Carroll-Porter Boiler & Tank Co. v. Columbus Mach. Co.

| 3rd Cir. | May 5, 1893

DALLAS, Circuit Judge.

The defendants sold to the plaintiffs a machine for rolling and bending sheets of iron. The letter which embodied the contract of sale contained this language:

“This machine will have a capacity of handing a sheet 5-10 inches thick, and full width, to a sheet 1% inches thick and 6' wide. Will roll to a dia. of 24 feet on light stock. The machine is guarantied first-class, as is also materials and workmanship.”

The machine was delivered, and this action was brought for recovery of the contract price. The case turned upon the defense that the machine was not of the warranted capacity, and that damages had resulted, which were claimed by way of set-off. The only matter for consideration here is the rule of damages, and that subject is presented by four assignments of error to the rejection of as many separate offers of evidence. If the measure generally applicable where a warranty such as this has been broken were appropriate to the circumstances of this case, there could be no doubt of the correctness of all the rulings complained of; for it is well settled that ordinarily the sum recoverable ii the difference between the price contracted to be paid for the article as warranted, and the market price of like articles at the time of the breach. Where, however, as in the present case, the article is one which could not be bought in the market, that standard cannot be resorted to; and some other, which shall be fairly compensatory to the vendee, and not unjust to the vendor, must, of necessity, be adopted.

By the first offer it was proposed to show the loss, by reason of the breach of warranty, of an actual contract of the plaintiffs with a third person, and the difference between what it would have cost the plaintiffs to execute that contract, and the price agreed to be paid them for doing so. The objection which was and is interposed to this offer is that it assumed that loss of profits is a subject of damage. We agree that this assumption was involved, but not that it rendered the offer inadmissible. Railroad Co. v. Howard, 13 How. 307" court="SCOTUS" date_filed="1852-05-18" href="https://app.midpage.ai/document/philadelphia-wilmington--baltimore-railroad-v-howard-86747?utm_source=webapp" opinion_id="86747">13 How. 307; U. S. v. Behan, 110 U.S. 338" court="SCOTUS" date_filed="1884-02-04" href="https://app.midpage.ai/document/united-states-v-behan-91040?utm_source=webapp" opinion_id="91040">110 U. S. 338, 4 Sup. Ct. Rep. 81. It is a mistake to suppose that, where a vendee is unable to supply himself in the market’, he is wholly debarred from showing in any way such damages as he may actually have sustained as a natural and proximate consequence of the vendor’s failure to deliver at the time, or of the quality, agreed, or, as the same rule is sometimes expressed, such damages as.the vendee has in fact suffered, and which may reasonably be presumed to have been contemplated by the vendor when the contract was made. Where an article is purchased which enters into the product of the vendee’s manufacture, and by reason of the vendor’s failure to deliver the vendee is obliged to substitute an inferior article, the case presented is substantially the same as if the inferior article had been wrongfully delivered by tíie vendor; and such a case wiui McHose v. Fulmer, 73 Fa. St. 335, In which, the supreme court of Pennsylvania. held that the vendee was entitled to compensation for the loss of a contract for the sale of Ms product, which had resulted from the use of the inferior article in Its composition. The article there in question was not purchasable in fhe market, and the court, per Sliarswood, J., said:

•'la sucli ;¡. caso tlio tree memiare is tlio actual Josa which the vención sustains hi Ms own manufacturo by having to uso an inferior article, or not receiving tho advance on Ilia contract price upon any contracts which lie had Mmsi'l)' made in reliance upon the JTiUUlinoiit oí the contract by the vendor.’'

