Court Opinion

ID: 9552766
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:16:19.615735+00
Date Added: 2024-06-11T15:28:53.602926
License: Public Domain

BISTLINE, Justice,
concurring specially.
Having concurred in the Court’s opinion, I mention my preference that it could have been more expansive in regard to the question raised by the dissent. For certain, the Court’s opinion displays a more acute awareness of the issues and holding in Industrial Leasing than does the dissenting opinion of Chief Justice Bakes, notwithstanding that the latter authored the Industrial Leasing opinion — all of which is of little moment other than that it seems to me that the net result of the two opinions might to some be a little confusing, which confusion in my view can be put to rest.
The dissent properly makes a singular distinction between this case and Industrial Leasing, that of no acceleration clause in the latter case while there is one here. The dissent somehow sees this distinction as not requiring that recovery of the reserved rents here should be discounted, and hence would allow the lessor to now collect in full all of the future rents. The author of to*744day’s dissent in Industrial Leasing wrote for a unanimous court that Industrial Leasing was obliged to make commercially reasonable efforts to release or sell in mitigation, and wrote further that following a lessor’s sale in mitigation of damages occasioned by lessee’s breach, lessor’s damages are then basically “the total discounted rents provided for in the lease” less the net proceeds returned from the sale.1 96 Idaho at 578, 532 P.2d at 920.
The portion quoted was perhaps an unfortunate sentence structure. In Industrial Leasing v. Thomason there was no provision (in Young Electric there was) for liquidated damages which were (in Young Electric, 25%) to be discounted from the total of the lease agreements’ unpaid and reserved rents. What the author was obviously intending, and apparently then so understood by the other members of the Court, was the view taken by Justice Donaldson, to wit: the total of the reserved rents, properly discounted. This is not a difference without a distinction. In Industrial Leasing v. Thomason there was not only an absence of an acceleration clause, but an absence of a discount provision to be applied against the accelerated cumulation of all rents — in short, no declared provision for liquidated damages. See Ricker v. Rombough, 120 Cal.App.Supp.2d 912, 261 P.2d 328 (1953).
In concluding the Industrial Leasing opinion, 96 Idaho at 579, 532 P.2d at 921, note was taken of that lessor’s contention that it could not accelerate under its lease and was relegated to suing for periodic installments of rent as they accrued. The briefs in that case readily disclose that such indeed was continuously Industrial Leasing’s case theory, as well evidenced that the appeal came up on a monetary judgment which was rendered against Thomason for only those payments which had accrued at the time suit was filed. In sum, Industrial Leasing took the position that its lease could not be breached, had not been breached, and that it was and would be entitled to sue for and collect all the payments as the same accrued, the equipment at all times for the duration of the lease being “owned” by Thomason. A major holding of the case, however, picked up as such by the publisher as headnote 10, is that
“where there has been a repudiation of the portion of the lease left unperformed, as in this case, because the damages that will accrue are computable and the lessor may sue for its entire damage, including unaccrued rental payments to the extent the lessor is entitled to them, under the rules set out herein.” 96 Idaho 579, 532 P.2d at 921. (Emphasis added.)
Whatever the author of that opinion may have intended, it is entirely clear that the foregoing passage, taken together with the remainder of the opinion, leaves no doubt but that for the eight years since Industrial Leasing v. Thomason was filed, the law has been that even in the absence of an acceleration clause, or a clause providing for liquidated damages, on a lessee’s repudiation of the lease (anticipatory breach) the lessor not only may, but must, sue for all of his reserved rentals, the sum total of which will be subject to a reasonable and proper discount. Such indeed was the very signal which the Court sent out to Industrial Leasing to its dismay in its action against Thomason.
The final paragraph in Industrial Leasing v. Thomason, above set forth, though a major holding of the case, was not fortified by any citation of authority. A review of the briefs in that case, however, shows that the Court was supplied with pertinent and persuasive authority. In particular, the Thomason brief twice points to 4 Corbin, Contracts § 983:
*745“ ‘§ 983. Anticipatory Repudiation Makes Rule as to Avoidable Consequences Applicable at Once.
Not only are the injured party’s duties terminated and his conditions precedent excused; it is now the general rule that when a definite repudiation is communicated to him the rule as to avoidable consequences is at once applicable. He must not proceed with his own performance if his so doing will increase the extent of his injury. He will not be given damages for any part of his loss that he could have avoided by refraining from continued performance or by making reasonable effort. Such decisions as these are clearly in conflict with the notion that by refusing to assent to a repudiation the injured party remains bound as before. Not only is he not bound to perform; he cannot get damages for the additional injury suffered by him if he does perform. Because of the rule as to avoidance of losses, one effect of a repudiation in advance of some performance by the other party is to deprive that party of his contract right to the full price or compensation promised him. But for the repudiation he would have had the power of earning the full contract price by completing what he was to do as the agreed exchange. If the price was to be in money, he could have completed his work and thus created a liquidated debt for the full price. If the price was to be paid otherwise than in money, he could have created a right to the full performance promised in return and to its full value in money in case of nonperformance. After a repudiation, the injured party is deprived of this power, provided that his resulting injury will in fact be less if he stops work than it will be if he continues. (Underlining added [in the brief].)’
“... § 983 at p. 949, states that if such a contract provided that the full sum would nevertheless be payable, it should not be enforced because of being a penalty. ‘The remedy should be damages. measured as above indicated, and not debt for the full sum provided.’ 4 Corbin Contracts, § 983 at p. 949. (Emphasis added [in the brief]).”
A case from Washington, Northwest Collectors, Inc. v. Enders, 74 Wash.2d 585, 446 P.2d 200 (1968), cited only without discussion in Industrial Leasing v. Thomason at 577 of 96 Idaho, 919 of 532 P.2d, was heavily relied upon in the Thomason brief. A passage from the Thomason brief discussing Enders has even greater applicability to this case than it did there.
“It may be helpful to set forth verbatim what the Washington Supreme Court said as it is pertinent here:
“‘This court has said that contractual provisions for liquidated damages will be upheld unless it is shown that they are, in effect, a penalty, since there is no reason why an agreement fairly and understanding^ entered into with a view to just compensation for an anticipated loss should not be enforced.
“ ‘A provision in a contract which bears no reasonable relation to actual damages will be construed as a penalty. (Citations omitted.)
“ ‘ We think the provision here in question falls within this definition. Under it Enders would be required to pay the full contract amount (in advance), whether his breach was total or partial and whether or not the property was fully depreciated.’ 446 P.2d at 205, 206. (Emphasis added [in the brief].)”
The Thomason brief further stated that:
“In comparing Enders to a sign leasing case, the Washington Court, wholly in accord with the Idaho decision of Young Electric, supra, said:
‘In that case, the sign which was leased to the defendant was custom-made for him, and there was no showing that it had any value to the lessor for any purpose other than leasing it to the defendant. Under such circumstances, the loss of the rentals for the term would necessarily deprive the lessor of all the value of his investment. But where, as here, the leased property is *746capable of being used by others and the lessor can recoup his losses by leasing or selling it, the extraction of its full value for a default in the lease which does not render it valueless is clearly a penalty.’ 446 P.2d at 206. (Emphasis added [in the brief].)”
Other than that this Court in Industrial Leasing did clearly hold that on a lessee’s anticipatory breach of a lease agreement all reserved rents are then collectible, and inferentially must be collected in a single action, and further that the same are as a matter of law subject to a proper discount,2 I would have thought that the analysis which might have been used in deciding this case is that set out in Young Electric Sign Co. v. Capps, 94 Idaho 518, 492 P.2d 57 (1971), where the Court stated:
“ ‘Generally speaking, parties to a contract may agree upon liquidated damages in anticipation of a breach, in any case where the circumstances are such that accurate determination of the damages would be difficult or impossible, and provided that the liquidated damages fixed by the contract bear a reasonable relation to actual damages. But, where the forfeiture or damage fixed by the contract is arbitrary and bears no reasonable relation to the anticipated damages, and is exorbitant and unconscionable, it is regarded as a “penalty,” and the contractual provision therefore is void and unenforceable.’ ” 94 Idaho at 521, 492 P.2d at 60 (citing Graves v. Cupic, 75 Idaho 451, 456, 272 P.2d 1020, 1023 (1954)) (emphasis added).
Young then proceeded to set out a two-part test for determining whether a liquidated damages provision should stand, with which we no longer, since Industrial Leasing v. Thomason, have any legitimate concern.
But, as I repeat, the Industrial Leasing v. Thomason holding is quite explicit. In the long run I see it as a sound principle which should avoid considerable litigation as to whether a lessor’s exacting of all reserved rents is or is not a penalty. Industrial Leasing accepted that it is, but also gave the lessor a right to collect all reserved rents even in the absence of an acceleration clause.

