Taylor v. Johnston
15 Cal. 3d 130, 539 P.2d 425, 123 Cal. Rptr. 641 (1975)
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Rule of Law:
For conduct to constitute an anticipatory breach of contract, it must be a clear, positive, unequivocal refusal to perform (express repudiation) or an action that makes substantial performance impossible (implied repudiation). Conduct that merely makes performance more difficult or uncertain does not rise to the level of a repudiation.
Facts:
- In January 1965, H. B. Taylor entered into two written contracts with Elizabeth and Ellwood Johnston to have his mares, Sunday Slippers and Sandy Fork, bred by the Johnstons' stallion, Fleet Nasrullah, during the 1966 season.
- On October 4, 1965, the Johnstons sold Fleet Nasrullah to new owners and shipped him to Kentucky.
- On the same day, the Johnstons sent a letter to Taylor informing him of the sale and stating he was 'released' from his reservations for the stallion.
- After Taylor's attorney insisted on performance, the Johnstons arranged for the breeding to occur in Kentucky under the management of the new owners' agents.
- Taylor shipped his mares to Kentucky in January 1966. After the mares foaled and became ready for breeding, Taylor's agent, Frazier, attempted to schedule sessions.
- For the mare Sunday Slippers, Frazier made several unsuccessful attempts to book a breeding session in April, May, and June 1966, but was told each time that shareholders in the stallion had priority.
- For the mare Sandy Fork, Frazier secured a breeding appointment for June 14, but it was cancelled on June 13 because a shareholder exercised their priority right.
- Following these difficulties, on June 7 and June 14 respectively, Taylor instructed his agent to breed the mares to a different stallion, Chateaugay.
Procedural Posture:
- H. B. Taylor (plaintiff) sued Elizabeth and Ellwood Johnston (defendants) for breach of contract in a California trial court.
- The Johnstons filed a cross-complaint seeking payment of the stud fees.
- Following a nonjury trial, the trial court found in favor of Taylor, holding that the Johnstons had committed an anticipatory breach of the contracts.
- The trial court awarded Taylor $132,778.05 in damages and costs and entered judgment against the Johnstons on their cross-complaint.
- The Johnstons (appellants) appealed the trial court's judgment to the Supreme Court of California, with Taylor as the respondent.
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Issue:
Does a party's conduct that creates uncertainty and makes performance more difficult, but does not render performance impossible or constitute an unequivocal refusal to perform, amount to an anticipatory breach of contract?
Opinions:
Majority - Sullivan, J.
No. A party's conduct does not amount to an anticipatory breach unless it constitutes a clear, unequivocal refusal to perform or makes performance impossible. Here, the defendants' initial letter constituted a repudiation, but it was nullified when they retracted it by arranging for performance in Kentucky, which the plaintiff accepted by shipping his mares. The subsequent difficulties in scheduling the breeding, which gave priority to shareholders, made performance more difficult and cast doubt on its eventual accomplishment, but it did not render performance impossible nor was it an express refusal to perform. Since performance was still possible within the contract period, the defendants' conduct did not, as a matter of law, constitute an anticipatory breach.
Analysis:
This case clarifies the high threshold required to establish an anticipatory repudiation of a contract. It distinguishes between actions that merely frustrate or complicate performance and those that constitute a definitive refusal or create an actual impossibility. The decision reinforces that a party cannot declare a contract breached simply because performance has become uncertain or inconvenient; the repudiation must be absolute. This protects promisors from premature breach claims and requires non-breaching parties to wait until performance is actually due if the other party's conduct is ambiguous.
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