Lommen v. Danaher

Marshall, J.

It appears from the foregoing that the contract between the parties was wholly executory on the part of respondent at the time he rescinded it because he was unable to strictly perform as he agreed and appellant would not accept any modified performance. The latter was wholly without fault and, though he received back the stock of merchandise and store fixtures, he insisted upon the benefit of his bargain. The trial court, notwithstanding the loss of such bargain prevented appellant from making a gain, according to the verdict of the jury, of $14,750, held that he was not entitled to recover anything. It is of that appellant ‘mainly complains, insisting that the ordinary rule for the determination of damages for breach of contract applies.

*19 It cannot be questioned but that, in general, if two persons enter into a contract and one breaches it, the other is entitled to full compensation for the loss of his bargain to be computed by the settled rule that the damages must be reasonably certain, — not speculative, and extend to the natural and proximate consequences of the wrong, and so must be fairly and reasonably considered as arising in the natural course of things from the breach and to be supposed to have been in contemplation of both parties at the time they made the contract as the probable result of the breach of it. Guelzkow Bros. Co. v. A. H. Andrews & Co. 92 Wis. 214 , 66 N. W. 119 ; Anderson v. Savoy, 137 Wis. 44, 48 , 118 N. W. 217; Altschuler v. A., T. & S. F. R. Co. 155 Wis. 146, 153 , 144 N. W. 294 . Why is that rule not applicable to this case? The trial court held that it was not, within the doctrine of Nash v. Hoxie, 59 Wis. 384 , 18 N. W. 408 , and, particularly, the rule stated in Fagan v. Hook; 134 Iowa, 381, 391 , 105 N. W. 155 , 111 N. W. 981 , in these words:

“If parties definitely settle upon and agree to the value of their respective properties for the purpose of sále one to the other, no inquiry concerning actual values is permissible, as these are put beyond question by their having determined the worth thereof for themselves, and thereby fixed the measure of damages in event of a breach. If, on the other hand., the agreement is a mere trading contract, by the terms of which one party is to exchange certain property belonging to him for that of the other upon or by the payment.,of the difference, and to this end and for the purpose solely of accomplishing this result, but not to ascertain their actual values, estimates are placed on the respective properties, then neither party is bound by the values so estimated, and the measure of damages to be applied is that of quantum meruit. In other words, the values designated in the agreement to be binding on the parties must appear to have been specified as such, and not as merely incidental to some other purpose not involving the intention of deciding the true worth. The criterion in determining whether there has been a sale or exchange of per *20 sonal property is whether there is a fixed price at which the things are to be exchanged. If there is such fixed price, the transaction is a sale; but, if there is not, the transaction is an exchange.”

Did the parties here, within the doctrine of Nash v. Hoxie, 59 Wis. 384 , 18 N. W. 408 , and the Iowa case, mutually agree upon the real value of their respective properties at the time the contract was entered into ? The trial court, as indicated, resolved that in the affirmative and so held that the ordinary rule of damages did not apply; that plaintiff was bound by such mutual agreement, and, as he retained all his property and was relieved from the obligation to pay the $22,000, he was not damaged by reason of not being able to obtain for such property and the $22,000, the agreed equivalent.

It seems that, by the logic of the rule the court relied on, the transaction in question was a trading agreement, in the nature of a land contract, by the terms of which one party was to sell or exchange certain property, belonging to him, for that of the other and a difference in money and, in the language quoted, “to this end and for the purpose solely of accomplishing this result, but not to ascertain their actual values,” prices were placed on the respective properties; and so, as said, neither party was bound by such values in respect to damages for the breach of contract. In order to take this case out of the ordinary rule for recoverable damages, the evidence should be pretty clear and satisfactory that it does not apply by reason of the parties, in effect, having stipulated that it should not. That is the logic of the doctrine upox^ which the trial court relied. “The values designated in the agreement to be binding on the parties -must appear to have been specified as such, and not incidental to some other purposes not involving the intention of deciding the true worth.”

There is no satisfactory indication that the amounts stated in the writing were specified as actual values. As to re *21 spondent’s property, nothing was said about its value; there was the mere contract selling price as in any ordinary land contract or a deed. As to appellant’s property, it was recited that the value was $44,500 “as reckoned in this transaction.” That language, pretty plainly, indicated the value stated was for a mere trading basis and not with any thought of making a binding agreement as to the real market value of the property.

