Brief Fact Summary.
Corporation 1 which was in the business of running pizza parlors contracted with Corporation 2 to provide the pizza shops cold drink vending machines. Corporation 2 was bought by Corporation 3 and the rights to the contracts involving Corporation 1 were delegated to Corporation 3.
Synopsis of Rule of Law.
"[U]nder an executory bilateral contract [rights] may be assigned and delegated, subject to the exception that duties under a contract to provide personal services may never be delegated, nor rights be assigned under a contract where delectus personae was an ingredient of the bargain."
The Appellees-Defendants, are Pizza of Gaithersburg, Inc. and three other corporations under the common ownership of Thomas S. Sherwood and Eugene Early (the "Defendants"). The Defendants contracted with Virgina Coffee Service, Inc. ("Virginia") on December 30, 1966 and July 25, 1967 to provide six pizza shops with cold drink vending machines. On December 30, 1967, the Plaintiff, Macke Co. (the "Plaintiff"), purchased the assets of Virginia. The contracts with the Defendants' six pizza shops, were assigned to the Plaintiff by Virginia. In January 1968, the Defendant attempted to terminate all 6 contracts. The Plaintiff brought suit against the Defendants alleging breach of contract. The lower court found that Virginia's duties were non-delegable to the Plaintiff because the Defendant "relied on [Virginia's] skill, judgment and reputation".
Are Virginia's duties delegable or do they constitute a personal services contract or fit into another exception and as such are not delegable?
The court first observed the general rule that "[i]n the absence of a contrary provision-and there was none here-rights and duties under an executory bilateral contract may be assigned and delegated, subject to the exception that duties under a contract to provide personal services may never be delegated, nor rights be assigned under a contract where delectus personae was an ingredient of the bargain."
· The court concluded that none of the six relevant agreements were contracts for personal services. The only way the delegations would be impermissible is if the contracts "imposed on Virginia duties of a personal or unique character which could not be delegated." The court quoting the California Supreme court in [Taylor v. Palmer, 31 Cal. 240 at 247-248 (1866)] observed, "Rare genius and extraordinary skill are not transferable, and contracts for their employment are therefore personal, and cannot be assigned. But rare genius and extraordinary skill are not indispensable to the workmanlike digging down of a sand hill or the filling up of a depression to a given level, or the construction of brick sewers with manholes and covers, and contracts for such work are not personal, and may be assigned."
· As such, the court concluded that the delegation of duty by Virginia to the Plaintiff was permissible.
It is interesting to read this case alongside [Sally Beauty Co. v. Nexxus Products Co.] for another court's interpretation of assignments.