Sixta v. Ontonagon Valley Land Co.

SiebecKER, J. An examination of the contract made by the parties discloses that the plaintiffs were given the exclusive right to sell the lands as the defendant’s agents, except that the defendant had the right to sell upon the terms and conditions specified. Another stipulation provided that all sales made by the plaintiffs must be submitted to the defendant to fix the price and the terms of sale, and the moneys received on the sales approved by the defendant, above the stipulated commission the plaintiffs were entitled to, were to be turned over to the defendant and all securities taken on sales were to be in defendant’s name and for its benefit. These stipulations concerning the agency of the plaintiffs clearly show a relation of personal confidence and evince an intent that the right reserved to the defendant to fix prices and terms on sales made by the plaintiffs should be exercised by the defendant’s officers, and that this' obligation should be performed for the mutual benefit of the two' parties to the contract without interference or hindrance by others. The conveyance of the lands and the assignment of the contract to the Hess Company brought a third party into the transaction, which was manifestly contrary to the understanding embodied in the agreement, and brought a party into it whose interests were clearly hostile to those of the plaintiffs and clearly tended to alienate the friendly co-operation of the defendant’s officers to further the plaintiffs’ rights and interests in fixing prices and terms of sales for the remainder of the time fixed by the contract. It is evident that the Hess Com — 301 — pany made tbe pnrcbase to obtain the lands, and this in itself naturally made the Hess Company adverse to further sales by the plaintiffs. The defendant, by transferring all its pecuniary interests in the lands and by assignment of the contract, was likewise put in the position of an adverse party to the plaintiffs’ interest in making sales. It also followed that, if the plaintiffs desired to perform their agency agreements, they encountered additional obstacles in securing conveyances of the defendant and of the subsequent purchaser, the Ontonagon .Valley Settlement Company. That these results were the consequence of the defendant’s conveyance to the Hess Company is shown by their acts when the plaintiffs demanded conveyances to Wallen and Bernhardt. The circumstances of these sales clearly show that the. defendant’s officers were disposed to hinder and oppose the plaintiffs in carrying out sales to purchasers they might obtain as the defendant’s agents, and practically prevented the plaintiffs from making sales. In substance and effect the defendant’s transfers of the lands and contract to the Hess Company put the Hess Company in the defendant’s place and thereby clearly violated the agency part of the contract. But the conveyance also violates the provision of the contract by which it is agreed that the defendant should have the right of making sales at any time or to any person “upon the condition that it make no sales for a less sum than ten ($10) dollars per acre.” That the defendant understood this agreement to include a sale of lands as a whole is shown by its attitude in all of its dealings with the Hess Company by attempting to so frame the transfer as to give it no efficacy as a conveyance until after the plaintiffs’ contract had expired; but the form of conveyance, deeding it to the purchaser, payment of the consideration, and all other acts of the parties thereto, make the transaction a completed sale of the land to the Hess Company, subject to the condition that, if the plaintiffs elected to stand upon the contract and exercise their rights thereunder, then — 302 — the grantee was to join in a conveyance of the lands to which the plaintiffs were entitled under either the agency or option features of the contract. We consider the conveyance to the Hess Company to be a sale within the stipulation of the contract binding the defendant not to sell any such land for a less sum than ten dollars ($10) per acre, and that such sale was in its terms a breach of this agreement. This stipulation has a twofold bearing in determining the rights and obligations of the parties to the contract: it was apparently designed to-protect the plaintiffs against any sale by the defendant at a price so as to nullify the plaintiffs’ efforts to establish a market for these lands at a price above the six dollars ($6) per acre at which they had an option thereon, and that all sales made by them or the defendant would produce a fund which the plaintiffs could apply on the purchase price under the option. To allow the defendant to sell the lands as it did to the Hess Company tended to nullify both of these objects. We consider that the sales to the Hess Company breached the agency and the option features of the contract, and that such violation of either part of the agreement constituted a substantial breach thereof. As declared on the former appeal of the case (148 Wis. 186, 134 N. W. 341) : “The so-called option feature of the contract cannot be separated from the commission part. Each is dependent upon the other; the covenants are mutual. The covenants of each party to the contract constitute a consideration for the covenants