Link v. State by & Through Dept. of Fish & Game
180 Mont. 469, 1979 Mont. LEXIS 748, 591 P.2d 214 (1979)
Rule of Law:
A party to a long-term contract is generally bound to perform its maintenance and operational duties, even in the face of unforeseen expenses or difficulties, unless the hardship is so extreme as to be outside any reasonable contemplation of the parties, and specific performance is an appropriate remedy when monetary damages for breach are speculative and inadequate.
Facts:
- On June 15, 1946, the Montana State Park Commission (later the Fish and Game Commission) and Henry A. Link, John G. Link, Jr., Elmer F. Link, and Louis W. Link, doing business as Link Bros. (concessionaires), entered an agreement for concessionaires to operate concessions at Lewis and Clark Caverns State Park and construct certain permanent improvements, including a mountain railroad.
- From 1947 to 1950, the concessionaires constructed and operated a mountain railroad system, which transported visitors between the concession area and the cavern entrances using a jeep-pulled car on tracks and a hoist/tram system.
- On March 30, 1950, the Park Commission and concessionaires signed a supplemental agreement whereby the Commission agreed to take over the operation and maintenance of the mountain railroad at its own expense, recognizing the concessionaires' equity by paying a percentage of the railroad fares collected.
- In 1970, the concessionaires exercised their option to renew the amended agreement for an additional 25 years.
- In 1973, a large gear broke in the cable car hoist, causing the tramway portion of the system to close, and the Commission did not replace it.
- From 1973 to 1975, the Commission made repairs to other portions of the railroad.
- In 1976, the Commission refused to spend more money on the mountain railroad, discontinued its use, removed the track, and constructed a gravel pathway from the concession area to the cavern entrance for visitors.
- The Commission (Department) stated its intent not to perform its contractual obligations to maintain and operate the mountain railroad, tram, and hoist.
Procedural Posture:
- The Montana Fish and Game Commission (successor to Park Commission, herein 'Commission') sued Link Bros. (concessionaires, herein 'Links') in the District Court of the First Judicial District, Lewis and Clark County, alleging breach of contract and seeking damages and specific performance.
- Links counterclaimed, alleging default on a contract condition and seeking termination of the contract.
- On November 4, 1976, the District Court issued a partial summary judgment, finding Links (defendants) in breach of contract.
- On October 26, 1977, the District Court issued a final summary judgment, ordering specific performance of the contract against Links.
- Links appealed the partial summary judgment of November 4, 1976, and the final summary judgment of October 26, 1977, to the Montana Supreme Court (Links are appellants, Commission is appellee).
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Issue:
Does a state commission breach a long-term contract by discontinuing the operation and maintenance of an agreed-upon facility due to unforeseen costs and difficulties, and is specific performance an appropriate remedy when damages for such a breach are speculative and inadequate?
Opinions:
Majority - Jack D. Shanstrom, District Judge
Yes, a state commission breaches a long-term contract by discontinuing the operation and maintenance of an agreed-upon facility due to unforeseen costs and difficulties, and specific performance is an appropriate remedy when damages for such a breach are speculative and inadequate. The Court affirmed the District Court's partial and final summary judgments. The Court found that the contract was fully supported by valuable consideration, as the concessionaires released their contractual right to operate the railroad and their equity in its business in exchange for payments from the State. This issue, along with the public policy argument against charging fares for an inoperable railroad, was barred by the doctrine of res judicata, having been previously litigated and decided in Cause No. 35029, an earlier case between the same parties. The Court interpreted the contractual obligation to 'maintain' the mountain railroad to mean preserving or keeping it in an existing state or condition, encompassing acts of repair and other acts to prevent decline, and including the idea of keeping in repair, and even replacement if necessary. The contractual provision for payments to concessionaires even when the railroad was shut down for repairs, or for reasons beyond the Commission's control, implied a duty to repair. The Court determined that the Commission's refusal to repair or replace the system was due to costs, not reasons beyond their control, thereby constituting a breach of duty. The Court upheld the order of specific performance, concluding that monetary damages would be too speculative and inadequate. The loss of future business due to the absence of the mountain railroad made it impossible to establish a reasonable damage figure. Citing Portland Section of Council of Jewish Women v. Sisters of Charity of Providence in Oregon, the Court rejected the Commission's argument that specific performance was unduly harsh due to unexpected expenses. The Court held that unexpected difficulty or expense does not excuse performance unless the hardship is so extreme as to be outside any reasonable contemplation of the parties, and the unforeseen hazard should have been guarded against. Inflation and evolving costs were considered foreseeable in a long-term agreement. The Court found that the District Court, sitting in equity, had the power to compel specific performance to achieve complete justice between the parties, especially given the Commission's stated intent not to perform. The only modification was to grant the State two years to complete performance.
Analysis:
This case significantly reinforces the principle of contractual sanctity, particularly for long-term agreements, by establishing a high bar for parties seeking to avoid obligations due to increased costs or unforeseen difficulties. It clarifies that such hardships must be extreme and unforeseeable at the time of contracting to excuse performance. Furthermore, the decision strongly affirms specific performance as a suitable equitable remedy when monetary damages are too speculative or inadequate to provide complete relief, especially for unique contractual undertakings. This precedent discourages strategic non-performance and places a significant burden on contracting parties to anticipate potential future challenges in their long-term commitments.
