## Facts

- Paul R. Spindler agreed in writing to sell Sheldon Sackett all 6,316 outstanding shares of S & S Newspapers (publisher of the *Santa Clara Journal*) for $85,000, payable in installments: $6,000 by July 10, $20,000 by July 14, and $59,000 by August 15, with 6% interest on any unpaid balance.
- Sackett paid $6,000 on time and paid $19,800 on July 21.
- On August 10, Sackett delivered a check for $59,200 for the final payment; the check was dishonored for insufficient funds and was never paid.
- Spindler obtained the minority shareholders’ shares, endorsed the certificates, and delivered all but 454 shares to Sackett’s attorneys in escrow pending final payment.
- After the dishonor, Spindler reclaimed the escrowed stock certificates on September 1.
- Sackett sought more time and gave assurances of payment; Spindler granted extensions and warned that failure to pay by specified dates would end the transaction and result in damages.
- Sackett failed to tender payment by the extended deadlines; Spindler later declined to proceed and treated the contract as ended.
- Spindler later sold stock to obtain working capital and ultimately sold the stock to a third party in 1962.
- Sackett sued for money had and received to recover payments; Spindler cross-complained for breach of contract.

## Issues

1. Whether Sackett’s failure to pay the balance of the purchase price, including tendering an NSF check and missing extended deadlines, was a material and total breach justifying Spindler’s termination and suit for damages.
2. Whether Spindler’s conduct (including reclaiming escrowed certificates and refusing to close) amounted to rescission or wrongful repudiation barring recovery.
3. What measure of damages applied to Spindler’s cross-complaint and whether the trial court’s computations were supported.
4. Whether Spindler reasonably mitigated damages.
5. Whether prejudgment interest was properly awarded.

## Decision

- The Court of Appeal affirmed the judgment.
- Sackett’s repeated nonpayment, including the dishonored final check and failure to pay within extended deadlines, constituted a material and total breach.
- Spindler was justified in treating the contract as at an end and refusing further performance.
- Sackett took nothing on his claim for money had and received.
- The damages award of $34,575.74 plus interest on Spindler’s cross-complaint was affirmed, including findings on mitigation and the award of prejudgment interest.

## Legal Principles

- A nonbreaching party may terminate (repudiate further performance) and sue for damages only if the other party’s breach is material or total; a merely partial breach does not justify termination.
- Materiality may be evaluated by considering factors such as deprivation of the expected benefit, adequacy of compensation, likelihood of cure, extent of forfeiture, and the breaching party’s good faith.
- Persistent failure to tender the core consideration (here, the purchase price), especially after an NSF check and repeated missed deadlines, can support a finding of material and total breach.
- A seller’s post-breach steps to protect the business and obtain liquidity may constitute reasonable mitigation, and do not necessarily amount to rescission.
- Prejudgment interest may be awarded when damages are sufficiently certain or capable of calculation under applicable law.

## Conclusion

The court held that the buyer’s sustained failure to pay the agreed purchase price for the stock, including tendering a dishonored check and missing extended deadlines, was a material and total breach that entitled the seller to terminate the transaction and recover damages with prejudgment interest.


Sackett v. Spindler, 248 Cal. App. 2d 220, 56 Cal. Rptr. 435 (Cal. Ct. App. 1967)