Supreme Court of Canada
Barton v. Agincourt Football Enterprises Ltd., [1982] 1 S.C.R. 666
Date: 1982-05-31
Greg Barton (Plaintiff) Appellant;
and
Agincourt Football Enterprises Limited (Defendant) Respondent.
File No.: 16107.
1981: November 10; 1982: May 31.
Present: Laskin C.J. and Dickson, Beetz, Estey and McIntyre JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Contracts—Interpretation—Termination—Football player cut from club—Contract signed with another club—Whether or not first contract terminated—Whether or not player able to collect pay pursuant to first contract on second club’s collapse.
The appeal raised issues in contract law relating to the rights and obligations of an employee under a contract of service when the employer purported to terminate that contract and the employee purported to enforce payments falling due under the contract after the purported termination.
Appellant, a football player while under contract with respondent, signed a contract with a U.S. club without respondent’s permission. At that time he had been “cut” from respondent’s club but continuted to be paid as stipulated in the contract. When the U.S. club closed operations, paying appellant less than expected under his contract with them, appellant demanded that respondent meet the payments falling due under the contract and brought action when respondent refused. It was agreed that the claim should be for the net amount due taking into account the amount received from the U.S. club, and also that the C.F.L. by‑laws did not apply to the interpretation of the contract on other issues.
Held (Laskin C.J. and Estey J. dissenting): The appeal should be dismissed.
Per Dickson, Beetz and McIntyre JJ.: Respondent’s obligation to pay the salary pursuant to the contract depended on plaintiffs being available and willing to provide the services described in the contract. Appellant’s contract with the U.S. team breached the contractual arrangement with respondent, freeing respondent of any further obligation to pay under that contract.
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Per Laskin C.J. and Estey J., dissenting: The contract was terminated by the parties’ conduct. As authorized by the contract, termination occurred when respondent cut appellant from the club and appellant accepted such termination. Appellant’s action, a claim in debt, survived because it arose under a term of the terminated contract by reason of the performance of the contract up to the date of termination by the appellant. Double recovery was not permissible. The policy which forbad a requirement of idleness to protect the status of the guaranty must at the same time forbid a claim upon the guarantor for so much of the guaranty as had been received from other sources.
APPEAL from a judgment of the Ontario Court of Appeal (1979), 1979 73 (ON CA), 108 D.L.R. (3d) 152, 27 O.R. (2d) 734, dismissing an appeal from a judgment of Goodman J. Appeal dismissed, Laskin C.J. and Estey J. dissenting.
W.V. Sasso and G. Sternberg, for the appellant.
John T. Morin and Michael F. Brown, for the respondent.
The reasons of Laskin C.J. and Estey J. were delivered by
ESTEY J. (dissenting)—This appeal raises issues in contract law relating to the rights and obligations of an employee under a contract of service when the employer purports to terminate that contract and the employee purports to enforce payments falling due under the contract after such purported termination.
The plaintiff-appellant was a professional football player and the defendant-respondent the owner and operator of a professional football team playing in the Canadian Football League in the City of Toronto. The respondent became interested in acquiring the services of the appellant in 1971 when, having played out his contract with a team in the National Football League in the United States of America, he became free to enter into a contract to play football in Canada. In due course the parties entered into such a contract. In form it consisted of four annual contracts covering the playing seasons 1971 to 1974 inclusive, the contract date in each year actually commencing on
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June 1. Counsel agreed both here and below that in these proceedings the four contracts could be treated as one and that nothing turns in law or in fact on the physical separation of the contract into four individual, seasonal contracts for the period mentioned. The four contracts will be hereafter referred to as “the contract”.
The appellant had played for the respondent under the contract in the year 1971 and through part of the 1972 season when the respondent notified the appellant that he was being “cut from the club” and that his services as a player were no longer required. I will return to the actual mechanics of this cessation of services because their significance looms large in the outcome of these proceedings. For the balance of the 1972 season and throughout the 1973 season the respondent paid to the appellant the amounts stipulated in the contract for those years although the appellant did not play for the team and only rendered some coaching and administrative services as requested on an infrequent and spasmodic basis. In the year 1974, prior to the commencement of the football season, the appellant entered into a contract with a team in Portland, Oregon, for the purpose of playing football with that team in the World Football League in the United States of America for the period from March 1974 to the end of the 1978 season. In the 1974 season the respondent was obligated to pay to the appellant under the contract (if it was then in force during the 1974 year) the sum of $55,000. Under the arrangement with the Portland organization the appellant was to receive for the 1974 year almost precisely the same amount, taking into account bonuses and deducting agent’s fees for the negotiation of the contract.
