Seale et al. v. Bates et al.
359 P.2d 356 (1961)
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Rule of Law:
A party to a personal service contract who accepts performance from an assignee waives the right to rescind the contract based on the non-consensual assignment. Subsequent dissatisfaction with the assignee's performance will only justify rescission if it constitutes a substantial breach of the contract's express or implied terms, not for minor inconveniences.
Facts:
- Plaintiffs, the Seales and Hanscome, entered into contracts with Bates Dance Studio, Inc. for a large number of prepaid dance lessons.
- The contracts contained a clause stating, 'THIS AGREEMENT CANNOT BE CANCELLED' and that failure to take lessons did not relieve the buyer of their payment obligations.
- Bates Dance Studio informed the plaintiffs that their remaining lessons would be provided by a different studio, Dale Dance Studio, due to an assignment of their contracts.
- Plaintiffs proceeded to take lessons at Dale Dance Studio following the assignment.
- While taking lessons at Dale Dance Studio, plaintiffs became dissatisfied with the conditions, including smaller rooms, scheduling difficulties, and not receiving preferred or opposite-sex instructors.
- After taking several lessons at Dale, the plaintiffs stopped attending and demanded a full refund from Bates Dance Studio for the unused lessons.
- Bates informed them that his studio was closed and he did not have the money to provide a refund.
Procedural Posture:
- The Seales and Hanscome (plaintiffs) filed an action in the trial court against John Bates, Bates Dance Studio, Inc., and Dance Studio of Denver, Inc. (defendants).
- The plaintiffs sought to recover the full amount they had paid for dance instruction contracts.
- The case was tried to the court without a jury.
- At the close of the plaintiffs' case, the trial court granted the defendants' motion to dismiss the claims.
- The plaintiffs (plaintiffs in error) appealed the trial court's dismissal to this court.
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Issue:
Does a party who accepts performance from a third-party assignee of a non-assignable personal service contract thereby waive their right to rescind the contract due to the assignment itself?
Opinions:
Majority - Mr. Justice Doyle
Yes, a party waives the right to rescind a non-assignable personal service contract by accepting performance from the assignee. While the contract for dance lessons was personal in nature and non-assignable without consent, the plaintiffs' conduct demonstrated acceptance of the assignment. The plaintiffs did not object to the assignment when it occurred; instead, they proceeded to take lessons from the assignee, Dale Dance Studio. This conduct is inconsistent with a later claim for rescission based on the assignment itself, as it constitutes a waiver of that breach. The subsequent complaints about the quality of instruction at Dale—such as crowded rooms, instructor assignments, and scheduling issues—were not substantial breaches of the contract's terms, which did not guarantee specific conditions or instructors. Given the contract's explicit non-cancellable clause, such inconsequential variations in performance are insufficient grounds for rescission.
Analysis:
This case illustrates the principle of waiver by conduct in contract law. It establishes that a party's right to rescind a contract due to a breach, such as an improper assignment of a personal service contract, is not absolute and can be forfeited if the non-breaching party's actions are inconsistent with an intent to rescind. The decision reinforces the high bar for the remedy of rescission, limiting it to material breaches that defeat the object of the contract. It signals to future litigants that they must promptly and unequivocally reject a breach if they wish to preserve their right to rescind; accepting benefits under the modified arrangement will likely be interpreted as a waiver of the original breach.
