210 Conn. 705 | Conn. | 1989
The principal issue in this appeal is whether the doctrine of commercial impracticability excuses a developer from submitting construction plans when he discovers that necessary financing has become unavailable. The plaintiffs, Timothy E. Dills and the Neecon Corporation, sued the defendants, the town of Enfield (town) and the Enfield development agency (agency), to recover a $100,000 deposit Dills had paid the agency under an option and contract for sale. The trial court referred the case to Attorney J. Read Murphy, a state trial referee appointed pursuant to General Statutes § 52-434 (a) (4). Following a hearing and the parties’ submission of briefs, the referee reported his findings of fact and recommended that judgment enter for the plaintiffs. The trial court rejected the referee’s recommendation, instead rendering judgment for the defendants. The plaintiff Neecon Corporation appealed to the Appellate Court and we transferred the case here pursuant to Practice Book § 4023. We find no error.
The relevant facts reported by the referee, accepted by the trial court and supported by the record are as
Under the terms of the contract, the development agency agreed to convey the property to the developer sixty days after the fulfillment of two conditions: (1) the submission and approval of construction plans in accordance with section 301 of the contract;
The reason Dills failed to submit construction plans was that, despite diligent efforts, he was unable to obtain mortgage financing. Thereafter, both parties attempted, with proper notification, to invoke the contract’s termination clauses. On December 19, 1974, the agency, having been informed by Dills of his financial difficulties, voted to terminate the agreement pursuant to section 703 (b) of the contract of sale and to retain the $100,000 deposit as liquidated damages.
In the referee’s view, although Dills had never submitted anything more than “preliminary plans,” the fact that he could not obtain financing had become evident and “[t]he costly rendition of detailed drawings and specifications which were part of the Construction Plans thus became a useless act.” He concluded, therefore, that “[t]he duty of [Dills] to provide full Construction Plans by December, 1974 was discharged by supervening impracticability.” Accordingly, he recommended that the plaintiffs recover their $100,000 deposit.
After unsuccessful efforts to persuade the referee to make material changes in his report, the defendants moved the trial court, pursuant to Practice Book § 440, to reject the report and refer the case to another referee for a new trial, or to revoke the reference and leave the case to be disposed of in court. Alternatively, the defendants took exception in the trial court to the referee’s report and findings of fact and moved the court, pursuant to Practice Book § 439, to grant the corrections they had proposed in their motion to correct and to strike the corrections granted at the plaintiff’s request.
On July 14, 1988, the trial court issued its decision rejecting the referee’s recommendation that judgment enter for the plaintiffs. The court accepted the referee’s findings that the plans submitted by Dills were preliminary plans but not construction plans as defined by
After the trial court denied the plaintiffs’ motion for reconsideration,
I
In its procedural attack on the trial court’s judgment, the plaintiff proceeds from the premise that reference of a case to an attorney trial referee necessarily limits the subsequent authority of the trial court to address issues of law. According to the plaintiff, the issuance of a referee’s report deprives the court of authority to render any judgment except that recommended by the referee. The plaintiff maintains that, if the court, disagreeing with the referee, decides to reject the report, the court must refer the case for a new trial either before a new referee or before another trial judge. We disagree.
This court discussed the relationship between attorney trial referees and trial court judges in Seal Audio, Inc. v. Bozak, Inc., 199 Conn. 496, 508 A.2d 415 (1986), in which we upheld the constitutionality of General Statutes § 52-434 (a) (4), the statute authorizing the chief justice to appoint such referees.
Our holding in Seal Audio, Inc., necessarily implies that the trial court has the power to render whatever judgment appropriately follows, as a matter of law, from the facts found by the attorney trial referee. The nondelegable judicial duty to render judgments is not limited to endorsement of the decision recommended by the referee. The trial court’s unlimited authority in this regard is underscored by the first sentence of Practice Book § 443, which provides, without qualification: “The court shall render such judgment as the law requires upon the facts in the report as it may be corrected.” (Emphasis added.) Although the remainder of Practice Book § 443 contemplates the possibility of further proceedings before a referee or a court, we construe that direction to apply only when a trial court discovers material errors in the referee’s factual findings.
We therefore conclude that the trial court had the inherent authority, even without a request for judgment by the defendants, to render whatever judgment was appropriate in light of the facts found by the attorney trial referee. There was no procedural impediment to the trial court’s exercise of this jurisdiction.
II
Even though the trial court had jurisdiction to render an appropriate judgment, the outstanding unre
A
The plaintiff claims that the trial court improperly exercised the role of factfinder by concluding that: (1) the parties had “bargained for” the two contract provisions at issue herein (the provisions for submission of construction plans and for financing); and (2) the contract provisions were clear and unambiguous.