The appellant did not seek and was not granted permission from the respondent to play for the Portland team or to enter into the contract with that organization. Unhappily, as events turned out, the Portland organization ceased operations during the 1974 season and the appellant received from that source only $20,000.
Meanwhile the appellant had requested the respondent to make the 1974 payments under the contract, namely $45,000 which he would have
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received as a player in that season. The appellant did not demand an additional $10,000 payable for coaching services. The respondent refused to make any such payment with the result that the appellant brought action for the recovery of $55,000 “for damages for breach of contract” made up presumably of $45,000 for services as a player and $10,000 for coaching services. Before this Court the appellant took the position, however, that he was entitled to the net amount, being approximately $35,000.
For the purposes of this appeal counsel for both parties further agreed, in addition to the reduction of the claim to the net basis already mentioned, that the by-laws of the Canadian Football League do not apply to the interpretation of the contract or to the other issues herein arising.
The action brought by the appellant was dismissed at trial and an appeal to the Ontario Court of Appeal was likewise dismissed. It is convenient to set out at the outset the principal parts of the contract upon which the disposition of this action comes to depend.
The player agrees that during the term of this contract he will play football and will engage in activities related to football only for the Club and will play for the Club in all its Conference’s scheduled and play-off games, and Canadian Football League play-off games and any exhibition games for which the Club may arrange; and the Club, subject to the provisions hereof, agrees during such period to employ the player as a skilled football player. The player agrees during the term of this contract to report promptly for the Club’s training sessions and at the Club’s directions to participate in all practice sessions.
For the player’s services as a skilled football player during the term of this contract, and for his agreement not to play football, or engage in activities relating to football, for any other person, firm, Club or corporation during the term of this contract and for the option hereinafter set forth giving the Club the right to renew this contract and for the other undertakings of the player herein, the Club promises to pay the player the sum of $45,000 guaranteed, to be payable as follows:
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75% of said salary in weekly instalments commencing with the first and ending with the last regularly scheduled Conference game played by the Club during such season, and the balance of 25% of said sum at the end of the last scheduled Conference game, unless the Club shall, after its last scheduled Conference game have any Conference or Canadian Football League play-off games to engage in, in which event the remaining 25% shall be paid at the end of the last such play-off games.
The player represents that he is and will continue to be highly skilled in all types of football team play to play football of the calibre required by the Conference and by the Club, and agrees to perform his services hereunder to the complete satisfaction of the Club and its Head Coach. If, in the opinion of the Head Coach, the player fails at any time during the term of this contract to demonstrate sufficient skill and capacity to play football of the calibre required by the Conference or by the Club, or if, in the opinion of the Head Coach, the player’s work or conduct in the performance of this contract is unsatisfactory, or, where there exists a limit to the number permitted of a certain class of player, and in the opinion of the Head Coach, the player, being within that class, should not be included amongst the permitted number, the Club shall have the right to terminate this contract upon notice to the player. It is agreed by both parties that the Club’s Head Coach shall be the sole judge as to the competency and satisfaction of the player and his services.
Upon termination of this contract during the football season, the player shall only be entitled to receive and the Club shall only be required to pay to the player as compensation for services theretofore rendered hereunder, such portion of the total compensation for the regular season as provided in paragraph 3 hereof, as the number of the regular scheduled Conference games already played bears to the total number of Conference games scheduled for the Club for that season, and upon such termination the Club shall pay to the player the balance of such compensation as then remains owing to the player.
The player promises and agrees that during the term of this contract he will not play football or engage in activities related to football in Canada or in the United States of America for any other person, firm, Club or corporation except with the prior written con‑
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sent of the Club, and that he will not, during the term of this contract engage in any game or exhibition of baseball, basketball, hockey, wrestling, boxing, or any other sport which endangers his ability to perform his services hereunder without the prior written consent of the Club.
The player hereby represents that he has special, exceptional and unique knowledge, skill and ability as a football player, the loss of which cannot be estimated with any certainty and cannot be fairly or adequately compensated by damages, and therefore agrees that the Club shall have the right, in addition to any other rights which the Club may possess, to enjoin him by appropriate injunction proceedings against playing football or engaging in activities relating to football in Canada or the United States of America, for any person, firm, Club or corporation, and against any other breach of this contract.
