Niederhauser v. Jackson Dairy Co.

Under the facts, it appears the plaintiff (appellee) resides on a farm adjoining Marshalltown, Iowa, and prior to November, 1928, was engaged in the distribution of milk over certain well established milk routes in the city of Marshalltown, Iowa.

The defendant (appellant) is an Iowa corporation with its principal place of business in Marshalltown, Iowa, and was also engaged in the distribution of milk to retail customers.

On November 9, 1928, the plaintiff and defendant entered into the written contract upon which this suit is based. In said contract, the plaintiff agreed to deliver to the defendant all his milk routes in Marshalltown, Iowa, by furnishing to the defendant a complete list of all of his customers, and by recommending the defendant to said customers, and the defendant in turn agreed to purchase all milk furnished by the plaintiff for a period of three years from the 15th day of November, 1928, and to pay plaintiff therefor the sum of fifty cents per hundred pounds more than was paid to other patrons for milk of the same butterfat test. It was agreed that the milk was to be clean and sanitary and the cows were to be tuberculin tested and the plaintiff agreed not to re-enter the retail milk business for a period of three years. The plaintiff turned over his milk routes as agreed and delivered his milk to the defendant from November 15, 1928, to February 11, 1930.

On February 3, 1930, the defendant by F.R. Jackson, its president, informed the plaintiff that it would take no more of his milk because the cows had not been tuberculin tested for more than a year last past.

On February 1, 1930, Jackson had a conversation with the plaintiff, in which he asked him how long it had been since his cows were tested for tuberculosis, and the plaintiff replied: "A year ago last fall."

On February 3, 1930, Jackson had another conversation with plaintiff in which Jackson said to the plaintiff: "In view of the fact that your cows have not been tested since a year ago last fall, we are not going to take your milk any longer." In the same conversation, Jackson said: "As your customer we will take our milk for a few days and give you a chance to turn it and will use it in the pasteurizer and pasteurize it, all of it." (Writer's italics). It is claimed by the defendant that this was done to give the plaintiff a chance to get another outlet for his milk.

On the morning of February 11th, Jackson refused to furnish the plaintiff with empty cans in which to transport the milk and no more deliveries were made to the defendant. Thereafter, the plaintiff sold the milk to the best advantage and this suit is to recover as damages the difference between the contract price and the amount obtained for the milk.

In the meantime, the plaintiff had secured the services of one Mahlon Russell, a licensed veterinarian of Marshalltown, who began a test of the plaintiff's herd on February 3rd and completed it on February 6, 1930. According to this examination, there were at that time no "reactors" in the plaintiff's herd.

The plaintiff in his petition alleged "that the said plaintiff has fulfilled all of the terms and conditions imposed upon him by said contract and has been ready and willing at all times and is now ready and willing to carry out the terms of said contract."

The defendant's answer was in the nature of a general denial, with the further allegation that "defendant's refusal to take further milk from plaintiff was because plaintiff failed to keep and perform certain terms and conditions contained in the contract between the parties, which were incumbent upon him to perform, viz.: to have his cows tuberculin tested and to deliver the milk to defendant in a clean and sanitary condition."

The defendant further alleges that on account of plaintiff's failure to have his cows tuberculin tested, the defendant had the right to refuse to take plaintiff's milk and the defendant so refused. The defendant also pleaded an ordinance of the City of Marshalltown, providing for the inspection of milk and for tuberculin tests of herds supplying same and certain regulations of the State Department of Agriculture in relation to administering tuberculin tests to cows and herds.

The contract provides, among other things, as follows:

"Said First Party (Niederhauser, plaintiff) hereby agrees to turn over to said Second Party (Jackson Dairy Company, defendant) all of his milk business, retail and wholesale, and to recommend said Second Party to all of his customers to whom he sells and delivers milk and furnish to the Second Party a complete list of his customers as soon as this contract is signed." (Writer's italics).

After providing for the delivery of the milk, the contract provides, "the cows to be tuberculin tested."

The contract also contained a clause authorizing the plaintiff to terminate the contract on sixty days' notice.

The court withdrew from the jury the consideration of all questions except the amount of damages which the plaintiff might recover.

