CONTRACTS - IMPOSSIBILITY - EFFECT OF TEMPORARY INABILITY TO PERFORM

On August 16, 1940, plaintiff village and defendant corporation entered into a contract under which defendant agreed to build for plaintiff an electric plant and distribution system. This contract contained two provisions that became significant in the light of the litigation that ensued: (1) a not uncommon provision for extension of time beyond the 180 days allotted for performance, in case of delay caused by the fault of the plaintiff, or by the fault of neither party, and (2) a provision for postponement of the commencement of performance until after termination favorable to plaintiff of a pending suit for declaratory judgment brought against plaintiff by a corporation claiming an electric service franchise to serve plaintiff until September, 1944. In case of termination of this suit in .a manner unfavorable to plaintiff, the construction contract with defendant was to be void. Work was never commenced on the construction contract. When in March, 1942, the plaintiff had won the franchise suit, inability to obtain preference rating certificates from the War Production Board made performance of the construction contract illegal until December, 1945. Plaintiff then brought suit for a declaratory judgment to rule that the contract was still in full force and effect and that under provision (1), above, the intervention of wartime restrictions merely suspended, but did not discharge defendant\u27s obligations under the contract. The trial court rested heavily on provision (2) above and ruled that this provision showed the intention of the parties that delay without fault for any reason beyond September, 1944 -should discharge the contract. On appeal, held affirmed. The appellate court rejected full reliance on provision (2), but used this provision as one factor pointing to a decision that the temporary impossibility arising in this case was serious enough to discharge the contract. Village of Minneota v. Fairbanks, Morse & Co., (Minn. 1948) 31 N.W. (2d) 920