In agreement with the Argonaut Football Club, the player is to receive an additional $10,000.00 for rendering service as a coach, guaranteed.
“Guaranteed” shall mean that the Club is obligated to pay the player the sums set forth in paragraphs 3, 27 and 29 under all circumstances even if the player is injured, is cut from the Club or is incapable in any way from playing or coaching football.
The parties executed at the same time as the four agreements an addendum which provides as follows:
…the undersigned agree that notwithstanding anything contained therein the agreements shall be read as follows:
(1) Paragraph 29 of the first year’s agreement and paragraph 28 of the agreements for the succeeding years shall be amended to provide that the player’s compensation as provided for in pagraph 3 of all four agreements shall not be guaranteed in the event, that the player is unable to play football as a result of injuries incurred not in the course of his employment. The balance of such compensation shall be guaranteed after and only after the player has fully recovered from such injuries.
In the event the player is unable to play football as a result of injuries incurred in the course of his employ-
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ment notwithstanding the provision of article six the player’s salary is guaranteed as defined in the said contracts.
The learned trial judge described the status of the appellant under the contract after his release in August 1972 in the following way:
After the completion of the fourth game in the month of August, 1972, he was released from the active player’s roster of the Club. This action is commonly referred to as being “cut from the club” and there is no dispute that it is this type of action which was referred to in paragraph 28 of the fourth contract which was the “guarantee” definition clause set forth above. The plaintiff states that at that time he was told he had been placed on waivers, that no other club had “picked him up” and that accordingly he was a “free agent”.
It is common ground that when the plaintiff became a “free agent” he was entitled to play football for any other team in the United States or Canada.
The learned trial judge disposed of the claim on the basis of the manner in which it was pleaded, namely the assertion by the appellant to the full $55,000 and not merely the $35,064.12 lost by reason of the collapse of the Portland team during the 1974 season. The court treated the claim not as one for damages for breach of contract but in reality as a claim for the payment on the covenant contained in the contract. He found no evidence of any agreement between the parties that the appellant would be entitled to the full contractual sum for each of the four years from 1971 to 1974 inclusive, together with any revenue from playing elsewhere under whatever circumstances without deduction from the obligation of the respondent. The trial judge found that the general manager of the respondent had maintained the view throughout the negotiations or transaction that the appellant, once becoming a free agent as he did, was entitled to sign a contract to play for any football team. The learned trial judge found in this connection that the respondent at no time endeavoured to prevent the appellant from playing for another team, but once having signed the Portland contract the appellant was not in a position to fulfill his contract with the respondent, and the respondent was thus excused from performance. The nub of
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the decision at trial is found in that part of the trial judgment where the trial judge states:
In my opinion the words “even if” in the context in which they are used in paragraph 28 are the equivalent of “including circumstances where”. If I am correct in that opinion paragraph 28 would then read with that substitution “guaranteed” shall mean that the Club is obligated to pay the player the sums set forth in paragraphs 3, 27 and 29 under all circumstances including circumstances where the player is injured, is cut from the club or is incapable in any way from playing or coaching football”. The three circumstances expressly covered are situations which might properly be characterised as non-willful circumstances in the sense that they are not situations created by a willful act on the part of the plaintiff which he knows will prevent him from fulfilling his contract with the defendant.
By applying the ejusdem generis rule of construction the trial court concluded that the obligations of the respondent under paragraph 28 did not extend to performing the contract once the appellant, by signing the Portland contract, had removed himself from a position where he could fulfill his contract with the respondent. The trial judge put it this way:
In my opinion the defendant was entitled to expect that the plaintiffs services would be available to it under the fourth contract as of June 1st, 1974, in consideration for its covenant to guarantee payment of his salary. If it did not choose to make use of his services for their own team during that year, it would have been entitled to have his services available so that the player could be traded… Although it is not certain that it would have made use of such services or have been successful in trading him during the 1974 season, it was effectively deprived of the opportunity of endeavouring to do so.
For these reasons the trial court concluded:
It constituted an anticipatory and fundamental breach of his contract with the Toronto Club which was to have commenced on June 1st, 1974 and in my opinion the defendant was entitled to and did treat the contract at an end. It was thereupon excused from performance of the covenant to pay any salary.
