Coleman v. Magnolia Provision Co.

287 S.W. 294 | Tex. App. | 1926

^* Writ of error granted December 8, 1926. It will be noted that a method provided by rule 212 set out in the statement above for fixing the amount of damages, if any, where a buyer having a right to treat a contract as breached elected to do so, was for the buyer to go on the market (through a broker recognized by the Texas Cottonseed Crushers' Association) and buy the product he was entitled to have the seller deliver to him. Pursuing that method, the amount of the damages would be the difference between the sum the buyer had to pay for the product on the market and the sum he would have had to pay the seller had the latter delivered the product as agreed upon. It was on the theory, it seems, that the method provided was exclusive of all other methods, as it was in effect declared to be in rule 213 set out in said statement, and that it appeared from the allegations in the petition that appellants did not pursue it, that the exceptions to the petition were sustained. Appellants insist the rules specified were invalid if they meant what the trial court seems to have determined they did; for in that event, appellants say, the effect of the rules, if enforced, would be to oust the courts of jurisdiction of controversies between them and appellee arising out of the contract.

There is no doubt the general rule is that stipulations in a contract intended to deprive the courts of power to determine the substantive rights of parties thereto are contrary to public policy and therefore unenforceable. Price v. Thresher Co. (Tex.Civ.App.) 264 S.W. 113; Watson v. Boswell, 25 Tex. Civ. App. 379, 61 S.W. 407; 3 R.C.L. 752; 13 C.J. 455, 457, and authorities there cited. However, the rules specified, we think, did no more than provide a method for determining the damages if the contract was breached, and such a provision is held not to be a violation of the rule of law referred to. Scottish Union Nat. Ins. Co. v. Clancy, 71 Tex. 5, 8 S.W. 630. In the case cited the court said:

"If the stipulation was to deny or repudiate the jurisdiction of the courts to determine the rights and liability of the parties arising upon the contract, we would hold, with the weight of authority, such stipulation void. But here the stipulation does not divest the courts of jurisdiction, but only binds the parties to have the extent or amount of the loss determined in a particular way, leaving the question of liability for such loss to be determined, if necessary, by the courts. In the absence of fraud, accident, or mistake, the parties having agreed that the amount of loss shall be determined in a particular way, we are constrained to hold that such stipulation is valid."

Appellants next insist, if the rules specified were valid, it appeared from the allegations in their petition that they complied with same by buying the linters on the market. In effect the allegations were that appellants bought the linters of themselves. If appellants could not do that, and we think they could not (Dallas Waste Mills v. Early-Foster Co. [Tex. Civ. App.] 218 S.W. 515; Planter's Oil Co. v. Gresham [Tex. Civ. App.] 202 S.W. 145; 13 C.J. 261), the contention in question should, of course, be overruled. But if it should be, appellants insist, and a majority of the members of this court agree, the action of the trial court was nevertheless erroneous, because, appellants say, and said majority agree, it appeared from allegations in the petition that the damages appellants sought to recover were in effect fixed as contemplated by said rules and were for a less amount than they would have been entitled to recover of appellee had they complied with said rules by actually buying the linters on the market.

It is urged, in effect, in support of the view that it appeared that the purpose of the rules was substantially accomplished, that the bids presented to the broker by appellee and other dealers in linters, as alleged, showed the price at which the linters in question were purchasable on the market. It is argued that the damages to appellants from appellee's breach of the contract therefore were ascertainable in the way, substantially, provided by the rules, and that it was immaterial that the linters were not actually purchased by appellants as contemplated by the parties.

In that view of the case, appellants insist, and said majority agree, the judgment of the trial court was erroneous and should be reversed. The writer thinks an actual purchase of the linters as contemplated by the rules specified was indispensable to a right in appellants to recover anything of appellee; that the trial court therefore did not err when he sustained the exceptions to the petition; and hence that the judgment should be affirmed.

One of the purposes of the rules requiring a buyer who, as appellants did, elected to treat a contract subject thereto as breached to go on the market and buy the product the seller failed to deliver as agreed upon, was, the writer thinks, to eliminate all elements of speculation in determining the damages actually suffered by a buyer if a seller breached the contract. To accomplish that purpose the parties had a right to agree upon the method they did agree upon and to provide, as they did, that it should he pursued to the exclusion of all other methods. The parties having such a right and having exercised it, and it appearing from the allegations in the petition that appellants did not pursue the method agreed upon, in that they did not actually buy the linters on the market, the writer thinks the trial court could not properly have done otherwise than sustain the exceptions to appellants' petition. To have overruled the exceptions, as the writer sees it, would have been to hold, in effect, that the court could ignore the contract the parties made and make one for them.

In conformity with the conclusion reached by a majority of the members of the court the judgment is reversed and the cause is remanded for a trial on its merits.