The plaintiff argues that the trial court improperly found facts about the bargaining process that led to the contract in this case. The trial court did recount the history of the transaction, and noted the defend
The plaintiff also contends that the trial court’s statement that the “contract provisions are clear and unambiguous” in effect rejects the referee’s finding that they were indeed ambiguous. The plaintiff contends that the referee’s findings that section 301 called for a two-step procedure (preliminary plans followed by full construction plans within 210 days) and that zoning approval led the developer to the next two steps (arranging financing and preparing detailed drawings and specifications sufficient to build the building) amounted to a finding of ambiguity. We disagree.
Examination of the reason given in the referee’s report for discharging the plaintiffs of their contractual obligation demonstrates that the trial court read
B
Finally we must decide whether the trial court erred as a matter of law in rejecting the referee’s determination, endorsed by the plaintiff on appeal, that the impracticability doctrine excused Dills’ failure to deliver construction plans to the agency. The plaintiff contends that Dills’ inability to obtain such financing made submitting the construction plans a “futile” and “useless act,” and therefore the doctrine of supervening imprac
The impracticability
Although courts in recent years have liberalized the requirements for such an excuse; see G. Gilmore, The Death of Contract (1972) pp. 80-81; H. Berman, “Excuse for Nonperformance in Light of Contract Practices in International Trade,” 63 Colum. L. Rev. 1413, 1414 (1963); only in the most exceptional circumstances have courts concluded that a duty is discharged because additional financial burdens make performance less practical than initially contemplated. See, e.g., Neal-Cooper
Furthermore, the event upon which the obligor relies to excuse his performance cannot be an event that the parties foresaw at the time of the contract. We have previously held that “[t]he regular enforcement of conditions is . . . subject to the competing but equally well established principle that the occurrence of a condition may be excused in the event of impracticability
In this case the contingency upon which fulfilling the contract allegedly depended was Dills’ obtaining the requisite financing. We cannot conclude, however, that Dills’ failure to obtain financing was “an event the nonoccurrence of which was a basic assumption on which the contract was made.” Indeed, section 702 (b) of the contract of sale demonstrates that the parties expressly contemplated that Dills might encounter financial
This case, like virtually every case involving discharge from an obligation to perform, concerns the issue of which party bears the loss resulting from an event that renders performance by one party uneconomical. See R. Posner, Economic Analysis of Law (3d Ed. 1986) pp. 93-94; R. Posner & A. Rosenfield, “Impossibility and Related Doctrines in Contract Law: An Economic Analysis,” 6 J. Legal Stud. 83, 86-87 (1977). “Determining whether the non-occurrence of a particular event was or was not a basic assumption involves a judgment as to which party assumed the risk of its occurrence .... In making such determinations, a court will look at all circumstances, including the terms of the contract.” 2 Restatement (Second), Contracts, c. 11, introductory note. “Since impossibility and related doctrines are devices for shifting risk in accordance with the parties’ presumed intentions, which are to minimize the costs of contract performance, one of which is the disutility created by risk, they have no place when the contract explicitly assigns a particular risk to one party or the other.” Northern Indiana Public Service Co. v. Carbon County Coal Co., 799 F.2d 265, 278 (7th Cir. 1986); see also Wasserman Theatrical Enterprise, Inc. v. Harris, 137 Conn. 371, 374-75, 77 A.2d 329 (1950). Where, as in this case, sophisticated contracting parties have negotiated termination pro
There is no error.
In this opinion the other justices concurred.
Section 301 of the contract of sale provided: “plans for construction. Plans and specifications with respect to the Development of the Property and construction thereon shall be in conformity with the Development Plan, the Agreement, and all applicable State and local laws and regulations. As promptly as possible after the date of the Agreement, and, in any event, no later than the time specified therefor in Paragraph (a), Section 4 of Part I hereof, the Developer shall submit to the Agency, for approval by the Agency, plans, drawings, specifications, and related documents, and the proposed construction schedule (which plans, drawings, specifications, related documents, and progress schedule, together with any and all changes therein that may hereafter be made and submitted to the Agency as herein provided, are, except as otherwise clearly indicated by the context, hereinafter called ‘Construction Plans’) with respect to the Development to be constructed by the Developer on the Property, in sufficient completeness and detail to show that such improvements and construction thereof will be in accordance with the Development Plan and the Agreement. The Agency shall, if the Construction Plans originally submitted conform to the provisions of the Development Plan and the Agreement, approve in writting such Construction Plans and no further filing by the Developer or approval by the Agency thereof shall be required except with respect to any material change. Such construction plans shall, in any event, be deemed approved unless rejection thereof in writing by the Agency, in whole or in part, setting forth in detail the reasons therefor, shall be made within thirty (30) days after the date of their receipt by the Agency. If the Agency so rejects the Construction Plans in whole or in part as not being in con
Section 304 of the contract of sale provided: “The submission of Construction Plans and their approval by the Agency as provided in Section 301 hereof, and the submission of evidence of equity capital and commitments for mortgage financing as provided in Section 303 hereof are conditions precedent to the obligation of the Agency to convey the Property to the Developer.”
