Citation. 145 Colo. 430, 359 P.2d 356 (Supreme Court of Colorado, 1961)
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Brief Fact Summary.
A husband and wife entered into a contract with a dance studio to take a certain amount of lessons. The contract was assigned to a second dance studio and the husband and wife were unhappy with the lessons provided by the second studio.
Synopsis of Rule of Law.
Although an assignment is invalid, if a party to the assigned contract accepts the assignment and does not try to rescind the assignment, it is valid.
The Plaintiffs, the Seales (the "Plaintiffs"), paid the Defendants, John Bates ("Mr. Bates"), the Bates Dance Studio, Inc. ("Bates") and the Dance Studio of Denver, Inc. ("Dance Studio") (collectively referred to as the "Defendants"), a substantial amount of money for dance lessons. The Plaintiffs entered into a contract with Bates, which was assigned to the Dance Studio. The Dance Studio did business as Dale Dance Studio (Dale). The Seales began taking dance lessons at Dale in June of 1956, but became dissatisfied with them. The Seales wished to take the rest of their lessons with Bates, and accordingly entered into a new contract to do so. While their lessons at Bates were ongoing, the Seales learned that the remainder of their lessons would have to be taken at Dale, because Dale assumed the obligations of the contract between the Plaintiffs and Bates. The Seales were told that the whole Bates infrastructure was being moved to Dale. After taking lessons at Dale for a short period of time, the
Seales were dissatisfied with the conditions. In May of 1957, the Seales stopped taking lessons at Dale. In August of 1957, the Seales complained to Mr. Bates and demanded their money back or to make arrangements so they could complete their contract. Mr. Seale said the only reason he continued taking the classes at Dale was "[he] kept hoping that somebody would get the thing arranged to where we could continue as had been promised." The Seales brought suit and the trial court dismissed the suit on the ground that the Plaintiffs assented "to the assumption by Dale of the obligations under the contract."
Did the Plaintiffs assent to the assignment of their contracts from Bates to Dale?
• Irrespective of their assent, did the Plaintiffs have grounds to rescind the contracts?
Yes. The court first observed this was a personal service contract and as such, not assignable without the Plaintiff's consent. The court then recognized, that there was evidence supporting the trial court's conclusion that the Plaintiffs accepted the assignment. Further, the Plaintiffs did not attempt to rescind when they learned their contracts were being assigned to Dale.
• No. The court recognized that the contract did not include stipulations as to the size of the room the classes were to be taught in, how many people were to be in a class or if a male or female instructor was required. As such the court refused to imply these stipulations into the parties' contract for three reasons. First, "the warranties which the plaintiffs would have us read into the contracts do not arise by necessary implication." Second, " these breaches cannot be regarded as sufficiently substantial to justify the remedy of rescission." Third, "there is a failure of proof with respect to the essential element set forth in the complaint, namely, a refusal on the part of the Dale Dance Studio to furnish lessons. All of the evidence supports the finding that Dale was willing to continue the lessons." Rescission is not appropriate where only "inconsequential variations in the course of instruction" are present.
This case offers a glimpse at how courts construe the effects of an assignment on those parties whose rights under the contract have been assigned.