-Pacific Country Club. The trial court found that appellant’s actions constituted a breach of contract which justified appellee in terminating their agreement.
Appellant was the assignee of a written contract dated July 31,1961, wherein appellant’s assignor was to exclusively provide golf carts which it would rent to appellee’s members and guests for use on appellee’s golf course. The contract was for a term of five years and provided for a specified division of proceeds between appellee and appellant’s assignor. For the first three years the split was to be 60% to appellant’s assignor and 40% to appellee. A 50% division was to be in effect for the remaining two years and also for an additional five years should an option be exercised *358by appellant.
Because appellant was undergoing financial difficulties, appellee agreed on June 1, 1963, that the golf cart rental proceeds be divided 70% to appellant and 30% to appellee. The effective period of the changed division was never discussed by the parties and the change itself was not reduced to writing.
Subsequently a disagreement arose as to the duration of the 70-30 division. Appellee, who was doing the actual collection of the cart rentals from the golfers, began in August, 1964, to retain 50% of the rental proceeds. The appellant in May, 1965, in order to effect its interpretation of the contract that it was entitled to 70% of the proceeds, took over the collection of the cart rentals, retaining 70% and remitting 30% to appellee. Since the effective period of the changed division of the rental proceeds was never reduced to writing, it was uncertain as to whether appellant’s interpretation of the effective period of the changed division was correct until the trial court ruled in favor of appellee.
On June 4,1965, appellant filed an action in circuit court, praying for a reformation of the contract in accordance with appellant’s interpretation of the agreement. Thereafter the parties negotiated extensively toward the possibility of a settlement but such efforts proved unproductive. Appellee terminated the contract and evicted appellant for alleged breach of contract on December 1, 1965.
The trial court said that the evidence was ambiguous and unclear as to the duration of the- modification of the division of the proceeds. From this the trial court concluded that “such modifications were in effect only during the period that the parties actually complied with them, and that either party had the right to terminate the modifications and revert to the original terms of the written agreement.” The trial court then concludes that appellant’s noncompliance with the original terms of the contract “resulted in a breach of contract on its part which justified the defendant [appellee] *359in terminating the contract.”
As such the issue before us is whether appellant’s acts constituted a breach resulting in repudiation thus justifying appellee’s termination.
Under the facts of this case, it is evident that the parties entered into the contract for the appellant to provide a needed and essential service to the appellee, that of having golf carts available to its members. The fact that appellee was to receive a percentage of the proceeds of appellant’s receipts could be considered as a business-like realization of appellee for granting appellant the concession to provide the needed and essential service required by appellee. This aspect is significant because it goes to the materiality of appellant’s actions in terms of whether a repudiation or sufficiently material breach existed, justifying appellee’s termination. The general rule is as follows:
‘A rescission is not warranted by a mere breach of contract not so substantial and fundamental as to defeat the object of the parties in making the agreement. Before partial failure of performance of one party will give the other the right of rescission, the act failed to be performed must go to the root of the contract or the failure to perform the contract must be in respect of matters which would render the performance of the remainder a thing different in substance from that which was contracted for.’
Yucca Mining & Petroleum Co. v. Howard C. Phillips Oil Co., 69 N.M. 281, 285, 365 P.2d 925, 927 (1961).
The case of Viramontes v. Fox, 65 N.M. 275, 281-82, 335 P.2d 1071, 1075 (1959), involved a dispute between the parties over the proper interpretation of the terms of the contract involved. As a result of the dispute, appellant therein refused to perform. The following language of the court in speaking of the issue of repudiation is particularly applicable to the situation before us.
Thus the disagreement was nothing more nor less than an attempt on the part of each party to insist on *360performance according to his own interpretation of the contract terms ....
Thomas W. Flynn for plaintiff-appellant.
Louis A. Rodrigues for defendant-appellee.
Under the facts presented we would therefore be unwarranted in holding there was a breach or repudiation by appellee justifying nonperformance by appellant. . . . A repudiation which may be treated as a breach justifying nonperformance by the other party must be distinct, unequivocal, and absolute refusal to perform according to the terms of the agreement ....
As we interpret the authorities, appellant’s remedy was to tender performance according to his own interpretation of the agreement, or according to appellee’s interpretation reserving his rights as to the proper interpretation of the contract and then the parties could seek relief in the courts for a construction of its terms.
In the instant case, termination by appellee was clearly not justified. A difficulty arose over the percentage of receipts appellee was to be entitled to, a secondary consideration under the agreement. The terms of that portion of the contract were disputed by the parties. Appellant offered to continue its performance while the issue as to the correct amount of proceeds appellee was to receive was resolved separately. It has been held that “an offer to perform made in accordance with the promisor’s interpretation of the contract, if made in good faith although it may be erroneous, is not such a clear refusal to perform as to constitute an anticipatory breach.” Walker v. Shasta Minerals and Chemical Co., 352 F.2d 634, 638 (10th Cir. 1965). Surely such a demonstrated desire to continue to fulfill appellant’s obligation under the contract did not amount to a distinct, unequivocal, and absolute refusal to perform. As such, it cannot be said that appellant’s actions constituted a breach or repudiation, justifying appellee’s termination.
Judgment reversed and remanded for trial accordingly.