. Of that statement the dissent says that “the holding in Thomason regarding the discounting of rents was not intended to extend to leases that include acceleration clauses.” (Emphasis added.) Whatever may have been “intended,” the language in Thomason is clear and unequivocal. The dissent also says that “in Thomason the plaintiff lessor sued for damages incurred ... ” — which is an accurate replay of the first sentence in the Thomason opinion — itself an inaccuracy. Industrial Leasing’s complaint did not seek damages, but an unpaid rental of $19,-242.56 plus a five percent service charge.

. A cursory review of the Thomason brief seems to indicate that Thomason made no contention that he was entitled to a discount as to reserved rents. The Thomason appellate theory was primarily that Industrial Leasing could not as a matter of law refuse to mitigate damages — which Industrial Leasing steadfastly refused to do based on its “lease” theory that for the contractual period of the bailment Thomason “owned” an estate in the farm equipment placed in Thomason’s possession. The default provision in Thomason’s lease with Industrial Leasing simply gave Industrial Leasing the “right to take possession” and to thereupon either (1) sell the equipment and “credit the net proceeds of such sale to the payment of the obligation of lessee hereunder,” or (2) to lease the equipment and “apply any rent received therefrom to the payment of the obligations of the lessee hereunder.” Industrial Leasing’s stance throughout was simply that it was not obligated to exercise its right, that there was no breach, no duty to mitigate, and it could bring successive actions for accruing payments.