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District Court of Appeal, Fourth District, California.

Lewis GUERRIERI et al., Plaintiffs and Appellants, v. Phil J. SEVERINI et al., Defendants and Respondents.*

Civ. 5641.

Decided: March 18, 1958

Wild, Christensen, Barnard & Wild, by William R. Manson, Fresno, for appellants. James Robert Nielsen, Iener W. Nielsen, and Harold V. Thompson, Fresno, for respondents.

This action for damages for breach of a contract for the purchase of 200,000 gallons of wine, less lees and shrinkage, was before this court in Guerrieri v. Severini, 132 Cal.App.2d 269, 281 P.2d 879. The judgment in favor of defendants was reversed and it was there held that there was sufficient evidence of the existence of a valid contract notwithstanding the finding of the trial court to the contrary. On a new trial the court held that plaintiffs suffered no damage by reason of the breach of the contract; that although there was a breach or repudiation of the contract by defendants on the day it was executed, there was other wine available at that time and at the same price, and that plaintiffs could have replaced it then with such wine but failed to do so.

The factual background is about the same as there related, and in the interest of brevity was will not repeat it except such portion as may bear upon the time of the alleged breach and the finding of failure to minimize damages by the purchase of other wine. It is plaintiffs' claim that by such breach and due to the increase in the price of wine, they were later required to purchase wine elsewhere at an increase of 9¢ per gallon, and their damages amounted to $18,000.

On April 6th, 7th and 8th, 1953, a freeze occurred and a few days thereafter and up to May 8th, the price of standard wines rose steadily from 35¢ to 45 and 50 cents per gallon.

The evidence does show that when Severini signed the original order set forth in detail in the reported case, he returned within one hour and informed Fritz Kyer, the broker, that he could not deliver 200,000 gallons of wine because of some difficulty with his wife when he informed her he had sold the entire gallonage; that he told Kyer she threatened a restraining order against selling it; that he, at that time or later, offered to sell and deliver 88,000 gallons of specified wine at the same price and if the other one-half was released he would then sell and deliver that one-half to plaintiff. The testimony in reference to the price to be obtained for this other one-half, in case of release, is in doubt. Severini then said Kyer told him the order had gone in for the full amount and had been accepted by plaintiffs; that plaintiffs agreed that defendant could do his own gauging of the gallonage he had on hand and that the money would be immediately available; and that Kyer agreed to submit the new offer to plaintiffs for consideration.

Apparently Kyer and Severini thereafter were endeavoring to effect a new order that would place one-half of the net gallonage first agreed upon for sale to plaintiffs. Severini estimated that amount at 88,000 gallons. On April 24, 1953, Severini had his then attorney write Kyer as follows:

‘On March 27, * * * my client, Severini Winery & Distillery Co. signed a document prepared by you calling for the sale of approximately * * * gals. of * * * Wine for the purchase price of .36¢ per gal. and that said wine was to be sold to Santa Fe Vintage Co. * * *.

‘Since the signing of this document my client has never in any manner, shape or form received an acceptance of such offer to sell, and further your attention is called to the terms as stated in said document which plainly states that the buyer was to pay cash for the entire amount immediately, which would have been on March 27, 1953. Inasmuch as the prospective buyer, nor anyone acting for it, has made a valid acceptance and further for the reason that the payment has not been paid as reflected in the offer, said offer is hereby withdrawn.’

Thereafter dealings between Kyer and Severini were had in the hope that plaintiff would accept 88,000 gallons of wine as suggested, and this offer was submitted to plaintiff Lewis Guerrieri, through the broker Kyer, by letter dated April 29, 1953. It reads in part:

‘Dear Lewis:

‘Sorry I was unable to get in touch with Severini sooner today, but he did not show up until noon and had just walked into my office when you called me.

‘Phil (Severini) tells me that the wine he offered to give you is his exact half and represents all the wine he has in the winery with the exception of lees. This is as follows: * * *.

‘This totals 88,000 Gals.