of the other party. The contract is an entirety. The promises are mutual and are a sufficient consideration between the parties to the contract. . . . The covenant that defendant should not sell for less than $10 per acre was for the benefit of plaintiffs, because they had an interest in all moneys received on sales above $6 per acre, in case they elected to purchase.” We think the trial court erred in holding that the acts of the defendant in conveying the land to the Hess Company constituted simply a nominal breach and did not operate to — 303 — deprive tbe plaintiffs of any substantial rights under tbeir contract. Tbe conveyance of tbe land and assignment of tbe contract by tbe defendant resulted in serious and material deprivation of tbe plaintiffs’ rights to have tbe friendly and personal co-operation of tbe defendant’s officers in mating sales of land, and in subjecting them to tbe hindrances and unjust burdens of dealing with titles to which a third and hostile party bad acquired a right, and thus imposed adverse conditions which materially interfered with them in continuing tbeir agency under the conditions provided for in tbe contract, and they suffered a loss of having tbe benefit of an accumulated fund of at least $4 per acre to enable them to exercise tbeir option under tbe contract. Tbe contract having been thus breached, it was tbe plaintiffs’ right to stand on tbe breach and waive tbeir right of electing to continue tbe contract in force and demand its performance. Tbe plaintiffs have elected to stand on tbe breach, and hence tbe contract drops out of consideration except as it is material to ascertain tbe consequence of its breach in determining what damages, if any, tbe plaintiffs suffered from such breach. Tbe trial court awarded only nominal damages, upon tbe theory that tbe evidence failed to show that tbe plaintiffs suffered any damage from tbe breach of the agency feature of tbe contract, and that as to tbe option feature they were not deprived of any right, since tbe conveyance to the Hess Company provided that tbe plaintiffs were to have the right to purchase under tbe option. This seems to us a confusion of results, in that it bolds that tbe contract is breached and also that it is in force in part. This we deem erroneous in two respects. Eirst, because, as formerly held on appeal, tbe contract is entire and indivisible, and hence a breach of' one part constitutes a breach of tbe entire contract, and tbe plaintiffs bad tbe right to declare it abrogated in all respects; and secondly, a breach of tbe condition under which tbe defendant could make sales of land constituted a breach of tbe — 304 — option feature of the contract and operated to abrogate it in all its obligations when the plaintiffs elected to stand on the breach. The question then is, What damages proximately resulted to the plaintiffs from the acts of the defendant in breaching this agreement? We must not lose sight of the grounds on which the plaintiffs sue to recover damages, namely, the breach of the contract, and not under the provisions of the contract. We cannot accede to the contention of the defendant that the acts of the plaintiffs in attempting to complete the sale of parcels of land to Wallen and to Bernhardt on June 27, 1910, constitute a waiver of the breach. The sales were negotiated before they had knowledge of this conveyance, but they reported these deals to the defendant on July 12th and remitted the cash payments made thereon and requested contracts therefor. No waiver can be held to have been made, in the light of the fact that the defendant thereupon for the first time turned the matter over to its grantee and its successor in title to complete such sales and so notified the plaintiffs on July 19th.; to which the plaintiffs replied on August 2d, declaring in direct terms that they regarded the contract had been abrogated by the defendant and they should look to it to make their losses good. Each of these various acts was merely part of a transaction which finally culminated in the commencement of this action to recover the damages for the alleged breach. In determining what damages the plaintiffs are entitled to recover, the inquiry is, What does the evidence show the contract was worth to the plaintiffs when the defendant breached it, considering their rights as agents to sell these lands under its provisions and their rights as optionees to purchase the land ? We find the evidence is too vague and indefinite for ascertaining with reasonable certainty what damages, if any, the plaintiffs suffered by being deprived of their right to continue selling these lands throughout the contract period. — 305 — Whatever profits they might realize on such sales is left to rest on mere speculation, and on the record are too remote and incapable of ascertainment. The trial court so considered it and the record fully justifies this conclusion. As to the plaintiffs’ damages resulting from the breach of the option to purchase these lands, the conclusion of the trial court that they were merely nominal is not sustained. As already stated, the contract was breached and the plaintiffs elected to stand on the breach, and hence all claims and contentions that no damages resulted to them because the conveyance to the Hess Company did not affect their rights