I. There is practically no dispute upon the facts in this case. It appears without conflict that the defendant first learned on February 1, 1930, that plaintiff's herd had not been tested for more than a year. It appears without dispute that on February 3, 1930, the defendant said to the plaintiff: "In view of the fact that your cows hadn't been tested since a year ago last fall, we are not going to take your milk any longer," and that at the same time the defendant said to the plaintiff: "As your customer we will take our milk for a few days and give you a chance to turn it and will use it in the pasteurizer and pasteurize it, all of it."

On February 11th, the defendant refused to furnish empty cans to the plaintiff in which to deliver the milk and refused on that day to accept any more milk from the plaintiff.

It also appears without conflict that a licensed veterinarian began examination of the plaintiff's herd on February 3rd and completed the test on February 6th and that there were then no "reactors" in the herd.

Section 3077 of the Code of 1927 is as follows:

"Purity of milk and cream. No wholesaler or retailer of milk or cream, except the producer, shall offer or expose for sale any milk or cream unless the same is produced from cows known to be free from tuberculosis, as evidenced by a certificate issued within one year by a licensed veterinarian, or unless the same shall have been pasteurized according to the established regulations of the department of agriculture."

It is undisputed that on February 3, 1930, when Jackson notified the plaintiff that the defendant elected to refuse to longer perform under the contract because of defendant's claim that plaintiff had breached the contract, that plaintiff's herd had not been tested for more than a year. It will be noted that the contract provides that the cows were to be tuberculin tested, without further specification as to how this was to be done.

Manifestly, the contract must have been made in contemplation of Section 3077 of the Code then in force, and it must be accordingly so construed.

The contract provides for the payment of fifty cents per one hundred pounds of milk by the defendant to the plaintiff, in excess of the price paid to other patrons for milk of the same butterfat test during the term of the contract.

It is fair to assume that at least one of the principal considerations for this excess of price was that the defendant might be able to advertise to the public and to its customers that it was handling milk from tuberculin tested herds.

It clearly appears from the record that very promptly after the defendant learned that the plaintiff had not complied with the law of Iowa in reference to the testing of the plaintiff's herd, the defendant very promptly elected to not further perform under the terms of the contract, because the plaintiff had breached the contract.

We think the defendant was within its rights in so doing. The mere fact that subsequent tests of the herd disclosed that the herd was then free from tuberculosis and the fact that the plaintiff had been endeavoring to secure a test prior to the 3rd day of February, 1930, is not material. The plaintiff had breached his contract in a substantial manner and this, under the facts in this case, relieved the defendant from further performance.

The mere fact that the defendant, as a matter of generosity, offered to and did take the plaintiff's supply of milk for a few days after February 3rd did not constitute a waiver of the defendant's election. It is elemental that the effect of a breach of contract by one party is to excuse performance by the other. Elliott on Contracts, Vol. 3, Sec. 2025; Wasser v. Western Land Company, 107 N.W. 160 (Minn.); Clark on Contracts (3d Ed.) 557; Goben v. Des Moines Asphalt Co., 208 Iowa 1113; Canfield Lumber Co. v. Kint Lumber Co., 148 Iowa 207; and cases cited.

Having pleaded a fulfillment of all of the terms and conditions imposed upon him by the contract, plaintiff failed in the proof. The plaintiff's alleged performance of the condition of the contract in reference to testing his herd (a point not here decided) was after the defendant had elected not to further continue the contract by reason of the plaintiff's failure to perform. This subsequent test by the plaintiff was not available as proof of plaintiff's performance of his contract. The plaintiff having failed to prove his performance of the contract, he cannot recover damages from the defendant.

It follows that the court erred in withdrawing from the jury all of the defenses of the defendant and submitting only to the jury the question of the amount of the damages to be recovered by the plaintiff. This was equivalent to a direction by the court of a verdict in favor of the plaintiff, leaving only for consideration by the jury the amount of the damages.

It follows that the cause must be, and is, — Reversed.

FAVILLE, C.J., and STEVENS, De GRAFF and WAGNER, JJ., concur.

KINDIG, ALBERT, MORLING and EVANS, JJ., dissent.