Model Vending, Inc. v. Stanisci
74 N.J.Super. 12, 180 A.2d 393 (1962)
Rule of Law:
When the subject matter of a contract is destroyed without the promisor's fault, rendering performance impossible, damages for a prior breach of that contract are limited to losses incurred up to the date the impossibility occurred, not for the full contract term.
Facts:
- On August 15, 1958, Model Vending, Inc. and Frank Stanisci (trading as Clayton Lanes) entered into a written agreement for Model Vending to place various merchandise machines in Stanisci's bowling alley premises for a period of five years.
- The contract granted Model Vending the exclusive privilege of placing its machines for selling merchandise at Stanisci's location during the contract's existence.
- On or about July 28, 1959, Frank Stanisci closed down Model Vending's machines and began selling various items of merchandise through other methods on the premises.
- On March 24, 1961, Frank Stanisci's bowling alley premises were completely destroyed by fire.
- The bowling alley premises were never reconstructed after the fire.
- The original five-year contract period was set to continue until August 15, 1963.
Procedural Posture:
- Model Vending, Inc. (plaintiff) initiated an action for breach of contract against Frank Stanisci (defendant) in the Superior Court of New Jersey, Law Division.
- The case was tried by the court without a jury.
- After the trial, the court pronounced its findings of fact and conclusions of law, which included a finding that defendant had breached the contract on or about July 28, 1959.
- The court also made a finding of fact that defendant's bowling alley premises had been completely destroyed by fire on March 24, 1961, and had never been reconstructed.
- The remaining issues for decision by the court were whether the contract became impossible of performance by the fire and how this impossibility would affect the damages recoverable for the prior breach.
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Issue:
Does a supervening event, like the destruction of the contract's subject matter, which renders performance impossible, limit damages for a prior breach of contract to the period before the impossibility, or does the breaching party remain liable for the full term of the contract?
Opinions:
Majority - Rizzi, J.D.C.
No, a supervening event that renders performance impossible limits damages for a prior breach to the period before the impossibility occurred. The court concluded that the destruction of the bowling alley on March 24, 1961, made the contract impossible of performance from that date forward, citing the general rule that destruction of a contract's subject matter, not contemplated by the parties, discharges the promisor. Addressing the specific issue of impossibility occurring after a breach, the court relied on the weight of authority from legal scholars and the Restatement of Contracts. It noted that Williston on Contracts (§ 1759, § 1967A) suggests that if, after an anticipatory breach, supervening impossibility occurs, no substantial damages should be recovered for the period after the impossibility, and the loss should rest where chance placed it. Similarly, Restatement, Contracts (§ 457, Comment d) states that impossibility occurring after a breach (other than anticipatory repudiation) will limit recoverable damages if the impossibility would have occurred had there been no breach, using the example of an employer or employee who breaches a contract but becomes ill shortly thereafter, limiting recovery. The court distinguished a statement in Corbin on Contracts (§ 1341) as likely applying to situations where the entire performance time had expired. Finally, the court found that the destruction of the premises by fire was without the fault of Frank Stanisci, rejecting Model Vending's argument for an inference of fault. Thus, damages for Model Vending were limited to the loss of profits from the date of the breach until the date of the fire.
Analysis:
This case clarifies the application of the doctrine of impossibility of performance in scenarios where a breach of contract has already occurred. It establishes that a party who has breached a contract may still benefit from a supervening event that makes performance impossible, effectively limiting their liability for damages to the period before the impossibility. The decision provides an important precedent for measuring damages in situations where unforeseen external events prevent the completion of a contract, even if a breach has already occurred, thereby mitigating the breaching party's full liability. This principle underscores the legal system's recognition that certain risks are beyond the control of contracting parties, influencing how damages are assessed when contracts cannot be fully performed due to such events.
