John v. United Advert., Inc. - 165 Colo. 193, 439 P.2d 53 (1968)

Rule:

Whether a contract is entire or severable is a matter which cannot be determined with mathematical precision, as it has been said that there is no set formula which furnishes a foolproof method for determining in a given case just which contracts are severable and which are entire. The primary objective is to ascertain the intent of the contracting parties, as such intent is manifested by not only the several terms and provisions of the contract itself, but also as such are viewed in the light of all the surrounding circumstances, including the conduct of the parties before any dispute has arisen. And the singleness or apportionability of the consideration is said to be an important factor to be considered.

Facts:

Plaintiff Dwight John, as the owner and operator of two motels located on South Broadway street in Englewood, Colorado, entered into a written contract with defendant United Advertising, Inc, whereby defendant agreed to construct, install and then maintain at its own expense for a period of three years seven outdoor display signs advertising the two motels owned and operated by the plaintiff, in return for which the plaintiff promised to pay the defendant the sum of $95 per month for three years. The plaintiff alleged that the defendant failed to erect and maintain the advertising signs as it had agreed to do and averred that as a result thereof, he suffered damages in the total sum of $10,655. Of this amount, according to the plaintiff, $10,000 represented a so-called loss of business profits, and the remaining $655 represented monies paid the seller under the contract. The trial court found that the defendant breached its obligation as to signs no. 4 and 5, but since the contract was divisible, such failure only constituted a severable breach. The trial court found that plaintiff had failed to establish by satisfactory evidence that he sustained any damage by reason of the failure of the defendant to properly install signs No. 4 and 5, as such, the plaintiff’s claim for relief was dismissed. Plaintiff challenged the decision.

Issue:

1. Was the contract in question severable in nature?
2. Did the plaintiff sufficiently establish that he sustained damage because of defendant’s breach?

Answer:

1) Yes. 2) Yes.

Conclusion:

The court's review of the record found evidence to support the trial court's determination that five signs were installed substantially in accord with the contract, but that the seller did in fact breach the contract on two remaining signs. The court found that it was error for the trial court to not consider the $680 paid to the seller to be an item of damage. The court averred that reasonable persons could well differ as to the proper inferences to be drawn from the testimony and documentary evidence which was before the trial court. In such circumstance, the court was not at liberty to overturn the trial court's determination that the contract in the instant case was a severable one.