Section 702 of the contract of sale provided in relevant part: “In the event that . . . (b) the Developer shall, after preparation of Construction Plans satisfactory to the Agency, furnish evidence satisfactory to the Agency that it has been unable, after and despite diligent effort for a period of sixty (60) days after approval by the Agency of the Construction Plans, to obtain mortgage financing for the construction of the Development . . . then the Agreement shall, at the option of the Developer, be terminated by written notice thereof to the Agency, and any deposit paid by the Developer be returned to it . . . .”
Section 703 of the contract of sale provided in relevant part: “In the event that . . . (b) the Developer does not submit Construction Plans as
Section 303 of the contract of sale provided that “|a]s promptly as possible after approval by the Agency of the Construction Plans . . . the Developer shall submit to the Agency evidence satisfactory to the Agency that the Developer has the equity capital and commitments for mortgage financing necessary for construction of the Development.” (Emphasis added.)
Although the contract makes no mention of “preliminary plans,” the plaintiff claims that the agency required such plans to gain zoning approval, which Dills received. The defendants have not disputed this representation and the referee stated that that section contemplated such “preliminary plans.”
By letter dated December 26,1974, the agency gave Dills notice of this action.
Section 702 (b) of the contract allowed the developer sixty days to obtain mortgage financing unless the agency requested that he extend his efforts for another sixty days. The agency had made no such request.
On July 22, 1988, the plaintiff moved the court to set aside, reopen, reconsider or modify the judgment rendered, claiming that the court had no authority to render judgment for the defendants and that it had found certain facts not found by the referee or rejected by him. The trial court denied the plaintiff’s motion, asserting that it did have the authority to render judgment for the defendants, that it had “accepted the findings and applied the law it thought was correct to those findings” and that “based on [the referee’s] findings,” the court was permitted to render judgment for the defendant.
General Statutes § 52-434 (a) (4) provides in relevant part: “[T]he chief justice may appoint, from qualified members of the bar of the state, who are electors and residents of this state, as many state referees as he may from time to time deem advisable or necessary.”
Practice Book § 443 provides: “The court shall render such judgment as the law requires upon the facts in the report as it may be corrected. If the court finds that the committee has materially erred in his rulings or that by reason of material corrections in his findings the basis of the report is subverted or that there are other sufficient reasons why the report should not be accepted, the court shall reject the report and refer the matter to the same or another committee for a new trial or revoke the reference and leave the case to be disposed of in court.”
In oral argument before this court the plaintiff also contended that the trial court exceeded its authority when it stated that certain town officials had expressed concern that Dills would not come through with the plans and when it stated that Dills had determined that financing was unavailable because the climate for this kind of project had changed. Our review of the record and the transcript of the plaintiffs postjudgment motion reveals that it did not bring these claims to the attention of the trial court, and therefore we do not review them. Practice Book § 4185.
In his Rulings on Motions to Reconsider Rulings on Evidence, the referee stated: “I do not find that the Agency entered into the Agreement on the basis of a representation of $250,000 of costs to prepare Construction Plans. Plaintiffs costs may not have risen to this amount, but he certainly incurred costs (some $73,000) and put the deposit at risk.”
The referee stated in his memorandum: “Section 303, Part II, requires the Developer to submit to the Agency ‘as promptly as possible after approval by the Agency of the Construction Plans . . .’ evidence that it had mortgage financing necessary for construction.”
See footnotes 3 and 4, supra.
The referee stated flatly: “The duty of the plaintiff to provide full Construction Plans by December, 1974 was discharged by supervening impracticability.” We disagree with the plaintiffs characterization of the referee’s report as including a central finding of ambiguity to which the conclusion of impracticability was merely ancillary.
The doctrine of “impossibility” has come to include “physical impossibility,” “frustration of purpose” and “impracticability” because of contingencies rendering performance more costly. See 6 A. Corbin, Contracts (1962) § 1325; 16 S. Williston, Contracts (3d Ed. Jaeger 1978) § 1932; G. Gilmore, The Death of Contract (1972) pp. 80-82. This case concerns only the last of these.
General Statutes § 42a-2-615 (a) provides in pertinent part: “Delay in delivery or nondelivery in whole or in part by a seller . . . is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoeeurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.” (Emphasis added.) While the instant case does not concern the sale of goods, and therefore the Uniform Commercial Code does not apply, § 2-615 has been adopted by the Restatement and “promises to have a substantial influence on the law of contract generally . . . . ” E. Farnsworth, Contracts (1982) § 9.6, p. 677.
The Restatement (Second) of Contracts § 261 provides: “Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.” (Emphasis added.)
Significantly, the defendants never conceded that the promised plans would have been of no use to them. Thus, it is far from certain that submitting the plans would have been a “futile act” from the defendants’ point of view.