Taylor v. Johnston

Brief Fact Summary.

Taylor (Plaintiff) formed a contract with the Johnstons (Defendants) to breed Plaintiff’s two mares with Defendants’ stallion. Defendants sold the stallion and arranged for it to breed with several other mares. Due to the difficulty in scheduling, Plaintiff’s mares did not breed with Defendants’ stallion, but were bred with another stallion instead. Plaintiff sued for breach of contract and damages, and Defendants countersued for stud fees.

Synopsis of Rule of Law.

An anticipatory breach of a contract occurs only when one of the parties to an agreement expressly or impliedly repudiates the contract or unequivocally refuses to perform.

Facts.

Plaintiff had two mares, Sunday Slippers and Sandy Fork, he wished to breed with Defendants’ stallion, Fleet Nasrullah. They formed an agreement to breed the mares with the stallion in 1966, and if either of the mares failed to produce a live mare from the 1966 breeding, then again in 1967. Late in 1965, Defendants’ sold Fleet Nasrullah and shipped him to the buyers in Kentucky. As part of the sale, various shareholders were to breed their own mares with Fleet Nasrullah. Defendants notified Plaintiff that their agreement was nullified by the sale. Plaintiff threatened litigation and Defendants agreed to maintain the agreement and allow Plaintiff’s mares to breed with Fleet Nasrullah in Kentucky. During early 1966, both mares were already pregnant and gave birth in April and June of that year. Plaintiff’s agent tried to arrange for Fleet Nasrullah to breed with Sunday Slippers three times and with Sandy Fork once. On each occasion, the appointment could not be made because Fleet Nasrullah was booked on those dates for breeding with the shareholders’ mares. Plaintiff gave up trying to breed his mares with Fleet Nasrullah and instead bred them both with Chateaugay in June 1966. Both mares became pregnant, but the pregnancies did not result in live births. Plaintiff sued Defendants for breach of contract and Defendants countersued for stud fees. The trial court found that the sale of Fleet Nasrullah and the resultant inability of Plaintiff to arrange for the stallion to breed with the two mares constituted a repudiation and breach of the contract and awarded Plaintiff more than $103,000. Defendants appealed, claiming that they had neither repudiated nor breached the contract and that Plaintiff’s breeding of the mares with Chateaugay was the breach that made Defendants’ performance impossible.

Issue.

Has a party anticipatorily breached a contract when he causes the other party to believe that he will not perform the agreement, but does not expressly or impliedly repudiate the contract or unequivocally refuse to perform?

Held.

(Sullivan, J.) No. An anticipatory breach of a contract occurs only when one of the parties to an agreement expressly or impliedly repudiates the contract or unequivocally refuses to perform. An express repudiation requires a clear, positive, unmistakable refusal to perform. An implied repudiation occurs when one party puts it out of his power to perform the contract. Here, Defendants did initially expressly repudiate the contract when the stallion was sold. When Plaintiff then pressed the agreement, Defendants retracted that repudiation and the contract was back in place. Under the contract, Defendants had until the end of 1966, or at least until the end of the 1966 breeding season, to breed Fleet Nasrullah with Plaintiff’s two mares. The evidence shows that Defendants stood ready to perform that obligation. This became impossible only when Plaintiff then bred his mares with Chateaugay instead of with Fleet Nasrullah. Defendants did not repudiate or anticipatorily breach the contract, and are not liable to Plaintiff for damages. Reversed.

Discussion.

When an anticipatory breach does occur, the nonbreaching party has two options. He may treat the contract as breached and sue for damages immediately, or he may wait until the time set for performance arrives and sue at that time. The latter option gives the breaching party another opportunity to perform as originally promised. If this occurs and the breaching party cures the breach by performing on time, the nonbreaching party has no recourse for the anticipatory breach.