No. 14817
I N T E SUPREME COURT O THE STATE O MONTANA
H F F
1979
R U D P CATTLE FEEDERS,
O N U
P l a i n t i f f and A p p e l l a n t ,
VS .
FRJ3D HORPESTAD,
Defendant and Respondent.
Appeal from: D i s t r i c t Court of t h e Fourteenth J u d i c i a l ,
Honorable N a t A l l e n , J u J g e p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t :
Towe, B a l l , E n r i g h t and Mackey, B i l l i n g s , Montana
S t e p h e n Mackey a r g u e d , B i l l i n g s , Montana
F o r Respondent:
Ask and P r a t t , Roundup, Montana
Thomas M. Ask a r g u e d , Roundup, Montana
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Submitted: November 5 , 1979
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the
Court.
This appeal is from a judgment and award of damages in
favor of defendant-cross complainant Fred Horpestad. Trial was
in the District Court of Musselshell County, the Honorable Nat
Allen presiding without a jury.
On February 11, 1974, Horpestad, a rancher, entered a
joint venture agreement with Roundup Cattle Feeders, Inc. (RCF),
a feedlot operator. The agreement provided that Horpestad would
deliver cattle to RCF at its Roundup, Montana, feedlot. RCF was
then to feed and prepare the cattle for market. Upon sale of the
fattened cattle, each party was to recover its investment and then
split the profits. The agreement, in pertinent part, reads:
"2. [RCF] agrees to feed and care for said live-
stock for the periods as hereinafter specified.
"The cattle will be fed for a minimum of 120 days
from the respective dates they were delivered at
said feedlot and thereafter until at least 80% of
each respective lot will grade choice.
"4. The cattle feeding project shall be deemed
a joint venture whereby the parties will share in
the profits or losses, in accordance with the
following provisions:
" (a) [Horpestad] will have contributed the live-
stock with agreed values as above set forth for the
purposes of this agreement which will constitute
[Horpestad'sl investment in the enterprise.
"[RCF] will advance the actual cost of feed, vet-
erinary services, yardage, work and labor, and keep
a record of these charges, the total of which will
constitute in dollars [RCF's] investment in said
enterprise.
"(b) When said livestock are sold as fat cattle
. . . the net proceedsreceived from the sale of
[cattle] will be remitted to [Horpestad] by the
packers, but are to be accounted for between [Horpe-
stad] and [RCF] in accordance with the following
formula:
"If the proceeds from the sale of the [cattle] are
sufficient so that [Horpestad] may be reimbursed
for the agreed in-value of the animals and [RCF]
may be reimbursed for its feeding costs, the balance
shall be considered the profit on the transaction
and shall be divided equally between the parties.
"However, in the event the net proceeds of sale
of said [cattle] to a packer are not sufficient
so that [Horpestad] can be reimbursed in full for
the agreed in-value thereof, and [RCF] cannot be
reimbursed in full for its feeding costs thereof,
then and in that event the total agreed in-value
of the animals and [RCF's] total feeding costs shall
be added together, the net proceeds subtracted
therefrom and the balance which would constitute
the loss, shall be divided equally between the parties,
whereupon one-half the loss would be deducted from
[Horpestad's] in-value of the animals and the balance
of the cost of the animals remitted to [Horpestad]
and one-half of the loss would be deducted from [RCF's]
feeding costs for said cattle and the balance of
the feeding costs remitted to [RCF].
"5. [RCF] represents that it has made adequate
and suitable arrangements so that it can provide
the necessary feed, labor and equipment to properly
care for said cattle."
As per the contract, Horpestad delivered the cattle and
RCF began feeding them. Unfortunately, cattle prices plummeted
during the first half of 1974. As a result, RCF lost its bank
financing and could not provide feed for the cattle. Being unable
to perform its contractual obligation, RCF informed Horpestad he
would have to provide the necessary feed or remove the cattle.
On May 31, 1974, RCF fed the cattle dry hay instead of
silage along with their regular grain and supplement. This took
the cattle off their feed at a critical time and set their weight
back drastically. On June 1, Horpestad terminated the contract
and removed his cattle to a yard in Powell, Wyoming. RCF agrees
the joint venture ended on this date. As a result of the move to
Powell, the cattle were further taken off their feed and their
progress was set back even more.