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The Court of Appeal adopted the reasons of Goodman J. at trial “With the exception of the reliance of the trial judge upon the ejusdem generis rule…” with respect to s. 28 of the agreement.
It would be well to sweep aside the matter of the by-laws of the Canadian Football League before turning to the operative terms of the contract. Section 7 of the contract provides that:
- The player agrees to comply with all the rules and regulations now, or which may hereafter be, adopted during the duration of this contract, by the Canadian Football League and/or the Conference and/or the Club.
The by-laws are not made a part of the agreement. The clause clearly does not mean the by‑laws would override any terms of the contract. At most it calls upon the player when performing his services under the contract to conform to League requirements. The reference in s. 7 to rules which may be adopted by the Club underlines this meaning. Furthermore the record includes only sections 4 and 8 of the League by-laws, the former relating to the procedures of notifying other members of the League when “dispensing with the services of a player”, and the latter dealing with the recording of player contracts with the League by each team member and the eligibility of team players to compete in League games. Counsel agreed before this Court that these League regulations are not relevant to the interpretation of the contractual terms before the Court, and at the most assist in matters of terminology.
The key issue, therefore, is to determine the contractual consequences of the action taken by the respondent in August 1972.
Paragraph 10 of the contract, supra, expressly gives the respondent “the right to terminate this contract”. Paragraph 11 then adds “Upon termination of this contract…” the compensation payable shall be calculated according to the pro-
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portion of games played prior to such termination to the total games scheduled for the year. Of course the terms of paragraph 11 are wholly inconsistent with those of s. 28 which require the respondent to pay “the sums set forth in paragraphs 3, 27 and 29” (the basic player and coach compensation and renewal contract compensation) “under all circumstances”. This is the broad definition given to the word “guaranteed” after it appears after each sum stipulated in the said paragraphs 3, 27 and 29. The only descriptive or qualifying terms relating to this definition follow in paragraph 28 or are found in the “addendum”, supra. Paragraph 28 adds, “even if the player is injured, is cut from the Club or is incapable in any way from playing or coaching football”. The trial judge equated the words “even if” to “including circumstances where” and concluded that the three illustrations or conditions which followed formed a class of non-willful circumstances not created by the player, and thereupon applied the ejusdem generis rule of construction concluding that the guaranty was terminated with the execution by the appellant of the Portland contract. The Court of Appeal confirmed this result although without reliance on this rule of interpretation. The addendum, supra, expressly adds one further circumstance where the guaranty would not apply, namely where “the player is unable to play football as a result of injuries incurred not in the course of his employment”. This is an express exclusion from the guaranty of a circumstance which would ordinarily be described as “non-willful”. The words “even if” carry an emphasis or an inference that underlines the sweeping character of the expression in the guaranty itself, “all circumstances”. In contrast, the expression “including circumstances where” is an illustrative phrase which lacks the demonstrative tone of the expression “even if”. In my view a closer or more appropriate synonym would be “notwithstanding that”. Either way the term is calculated to assure the player being recruited as a member of the respondent’s team that the guaranty had no limits other than what was established in the addendum.
However, this still leaves the heart of the issue untouched, that is, after the events of August 1972
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and the continuing relationship between the parties in 1973, what was the status in law of this contract of employment? The respondent pleaded in its statement of defence that the contract had been terminated pursuant to action taken under paragraph 10. The defence reads:
The Plaintiff was released by the Club in August, 1972 in accordance with the provisions of paragraph 10. He was paid the amounts owing under the contract to that date in accordance with the provisions of paragraph 11. The Club had no further obligations to the Plaintiff under the contract.
The negotiation rights with reference to the appellant passed to the Hamilton member of the League and remained there until surrendered or reassigned by Hamilton to the respondent in 1974 when the respondent had already received notice of the appellant’s demands and knowledge of the Portland contract. Significantly there is attached to the 1974 segment of the contract:
Player Greg Barton for the 74 season has been removed from the register for the following reason:… Terminated. Player waived and deleted from roster.
Taking into account oral testimony which the trial judge later found to be inadmissible, it was concluded:
At its best, I am of the opinion that the discussions between the parties related to no more than the intention that the Toronto Club would guarantee that the income the plaintiff would receive from playing football and coaching during the Canadian Football League playing season in the years 1971, 1972, 1973 and 1974 would be no less than the amounts set forth in the four contracts and that there was no express agreement that in the event that the plaintiff was “cut” from the Toronto Club’s roster, that he would be entitled to full payment from the Toronto Club in addition to any salary he might earn from playing for any other club in the Canadian Football League or National Football League.