In Robbins v. Selby, 144 Iowa, 407 , 121 N. W. 674 , 122 N. W. 954 , where the doctrine of Fagan v. Hook was referred to, there were prices mentioned in the contract, very much as' here, and it was held, under all the circumstances characterizing the transaction, which were proper to be considered in construing the writing, that the contracting parties did not purpose making a binding agreement as to the real worth of their respective properties.

If the contract here fails to clearly indicate that the parties did not intend to agree upon the real worth of their respective properties, and it seems that such is the situation, it, at the best for respondent, is ambiguous in respect to the matter, warranting the court in looking to- characterizing circumstances in determining the real meaning. There are several such circumstances, the most significant being that neither party claimed that the real value of his property was that stated in the contract. Such values were so largely less than the prices stated in the writing as to strongly negative the idea that there was a definite purpose to agree upon such prices as such values,- — that the minds of the parties never met on that subject.

So the doctrine of Fagan v. Hook does not support the decision complained of, but rather the contrary.

Further, as indicated in Norton v. Hinecker, 137 Iowa, 751 , 115 N. W. 612 , a distinction is to be recognized between an action for the value of the property agreed to be transferred and an action for damages where the contract has *22 been, while executory, wrongfully rescinded, then tbe damages for tbe breach are to be determined, not on tbe basis of “tbe trading value put upon the properties, but by tbe actual value of such properties from which it might be ascertained what plaintiff’s real loss, in being deprived of the benefit of the contract, actually was.”.

In reaching a conclusion, we have not found it necessary to deal with the many authorities cited to our attention treating of the technical distinction between a sale and an exchange of properties. There was neither, completed here. There was an executory contract on the part of respondent to sell or exchange his real estate for other property and a balance in money, a mere price being placed on the properties for the purpose of the transaction, without any agreement as to actual values. Each had his selling price, and evidently purposed obtaining more than he parted with, to make a profitable bargain. They, practically, made a land contract in which each stated his price and it was met on a trading basis.

In case of an executory land contract, and it is not perceived why, upon principle or on authority, the agreement in question should not be so classed, where the executory seller fails to perform, having agreed to do what he had no right to do, talcing his chances upon being able to acquire such right, he is guilty of a species of bad faith,- and, if not in an ordinary case of breach of such a contract, he is liable to make good to the opposite party the damages caused to him by the loss of his bargain. Arentsen v. Moreland, 122 Wis. 167 , 99 N. W. 790 ; Muenchow v. Roberts, 77 Wis. 520, 46 . N. W. 802; Maxon v. Gates, 136 Wis. 270 , 116 N. W. 758 ; McLennan v. Church, 163 Wis. 411 , 158 N. W. 73 .

In the last case cited, it is said that, “ordinarily, the damages recoverable for breach of a land contract by failing to convey, over and above payments made, is the difference between the contract price and the market value at the time of the breach, with interest to the date of the judgment.”

*23 In Muenchow v. Roberts it was said: “Tbe plaintiff is entitled to recover, if at all, tbe value of bis bargain. Tbe true measure of sucb value is tbe value of tbe land tbe 'defendant contracted to sell to bim, estimated at tbe time tbe contract was broken, less wbat tbe plaintiff agreed to pay therefor.” That rule, as before indicated, applies wherever tbe contract breached is characterized by any species of bad faith, even sucb as an agreement to sell land which tbe vendor has no title to, or sell without present right to convey, depending upon subsequently acquiring sucb right. A full discussion of tbe subject will be found in Arentsen v. Moreland, supra.

Applying tbe foregoing to tbe situation here, it seems that tbe trial court erred in denying relief to tbe appellant. He was entitled to tbe full benelit of bis bargain. That requires tbe difference between tbe fair market value, at tbe time of tbe breach, of tbe property be was to sell respondent, less the incumbrances thereon, and tbe like value at such time of tbe Montana land less tbe $22,000, which was to be paid in money, and interest from tbe time of sucb breach. That is in accordance with appellant’s motion for judgment on tbe verdict of tbe jury.

Tbe result stated renders unnecessary consideration of tbe question of whether error was committed to appellant’s prejudice in refusing to grant a new trial. Tbe motion in respect thereto was an alternative. Had tbe court granted the motion for judgment, tbe result would have been a waiver of any errors against appellant in respect to tbe rejection of evidence which was tbe subject of tbe motion for a new trial.

By the Gourt. — Tbe judgment is reversed, and tbe cause remanded for judgment in plaintiff’s favor in accordance with this opinion.

SlEBECKER, J., dissents.