Because the cattle had been removed from their feed, they
had to be fed longer in order for 80% of them to grade choice.
They were fed at the Powell, Wyoming, feedlot until they were sold
Between February 11 and June 1, 1974, RCF expended
$57,872.66 for feed and labor. It was never reimbursed for this
amount. RCF sought an accounting as of the date the joint ven-
ture was terminated or, in the alternative, restitution. Horpe-
stad counterclaimed for damages in the amount of the expenses
incurred in moving the cattle and feeding them to make up for
the time they were off their feed. RCF was denied relief on
both its claims but Horpestadtscounterclaim was allowed in the
amount of $27,347.
RCF appeals and raises the following issues:
1. Whether an accounting must be made.
2. Whether RCF is entitled to restitution.
3. Whether the award of damages was proper.
The theory underlying RCFts claim for an accounting is
that it is entitled either contractually or equitably to the money
it expended in performing as much of the contract as it did. To
this end we must first determine whether the contract was entire
or severable.
The rule upon which the question is resolved has been
stated as follows:
" ...Whether a contract is entire or divisible
depends very largely on its terms and on the in-
tention of the parties disclosed by its terms. As
a general rule a contract is entire when by its
terms, nature and purpose, it contemplates and in-
tends that each and all of its parts are inter-
dependent and common io one another and to the
consideration . . ."Traiman v. Rappaport (3rd Cir.
1930), 41 F.2d 336, 338; Purdin v. Westwood Ranch
and Livestock Co. (1923), 67 Mont. 553, 557, 216 P.
326, 327.
The contract here provided that RCF was to feed the cattle
until 80% graded choice. Only after this was achieved were the
cattle to be sold and the proceeds from the sale split between
the joint venturers. It is clear the parties intended the contract
to be entire and nonseverable. Complete performance was required
of RCF until the desired weight gain was accomplished; partial
performance could not satisfy its contractual obligation,
RCF, by defaulting on its obligation and abandoning the
contract completely frustrated the purpose, intent and terms of
the joint venture agreement. It thereby forfeited any right it
may have had to an accounting under the contract. Brooks v Muth
.
(1956), 144 Cal.App.2d 560, 301 P.2d 404, 408. The instant case
is distinguishable from Murphy v. Redland (1978), Mont .
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583 P.2d 1049, 1053, 35 St.Rep. 1267, 1272, wherein we said,
"[Albsent a default agreement joint adventurers cannot forfeit
the rights of a member and exclude him from participation in the
enterprise because he is in default." In Murphy, the joint venture
was never terminated and the party seeking an accounting remained
a fully participating venturer. Here, the complaining party agrees
the joint venture was terminated by its own abandonment.
Even though its own wrong destroyed the joint venture, RCF
attempts to invoke the court's equity power to order an account-
ing. The contention fails as equity is premised on the notion that
a wrongdoer may not take advantage of his own wrong. Mitchell v.
Pestal (1949), 123 Mont. 142, 150, 208 P.2d 807, 811; section
1-3-208, MCA. In a case similar to the one at bar, the Washington
Supreme Court said:
"Appellants did not offer to do equity in their
complaint. It seems strange, indeed, that suitors,
admitting their breach of a joint venture contract,
should seek the aid of the court of equity to enforce
rights claimed by them under the identical contract,
No one may profit by his own wrong. It seems to us
that by their own admitted misconduct appellants
forfeited any rights to an accounting." Saletic v.
Stamnes (1958), 51 Wash.2d 696, 321 P,2d 547, 549.
RCF argues its performance became impossible because of
the drop in cattle prices which caused it to lose its financing.
It concludes it was thus excused from performing under the doctrine
of commercial impossibility. We cannot agree for two reasons.