This of course leaves unanswered the question as to whether the guaranty would reflect by reduction any amounts received for playing football in Portland. Elsewhere the court accepted the evidence on behalf of the respondent that the appellant, after
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August 1972, could have signed a contract to play for any football team. The issue therefore narrows down to the position of the parties under paragraph 28 as to the extent of the guaranty. The court summarizes these positions:
The defendant’s [respondent’s] position is however that as soon as the plaintiff signed his contract with the Portland Club, he was no longer in a position to fulfill his contract and that his action in signing such a contract amounted to a repudiation of his contract with the defendant, thereby excusing it from performance on its part.
This seems to be somewhat at odds with the endorsement attached to the 1974 contract as quoted above; as well as being at odds with the pleaded position, supra.
Equally ambivalent is the appellant. As the trial judge put it:
The plaintiff [appellant] took the position that the definition of “guarantee” in paragraph 28 is clear and all embracing and that the defendant [respondent] must pay the plaintiff under all circumstances excluding the circumstances mentioned in the addendum…
The trial judge then concluded that paragraph 28 would raise no obligation in the respondent to pay the appellant where the appellant willfully refused to provide his services or:
…where he willfully entered into a contract covenanting to provide his services to another club during the time period when he could have been required to make his services available to the Toronto Club under the fourth contract.
But this does not meet the need to resolve the clash between paragraphs 10 and 28 of the contract. If the contract was indeed terminated in August 1972 leaving a crystallized debt owing to the appellant, his conduct thereafter does nothing to alter the obligation of the respondent. If on the other hand the events of August 1972 did not terminate the contract under paragraph 10, then the respondent’s right to look to the appellant for services continues and the appellant’s conduct in 1974 becomes vital to the appellant’s continued
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entitlement under paragraph 28.
The trial judge may have been responding to this problem when he stated:
In my opinion the defendant [respondent] was entitled to expect that the plaintiffs [appellant’s] services would be available to it under the fourth contract as of June 1st, 1974, in consideration for its covenant to guarantee payment of his salary. If it did not choose to make use of his services for their own team during that year, it would have been entitled to have his services available so that the player could be traded. The plaintiff’s own evidence was that at the time he entered into the contract with the Toronto Club it was on the understanding that he could be traded. I have indicated that in my view such evidence is inadmissible in this case. If I am wrong in that conclusion and such evidence is admissible, it supports the interpretation which I have placed on the contract. If the plaintiff was available for trade purposes, the defendant would no doubt have endeavoured to obtain some payment from the other club for the playing rights to the plaintiffs services or to have obtained the services of some other player in exchange for those of the plaintiff. In my opinion the defendant if it had traded the player to some other club in the Canadian Football League would have been entitled to set-off against its salary liability to the plaintiff the amount which the other club was prepared to pay to it or to the plaintiff for his services. The defendant was entitled to the exclusive use of the plaintiff’s services for the 1974 season. Although it is not certain that it would have made use of such services or have been successful in trading him during the 1974 season, it was effectively deprived of the opportunity of endeavouring to do so.
There is no evidence of any effort by the respondent to trade the appellant. This expression is used by all participants in these proceedings and really relates to the right of the respondent under paragraph 14 of the contract to assign the contract. Following the League rules the respondent offered the appellant’s contract to all members of the League in August 1972 but all members “waived” the opportunity to acquire the services of the appellant. Neither the previous coach nor the coach in 1973-74 wished to employ the services of the appellant. In January 1973 the Hamilton member of the League, in accordance with League rules, placed the appellant on its players negotiation list. In fact, neither Hamilton nor any other
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member of the League negotiated with the appellant. On May 24, 1974 the Hamilton team removed the appellant from its negotiation list and on the same day the respondent added the appellant to its list. The trial judge observed:
I have no doubt however that the fact that the plaintiffs [appellant’s] name was placed on the Toronto Club’s list on May 24th, 1974 was precipitated by the plaintiffs letter of May 15th 1974. By that time Barrow knew that the plaintiff would not be available as a player because he had signed to play for the Portland Club. I also have no doubt that Hamilton readily transferred the plaintiff from their list as his departure for the World Football League would make it readily apparent to them that he would not soon be available as a player for them or indeed for any competing club. On the other hand it must have been readily apparent to Barrow that it might be of some importance to his Club at least to acquire the right to make use of the plaintiff’s playing services, in the event, as appeared likely from the plaintiff’s letter, that he were to insist on payment under his contract for the year 1974. Regardless of the motive however the Toronto Club by placing the plaintiffs name on its negotiation list on May 24th, 1974, became entitled to his playing services in the Canadian Football League during the 1974 season. It is true of course that at the time the plaintiff signed his contract with the Portland Club, they were not in a position to make use of his services.