‘All this wine is ready to ship and Severini told me he would like for you to draw at least three truck loads a week until it is all out.

‘As to payment, he would rather that you sent me checks covering sixteen loads and as fast as the trucks were loaded he could bring me the receipt and collect. This would be a more simple procedure than sending the money to the bank.

‘I told Severini that I would let him have your definite answer on this sometime tomorrow morning. I did overlook mentioning that he also told me that in case he got a release from his wife on the second half that you would be given first opportunity to buy it.’

(Signed) ‘Fritz Kyer’

Several days passed and there was no answer from Guerrieri. From the testimony produced it would appear that plaintiffs conditionally accepted this new offer and had Kyer inform Severini that if Severini would furnish plaintiffs with an inventory (Form No. 702) required by the United States Government, showing this to be a full one-half of all wine defendants had on hand he would take this 88,000 gallons with the further understanding that in case of release of the other one-half he could have first refusal at the present market price. Severini refused to show or produce form No. 702, and said it was one-half of the wine on hand; that he was not showing form No. 702 to plaintiffs; and this was the ‘end of it’.

It was agreed that no money was ever paid by plaintiffs to defendants and that no wine was ever delivered to plaintiffs from defendants. In November, 1953, after the commencement of this action on June 2, 1953, Severini sold to other persons all the wine he had, consisting of 176,000 gallons plus lees and shrinkage.

The evidence shows that on or about March 27, 1953, plaintiffs and defendants did enter into a binding contract for the sale and purchase of 200,000 gallons of wine, as set forth in the agreement. The prior decision so holds and the court so found. According to Kyer, within one hour after signing it, Severini called and stated he was ‘unable to deliver’ the wine because his wife had or was going to obtain a restraining order and this information was telephoned to Guerrieri immediately. There is some confusion in the evidence as to what Severini said after Kyer told him the order had already been mailed and Guerrieri had accepted it. At the previous trial Severini said: ‘Well, if that is the way it is, there is nothing we can do about it’.

Guerrieri testified that after receiving the original order by mail Kyer called him and said Severini did not want to deliver the wine on account of wife trouble and Guerrieri told him that was the deal he signed and he (Guerrieri) ‘will hold him to it’; that things just went along like that until he received the letter of April 24th, although he knew, in the meantime, Severini and Kyer were trying to get together on something.

Upon this testimony the court found that within 24 hours after the execution of the agreement, Severini unconditionally repudiated the contract and notified plaintiffs he would not deliver the wine in accordance with the agreement, and such refusal of defendant to deliver the wine constituted a breach of the agreement. Although the evidence is not entirely satisfactory on this question, there is sufficient evidence to support the finding. It does appear that either at the time or subsequently, Severini did attempt to negotiate a new transaction or agreement whereby he would deliver one-half or 88,000 gallons at 36 cents and would agree to sell the other one-half if and when it became available to him for sale. Guerrieri did not unconditionally accept this offer but required Severini to furnish an inventory form No. 702, as required by the United States Government, showing this to be a full one-half of all wine defendant had on hand. Apparently believing the 88,000 gallons was not the full one-half of all wine defendants had on hand, Guerrieri did not accept this latter condition and accordingly there was no subsequent agreement reached on which plaintiffs could base a cause of action for its breach.

The court found plaintiffs failed to immediately tender payment of the full amount of the purchase price of the 200,000 gallons of wine. Since Severini notified plaintiff he would not deliver the wine as originally agreed upon, plaintiff was not required to make or tender payment therefor in full. Civ.Code, Sec. 1440; Guerrieri v. Severini, supra. Under the facts found the notice from Severini's attorney, dated April 24, 1955, to the effect that the offer was withdrawn for failure to pay said money and failure to accept the offer was without effect and did not constitute the first repudiation or breach of the agreement.