There is no difference in principle between that case and the present one. Tliere the article purchased was for use as an ingredient in ¿lie m?rau fact are of the product which. was fhe subject of the eon tract of which the Tendee was deprived. Here ike article involved war fhe meofcaniuni relied upon for the construction of the thing skid, and by reason of the insufficiency of that, mechanism the performance by the vendees oí then* dependent contra (it war. rendered wholly impossible. The result in each case was ike sarnie, • — a contract lost to the vendees by reason of the default of the vendors. The defendanls were aware of the fact that a. machine such a" th",? bad linderhikiw) to supply could no! be procured in the narked That the ‘plaintiffs, who purchased this one for use in tlmir business, would ?uake contracts involving its operation, ivas a contingency which ike defendants must have antieijiated; and fliar the Joss of such coni racks would result from broach of die warranty was a consequence so direct and natura] that they rou&fc Too presumed to ho re contemplated it. This is the view of the matter which was taken by ike court which decided ike very similar case of Mellóse y. Fulmer, and we think it is the only reasonable one. The latent of the law is to award such damages sis will compénsate the injured party for the injury sustained; smd If these plaintiffs could have obtained another machine with which to fulfil] their contracts, that intent might have been accomplished in Oils instance by applying the ordinary measure of damages; but, as dial measure was inapplicable, they were entitled to the subsfctiMien of an appropriate one, and that which they set up was just and reasonable, and precisely adapted to the special fads of the particular case. They had lost a contract, and they claimed the difference between what if would have cost them to fulfill it, and what they would have received If they had not been prevented from doing so; and “nothin?; short of this will do justice, because nothing short, of if will give the plaintiffs the benefits they could have enjoyed if the?r had not been deprived of their rights.” To the list of authorities furnished by Mr. Justice Bradley in. II. S. v. Behan, supra, there may be added, as also pertinent to the general subject, Borrieu v. Hutchinson, 18 C. B. (N. S.) 445; Hydraulic Co. v. McHaffle, 4 Q. B. Div. 670; Hinckley v. Steel Co., 121 U.S. 264" court="SCOTUS" date_filed="1887-04-18" href="https://app.midpage.ai/document/hinckley-v-pittsburgh-bessemer-steel-co-91920?utm_source=webapp" opinion_id="91920">121 U. S. 264, 7 Sup. Ct. Rep. 875; White v. Miller, 71 N.Y. 118" court="NY" date_filed="1877-11-13" href="https://app.midpage.ai/document/white-v--miller-3605643?utm_source=webapp" opinion_id="3605643">71 N. Y. 118; Wakeman v. Manufacturing Co., 101 N. Y. 205, 4 N. E. Rep. 264; Beeman v. Banta, 118 N.Y. 538" court="NY" date_filed="1890-02-25" href="https://app.midpage.ai/document/beeman-v--banta-3582177?utm_source=webapp" opinion_id="3582177">118 N. Y. 538, 23 N. Y. Rep. 887; Bank v. Reese, 26 Pa. St 143; and Culin v. Glass Works, 108 Pa. St. 220.

The principles which have been discussed with especial reference to the first offer, are also applicable to the second and third offers; for by each of them, as by the preceding one, it was proposed to show that an actual contract had been lost to the plaintiffs because of the defectiveness of the machine. But the method indicated for the ascertainment of the amount of the resultant damage was not the same. The claim asserted by the second and third offers was for the difference, in each instance, between what it would have cost the plaintiffs to do or to complete the work required by the dependent contract if the machine had conformed to warranty, and what they were compelled' to pay, and did pay, to others for doing or completing that work. Assuming, in accordance with what ha3 already been said, that the subject of damage was an admissible one, the measure suggested was certainly correct. For performance of the plaintiffs’ contract the use of a sufficient machine was essential. They were therefore compelled either to abandon their contract, or to acquire the use of a machine by some means. It not being possible to purchase, they would have been justified in hiring. But as they could not, in either way, bring a machine to the work, they were compelled to take the work to a machine; and they now ask allowance, not for the entire sum which they had to pay, hut only the difference between that sum, and what it would have cost them to do the work themselves. This, practically, amounts to a claim for money paid for hire of a machine, and for the profit which, presumably, was charged by those who did the work; but the defendants have no right to object to any part of this disbursement, for it was all rendered necessary by their breach of contract.

The fourth offer differed materially from the others. By it evidence was offered to show, not actual contracts made in reliance upon the warranty, but expenditures made for advertising, and losses incurred, in the general or miscellaneous business of the plaintiffs. The relation of such expenditures and losses to the breach is too remote, vague, and uncertain to admit of their allowance. As was said in White v. Miller, 71 N.Y. 118" court="NY" date_filed="1877-11-13" href="https://app.midpage.ai/document/white-v--miller-3605643?utm_source=webapp" opinion_id="3605643">71 N. Y. 118-133:

“Gains prevented, as well as losses sustained, may be recovered for a breach, of contract, where they can be rendered reasonably certain by evidence, and have naturally resulted from the breach. But mere contingent or speculative gains or losses, with respect to which no means exist of ascertaining with any certainty whether they would have resulted or not, are rejected, and the jury will not be allowed to consider them.”

This distinction is referred to in many other cases, and especially in Railroad Co. v. Howard, 13 How. 307" court="SCOTUS" date_filed="1852-05-18" href="https://app.midpage.ai/document/philadelphia-wilmington--baltimore-railroad-v-howard-86747?utm_source=webapp" opinion_id="86747">13 How. 307, and U. S. v. Behan, 110 U. S. 338, 4 Sup. Ct. Rep. 81. In Railroad Co. v. Howard it is thus stated:

“Wherever profits are spoken of as not a subject of damages, it will be found that something contingent upon future bargains, or speculations, or states of the market are referred to, and not the difference between the agreed price of something contracted for, and its ascertainable value or cost.”

The 1st, 2d, and 3d assignments of error are sustained. The 4th is not. The judgment of the circuit court is reversed.