The factual position of the respondent in 1974 therefore may indeed be accurately reflected in the document appended to the 1974 contract, supra, which shows a change of status in the appellant which is described as “terminated”.
Reference has been made in the judgment below and in argument here to the doctrine of ‘fundamental breach’. The execution of the Portland contract, removing as it did the capacity of the appellant to perform the contract with the respondent in 1974, was indeed fundamental to the purpose of that contract. It struck at the core of the purpose of the four year obligation to supply the appellant’s services to the respondent. This is of importance, however, only if the contract was then still in existence. It begs the continuing and only question, namely the status of the contract
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and the position of the contracting parties thereunder in 1974. In any case, the doctrine of fundamental breach was developed by the courts to determine the efficacy of an exemption clause in a contract where there occurs a breach of that contract which strikes at the very heart and purpose of the bargain. This is not the case here and that principle has no application.
It may be that the constituents of a fundamental breach and an anticipatory breach are in law the same. But again, this begs the question as to whether in 1974 the contract still existed. If it did, obviously the appellant has committed an anticipatory breach going to the root of the contract and entitling the respondent to treat the contract as at an end and to sue for damages for the breach. This of course assumes the existence of the contract. The respondent’s damages flowing directly from such a breach are, by its own documentary and oral evidence, nil.
If the contract was still alive in 1974 two other considerations arise. Is the respondent’s insistence that the appellant continue to hold himself in readiness, at least to the extent that his services were utilized in 1973, for a call on his services by the respondent, in order to preserve his entitlement to the benefits of the guaranty justified? The respondent, be it noted, has not denied the appellant’s right to play for others. Indeed, the respondent recognized he was free from 1972 onwards to do so as a free agent. The principle in Lumley v. Wagner [(1852), 1 De G.M. & G. 604], thus has no application here. Neither is there here present the element of restraint of trade. The restraint on the appellant, if there is one in the contract, would be unenforceable unless it were reasonable as between the team and the player and reasonable in the public interest as well. It can be said on the evidence here present that the respondent has no continuing ‘interest’ in the appellant’s services. The only possible interest would be either a fear of competition against him in the C.F.L. which ended with the Portland contract, or a furtive hope of a beneficial trade or assignment of the appellant’s
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contract. The player had been waived out of the League two years earlier, had not played football since that time, and was on no one’s negotiating list except Hamilton’s which had not negotiated with him, and indeed had ultimately removed him from its list without any apparent receipt of benefit from the respondent. Moreover the respondent sought not to restrain the appellant’s freedom to play but merely a release from the guaranty if he did play for another team. The doctrine of restraint of trade thus has no application here.
It may be said that the appellant was under a duty to mitigate so that he could not merely sit out the balance of the four year period in idleness and receive the benefits of the guaranty. The appellant, as the trial judge has said, is not in strict law claiming damages, but rather performance of a contract obligation or the payment of a debt which arose on the termination of the contract and under its terms. There may nonetheless be a public policy against the enforcement of such a clause in any manner so as either to encourage idleness, or to fail to enforce such a clause against the guarantor because the guarantee did not remain idle. It may be in the circumstances of this contract that the appellant, faced with the respondent’s actions in 1972 and 1973, is required only to act in a reasonable way. See Compania Naviera Marapon S/A v. Bowaters Lloyd Pulp and Paper Mills Ld., [1955] 2 Q.B. 68. The respondent can, on this view of the termination clause, claim the benefit of any action of the appellant which results in a diminution of the appellant’s loss, for example, the $20,000 received from the Portland organization, and the respondent may be entitled to this though no duty arises in the appellant to take such action. See British Westinghouse Electric and Manufacturing Company Limited v. Underground Electric Railways Company of London, Limited, [1912] A.C. 673 at p. 690. Conversely, on the sale of goods at least, where a vendor accepts the purchaser’s conduct as anticipatory repudiation, the vendor is under a duty to take reasonable steps to mitigate his loss. Here the appellant responded ambiguous-
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ly. He continued through 1972 and 1973 to hold himself available and indeed performed administrative and coaching duties occasionally, thus appearing to treat the contract as continuing. On the other hand the appellant contracted to play elsewhere without seeking the consent of the respondent as he claimed the contract had been terminated. By analogy to the rules on breach, if the appellant has not accepted the contract as being terminated under para. 10 in 1972 but treats it as continuing, there is no repudiation, no right to damages, and of course no duty to mitigate. See Shindler v. Northern Raincoat Co. Ltd., [1960] 1 W.L.R. 1038. The learned author of McGregor on Damages, 14th ed., discusses the duty to mitigate with reference to a contract for the delivery of services but where a wrongful refusal of acceptance occurs (which is not the case here) in the following way:
…in contracts involving the rendering of services and the non-acceptance of these services as the breach, although it is clear that the plaintiff must try to sell his services elsewhere, this mitigating step may not yet have become finally incorporated into the normal measure of damages. This is so both in contracts of hiring and in contracts of carriage [para. 223].