The court then found that at the time of defendants' refusal to deliver, which time it fixed as being ‘within 24 hours' after March 27, 1956, the date of the original contract, there was available for purchase on the open market at Fresno, assorted wines in sufficient quantities and of a like quality as that contracted for and at the identical price per gallon; that plaintiffs knew of the availability of these wines; that these wines were offered for sale to them but they unjustifiably refused to purchase the same; and that if they had purchased the wines so offered they would have suffered no damage by reason of defendant's refusal to deliver the wine under the contract. The question is the sufficiency of the evidence to support this finding.

Guerrieri testified Kyer submitted samples of Severini wine ten days before March 27th; that he had it examined and analyzed, and found it to be very good wine; that another winery had likewise submitted samples through Kyer which he had examined and it was inferior to Severini wine. When asked if Kyer did not tell him, after Severini refused to deliver his wine, that Kyer could get that amount at the same price from another winery, Guerrieri said he did not remember, but even if he did, he was not interested because he bought the Severini wine; that later (time not indicated) he tried to buy that wine and found it had been sold to someone else.

Kyer testified as a broker he had previously submitted samples of defendants' wine as well as wine from other sources to plaintiffs; that during this period and up to April 29th, there was other wine available at the same price which plaintiff could have bought to fill this order in the full amount; that 225,000 gallons of other unfinished wine was available for sale by him on March 27th, about 3 p. m., and that later that day he sold it to another party. He said Guerrieri was offered both batches of wine and he chose the Severini wine; that after Severini refused to deliver his wine, this other wine was still available to Guerrieri; that Guerrieri knew about it; that he talked to him on the telephone about it before he sold the other wine and Guerrieri said he did not want that wine, he wanted the Severini wine because he liked it, and Guerrieri did not, at that time, ask Kyer to obtain any other wine for him because he still wanted the Severini wine. It does appear that Guerrieri did endeavor later to purchase this wine but it had been sold, and commencing about April 17th, Kyer did purchase other wine for Guerrieri at the increased price indicated. It was upon this evidence that the court found plaintiff unjustifiably refused to purchase this other wine offered to him for sale, and that if he had accepted said offer he would have suffered no damage by reason of defendants' breach of the contract.

It is plaintiffs' claim that the breach of the contract by defendants was not on the date found but was an anticipatory breach and did not become actually a breach until so treated by the injured party, and that the bringing of the suit was plaintiffs' election to treat the repudiation as a breach, citing such authority as Crown Products Co. v. California Food Products Corp., 77 Cal.App.2d 543, 175 P.2d 861; and Wilton v. Clarke, 27 Cal.App.2d 1, 80 P.2d 141. It is accordingly argued that since there was no similar wine that could be purchased at the price agreed upon at this later date, the claim that no damage resulted to plaintiffs was untenable.

While the evidence on the subject is far from convincing, we conclude that there is sufficient evidence to show that, at the time defendant stated he could not deliver the wine contracted for under the agreement, plaintiffs were informed of the availability of the other wine and they chose to stand on their contract rather than purchase this other wine at the same price. Although this was an unfinished wine, as compared to defendants' finished wine, the testimony is that the difference in price would be about one cent per gallon. The unfinished wine was sold for 35¢ per gallon. The finding that this wine was of a like quality to that of defendants is somewhat lacking in evidentiary support but it does appear from the exhibits and other evidence that other standard assorted dessert wines were then selling for 35¢ a gallon or lower on the open market; that samples of the other wines were submitted to plaintiffs and when it was no longer available to them they were willing to buy it at the price listed even though they believed the quality of the Severini wine to be better. It should be further noted that plaintiffs were offered 88,000 gallons of the Severini wine at 36¢ per gallon. There was sufficient evidence to support the finding that plaintiffs had an opportunity to purchase other similar wines in the same quantity and quality at the same price; that they unjustifiably refused to purchase it, and accordingly suffered no damage.

Judgment affirmed.

GRIFFIN, Acting Presiding Justice.

MUSSELL, J., concurs. BARNARD, P. J., being disqualified, did not participate herein.

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