First, in order for commercial impossibility to excuse performance
of a contract, the parties thereto must have no reason to forsee
the impossibility at the time they contracted. Rest. Contracts,
section 456; Smith v. Zepp (1977), 173 Mont. 358, 567 P.2d 923,927-928
34 St.Rep. 753, 758-759. Here, fluctuation in cattle prices is a
fact of life--it is forseeable. Second, in order for commercial
impossibility to excuse performance, the contractual duties must
be impossible for anyone to perform. Rest. Contracts, section
455; Marshick v. Marshick (1976), 25 Ariz-App. 588, 545 P.2d 436,
439; Cannon v. Huhndorf (1966), 67 Wash.2d 778, 409 P.2d 865, 867.
As stated in 17 Am Jur 2d Contracts, S415:
"It is generally well settled that the subjective
impossibility, that is, an impossibility that is
personal to the promisor and does not inhere to the
nature of the act to be performed, does not excuse
nonperformance of a contractual obligation. Accord-
ingly, the fact that one is unable to perform a
contract because of his inability to obtain money,
whether due to his poverty, a financial panic, or
failure of a third person on whom he relies for
furnishing the money, will not ordinarily excuse
nonperformance, in the absence of a contract pro-
vision in that regard."
The impossibility in this case was personal to RCF. This fact is
illustrated by Horpestad's obtaining adequate financing once the
cattle were moved.
We turn next to RCF1s argument that it is entitled to
restitution of the expenses it incurred in partially performing
the contract. As discussed, the agreement was entire and nonsev-
erable; failing in the complete performance of such a contract,
RCF cannot recover thereunder. Being a plaintiff in substantial
default and without a remedy under the contract, RCF's argument
for restitution is necessarily based on an implied contract under
which it seeks to recover a benefit conferred on a nondefaulting
defendant. It contends if the benefit (less damages caused by its
breach) is not returned, Horpestad will be unjustly enriched. We
disagree.
The rule allowing restitution in some cases is said to be
grounded on principles of equity. As such, the party seeking
restitution cannot base its c l a b on its own willful breach of
an entire contract. Mitchell v. Pestal, supra, holding that a
wrongdoer may not take advantage of its own wrongdoing; section
1-3-208, MCA.
order for a claim restitution to lie:
"'There must be no willful or intentional de-
parture, and the defects must not pervade the
whole, or be so essential as that the object
which the parties intended to accomplish--to
have a specified amount of work performed in a
particular manner is not accomplished.' [Cita-
tions omitted.] To permit a plaintiff to recover
though it appears that he has willfully disre-
garded his engagement in essential particulars,
would be for the law to encourage parties to be
delinquent in the performance of their solemn
engagements; whereas its policy is to compeX
cgbservance of them." Waite v. C. E, Shoemaker
& Co. (1915), 50 Mont. 264, 278, 146 P. 736, 739;
see also Harris v. The Cecil N. Bean (2nd Cir.
1952), 197 F.2d 919; Hayeck Building & Realty Co.
v. Turcotte (1972), 361 Mass. 785, 282 N.E.2d
907; McLeod v. Belvedale (1967), 115 Ga.App. 444,
154 S.E.2d 756; Jones & Laughlin Steel Co. v.
Abner Doble Co. (1912), 162 Cal. 497, 123 P. 290.
A workable composite of the above cited authorities is
that a party who has completely breached an entire, nonserverable
contract, without justification or excuse, may not recover for any
performance rendered prior to the breach. Here, RCF expressly
represented it had "made adequate and suitable arrangement so
that it can provide the necessary feed, labor and equipment to
properly care for said cattle." The drop in cattle prices, which
was a forseeable event, caused RCF to lose its financing. Here
RCF had - made suitable arrangements in accord with its promises.
not
There is no justification or excuse. No restitution can be allowed.
The award of damages to Horpestad on his counterclaim will
not be disturbed. The object of a damage award is to recompense
the aggrieved party for detriment suffered as a proximate result
of a breach of contract. Section 27-1-311, MCA. The evidence
indicates that RCF's breach caused the cattle to be moved and to
be fed for thirty extra days. The award for expenses incurred in
moving and i n t h e e x t r a f e e d i n g was proper. The award covered
n o t h i n g b u t c o s t s i n c u r r e d a s a r e s u l t of R C F ' s breach.
Affirmed.
\
Chief J u s t i c e
Justices J