By analogy it may be argued that the same standard should apply where the services have been rightfully declined and not wrongfully rejected. Certainly the law should not, in my view, coerce a contracting party to do more than he is bound by contract to do, but it goes much further to say that the law requires idleness if the benefits of a guaranty are not to be jeopardized. It might be otherwise where the services are legitimately sought to be maintained on a stand-by basis for a fee and in circumstances which clearly show that to be the mutual understanding of the parties to the arrangement. This is not our case.
Of course if the appellant’s claim is in law for a debt due under a contract resulting from the appellant’s performance of that contract and not a
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claim in damages for breach of contract, the rules of mitigation are not applicable. White and Carter (Councils) Ltd. v. McGregor, [1962] A.C. 413; McGregor on Damages, 14th ed., para. 221.
If the appellant, faced with an offer from the Portland organization, had declined to take the rigours of that employment or the risk of injury, could the respondent have refused to pay on the guaranty, or at least to reduce the amount of the guaranty to reflect the potential receipts from the Portland organization? This brings into focus the need to determine in the disposition of this appeal the nature of the contract and the rights and obligations of the parties thereunder, the consequences in law of the actions of the respondent, and the classification in law of the claims now made by the appellant. In all this discussion it must be remembered that no one asserts a breach of contract in 1972. The appellant simply asserts that the contract was terminated and presumably now seeks to collect a debt arising under its terms at the time of termination. The respondent says it simply exercised its right to dispense with the appellant’s services and continued to perform the contract, including the guaranty, until the appellant breached the contract in March 1974.
There is, in short, an air of unreality to the respondent’s position, at least by the year 1974. There is nothing in the record to indicate any request by the respondent to the appellant to hold himself in readiness and nothing in para. 10 can be stretched into what might be called a stand-by provision after the services of the player have been dispensed with. There is nothing about para. 28 or the law surrounding it in my view which justifies an all or nothing stance on the part of the guarantor. That stance is predicated by an insistence by the guarantor on a state of idleness by the guarantee in order to maintain the status of the guaranty. Such a right has as its necessary concomittant a freezing of a wasting asset, that is the short-lived athletic talent which is the res of this contract. It
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would be a much better principle of law if the guarantor were to be accorded the benefit of the proceeds from the efforts of the guarantee either under the principles of mitigation or as the offset to a reward for idleness. In the result the guarantee would have the benefit of the gainful use of his wasting talent, the community would enjoy the benefit of the appellant’s skills, and the respondent the relief from the full burden of the guaranty.
It should be observed that in the event the essence of the action is a recovery of debt without any burden on the part of the claimant to mitigate, the Court is not required to decide on these facts what effect, if any, there would be upon the guarantor of a refusal by the appellant either to resume playing for the respondent on request or to accept an offer from another team during the four year period.
It is also clear that paras. 12 and 13 of the contract must in any case be limited, whatever may be the life of the contract, to that period wherein the respondent wishes to avail itself of the services of the appellant. Indeed the respondent has accepted this proposition throughout these proceedings. Consequently, whether or not the contract remained in existence, the attainment of “free agent status” effectively ended the operation of the prohibition in paras. 12 and 13. Furthermore, by 1974 at least, the respondent cannot be heard to claim damages in the event the appellant exercises his football talents for others as on the documentary and testimonial evidence the respondent had placed no value on those services by 1974.