and1 duties growing out of the option feature of the contract are not well founded if the facts proven show that the plaintiffs sustained damages proximately resulting from the breach of the contract. The nature of an option contract has a bearing on the solution of this question. What such a contract is was clearly stated in Barnes v. Rea, 219 Pa. St. 279, 293, 68 Atl. 836: “An option is not a sale. It is a right of election in the party taking the same to exercise a privilege, and only when that privilege has become exercised by acceptance in the manner specified in the agreement does it become an absolute contract, binding upon both parties. It is simply a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. Ry such an agreement he does not sell his land, nor does he at that time enter into an absolute contract to sell and convey, but he does agree to sell something ; that is, the right or privilege to buy at the election or option of the party with whom the agreement is made. The optionee under such an agreement takes, not lands, nor even an absolute agreement that he shall have lands conveyed to him, but he does get something of value; that is, the right to call for a conveyance of the lands if he elects to purchase in the manner specified. ... It is a unilateral agreement containing the terms and conditions upon which the optionor agrees to sell and convey his land not yet ripened into an absolute contract to sell and convey on one side and to purchase and pay on the other.” — 306 — The option contract, therefore, does not raise questions of damages for breach of a contract for sale of lands by the vendor, and hence the rule of damages in actions for breach of contract between vendor and vendee, where the vendee alleges a breach by the vendor which entitles the vendee to the difference between the contract price and the value of the land at the time of the breach, does not control this case. The case of Boyd v. De Lancey, 17 App. Div. 567, 45 N. Y. Supp. 693, involved the question of damages resulting from a breach of an option contract, and it was held that an action for damages based on a breach of an option by the optionor entitles the optionee to recover as damages the value of the contract and to have restored to him that with which the op-tionee has parted for the option. This rule compensates, as near as can be ascertained, the optionee for the losses resulting from an abrogation of the contract. In this case the evidence shows that the plaintiffs had earned $10,050, to be applied as payment on the option. The defendant’s breach operated directly to deprive them of the benefit of applying this sum and consequently caused them the loss thereof. This item is fixed and certain, and for its loss the plaintiffs are entitled to be compensated. The plaintiffs claim the right to recover compensation for deprivation of securing the land, and assert that this is measured by the difference in the market price of the lands and their contract value. But we do not perceive how this can be a measure of such loss. They had no contract for this purchase, as heretofore shown, nor can such damage be recovered as part of the value of the contract, for it appears that under the conveyance by the defendant to the Hess Company the defendant reserved the right to convey to the plaintiffs under the option and the grantee agreed to join therein to give title to the plaintiffs, if the plaintiffs demanded a conveyance upon the terms in the option. The loss of the land, under the circumstances, is of such character that the plaintiffs might reasonably have avoided it by accept — 307 — ing the title to the lands from the defendant within the defendant’s right under the conveyance to the Hess Company, and that they should have done so upon the principle of avoidable consequences as to resulting damages from illegal acts and which the party damaged is in justice called on to do if it can be reasonably done. Under the circumstances of the case the plaintiffs cannot be said to have been deprived of the opportunity to obtain the title to these lands if they were ready and willing to buy them upon the conditions of the option. Upon the record of the case no other elements of damages are established as the result of the breach of this contract aside from the $10,050 fund which has been accumulated by the plaintiffs for their benefit and was to be applied as payment of the option. Their right to this sum they lost as a direct consequence of defendant’s violation of the contract, and they are entitled to be compensated for such loss. From this it results that the lower court erred in holding that there was merely a nominal breach of the agency and option contract which resulted in only nominal damages to the plaintiffs. We consider that there was a substantial breach of the contract by the defendant; that the plaintiffs had the right to and did stand on the breach to recover the sum of $10,050 with interest from the date action was commenced. By the Court. — The judgment appealed from is modified on the plaintiffs’ appeal by striking out the words “six cents” and inserting in lieu thereof the following: “twelve thousand three hundred and nine dollars,” and as so modified is affirmed ; and that the defendant have nothing on its appeal. WiNsnow, C. J., and Baebtes, J., dissent.