In all these circumstances the Court is presented with two alternatives. Either the contract has been terminated by the conduct of the parties or the contract remains in effect with some provisions modified by reason of the conduct of the parties.
In the event the contract has not been terminated, the services of the appellant of course remain available to the respondent. The wording of para. 28 whereby the payments stipulated in the contract are guaranteed “under all circumstances” is clear and includes even the circumstance of a
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breach of contract by the appellant and at least the circumstances where the appellant has tendered his services and they have been refused by the respondent. Though the contract is in existence on this theory, given the circumstances as they existed at least by 1974, a breach in the form of the execution of the Portland contract would give rise to no damages in the respondent, either for the loss of his services or for the alleged loss of the opportunity to trade the appellant. Furthermore the appellant agrees that the contract does not entitle realization on the full guaranty, presumably because receipt of the proceeds from a breach of the contract without offset in the guaranty would render the guaranty unenforceable. In the result, if the contract has not been terminated, the appellant would, on this line of reasoning, be entitled to the face value of the guaranty less receipts from the Portland organization.
The second alternative proceeds on the assumption that there was a termination of the contract as authorized by para. 10 in August 1972 by the respondent and that such termination has been accepted as such by the appellant. Paragraph 10 is very clear: “the Club [the respondent] shall have the right to terminate this contract upon notice to the player.” Paragraph 11 states: “Upon termination of this contract during the football season…”. Following its action under para. 10 the respondent removed the appellant from the team roster and offered the appellant to other members of the League. Throughout the ensuing two years the respondent continues to regard the contract for services as terminated. Another member of the League has claimed the negotiation rights to the appellant. The respondent in 1974 reclaims these negotiation rights. This conduct is utterly inconsistent with the position now asserted by the respondent that the contract remains in effect. If there were a contract in existence it is difficult to see what negotiation rights the respondent wished to acquire. The appellant had not played for two years. He was only on the negotiation list of the respondent. No team had ever negotiated with him and he had been waived through the League according to the League rules two years earlier. The claim in debt survives in any case because it arose under a term of the terminated contract by
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reason of the performance of the contract up to the date of termination by the appellant. The appellant’s action may therefore be characterized in law as either an action in debt or an action to enforce a term of the contract. In my view, the former alternative is the correct characterization. On the theory of termination, the appellant became entitled to play for any team after August 1972. The respondent has acknowledged this throughout these proceedings and hence the contract must have ended at that time, otherwise the restrictions of paras. 12 and 13 would prohibit such action by the appellant. The appellant agrees that, in any event, be the contract terminated or not, what might be called double recovery is not permissible, presumably because the policy, which forbids a requirement of idleness to protect the status of the guaranty, must at the same time forbid a claim upon the guarantor for so much of the guaranty as has been received from other sources.
In my view the second alternative is the correct one in law. The appellant is therefore entitled to the net recovery of $35,064.12. For these reasons I would allow the appeal and order that judgment be entered in favour of the appellant in the amount of $35,064.12 together with costs throughout.
The judgment of Dickson, Beetz and McIntyre JJ. was delivered by
MCINTYRE J.—I have read the reasons for judgment of my brother Estey. They set out fully the facts in the case; include particulars of the series of contracts involved; describe the issues involved and the positions adopted by the appellant and respondent. I regret that I am unable to agree with these reasons.
In my opinion, the trial judge dealt correctly with this matter by dismissing the plaintiffs action and in holding that while the respondent was obligated to pay the salary provided for in the contract for the full term; this obligation depended upon the plaintiffs being available and willing to provide the services mentioned in the contract
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during the season of 1974. The appellant, by entering into a contract with the Portland football team and playing for that team, effectively breached the contractual arrangement he had with the respondent, and freed the respondent of any further obligation to pay salary under the contract. I observe that the Court of Appeal, while expressing reservation regarding the trial judge’s application of the ejusdem generis rule, which reservation I share, reached the same conclusion. For the reasons given by the trial judge and the Court of Appeal, I would dismiss the appeal with costs.
Appeal dismissed with costs, LASKIN C.J. and ESTEY J. dissenting.
Solicitor for the appellant: Gerald Sternberg, Toronto.
Solicitors for the respondent: Campbell, Godfrey, Lewtas, Toronto.