Hemingway Manuf'g Co. v. Council Bluffs Canning Co.

| U.S. Circuit Court for the Southern District of Iowa | May 11, 1893

SHIBAS, District Judge

(after stating the facts). It clearly appears from the evidence in this case that when the written contract for the sale of the com cookers and feeders was entered into, on the 21st of April, 1888, the machines were not in existence, and were not ready for delivery. The contract, therefore, was an executory one, having relation to articles to be thereafter manufactured by the plaintiff company; and the title thereto, during the process of manufacturing, remained in the plaintiff, and has not since been trans-ferrcd to the defendant. It no less dearly appears that there has been a breach of contract on part of the defendant company, in that on the 25th of April, 1888, it notified the plaintiff that it would not receive the machines, as it had contracted to do, nor pay for the same. The only question in dispute between the parties is as to the rule of damages applicable to the case. When notified, on the 25th of April, that the defendant company would not fulfill the contract on its part, it was open to the plaintiff to countermand the orders it had given for the manufacture of the separate parts of the machine, and fhe costs and expense resulting 1 herefrom would have been reeov-enable against the defendant. Instead of so doing, the plaintiff completed the manufacture of the machines. When completed, the defendant still refused to receive them, and the machines remained in the possession of the plaintiff. The title and possession of the property are therefore in tin? plaintiff, never in fact having passed to the defendant, and the only question in dispute Is as to the damages recoverable under these circumstances.

The usual rule in regard to executory contracts is that a vendor who retains the property is entitled to the difference between the contract price and the market value of the articles. It does not appear from fhe evidence that there has been any change in the price at which, the manufactured articles are sold in the market by the plain!iff since the 21st of April, 1888; and, as fhe burden is on tiie plaintiff to prove the damage sustained, the court cannot assume that Hie property has at any time since April, 1888, been of any value less than (he contract price, which the evidence shows was the usual price for which, the plaintiff company sold the articles in question. If this case, therefore, is governed by the usual rule applicable to executory contracts, where the title and possession of the property never passed from the vendor, it must follow that all the plaintiff- can recover is merely nominal damages. Tt is, however, urged on behalf of the plaintiff that the facts of Ibis case are peculiar, and take the same out of the reason of the ordinary rule, which, is based upon the assumption that the property can be sold in the market for its value, and therefore the vendor can in this way protect himself from loss up to the salable value of the property, and is only damaged by the failure of the vendors to the exient of the difference, if any, between the market value and the con tract price. It is sough L to except this case from the general rule upon the theory that, as fhe articles agreed to be sold are covered by a patent owned by the plaintiff company, all purchasers thereof must buy from the plaintiff, thereby giving it the profit upon each sale made, and, if the plaintiff is required to sell the article made for defendant, it would thereby be deprived of the profit of the sale which it could make to the second buyer of another set of the patented articles. Although there is much, plausibility in the position taken, it would have more force if it were true that the only com cookers in use in the canning of corn were the kind made by the plaintiff company. There are, however, other machines used for the same purpose, and it cannot he certainly known whether the person who might wish to purchase such machines, if he did not buy those manufactured for the defendant company, would purchase a set of the plaintiff’s manufacture, or a set of a rival in the trade. Furthermore, if the defendant should be-compelled to pay the contract price for the machines, then the same would rightfully become the property of defendant, and in that event the latter company would then have the right to sell these machines to any third party, and the plaintiff could not object thereto on the ground that by such sale it would lose the profit it might have made by an independent sale to such third party. As the plaintiff could not deprive the defendant of the right to resell the machines if they became the property of the defendant by the payment of the purchase price, it cannot rightfully refuse to account for the market value of the articles, when the title and the possession thereof remain in it, and hence there is nothing in the facts of the case which takes it out of the general rule already stated. The facts of the case show a breach of contract on part of the defendant, but fail to show any actual damages, beyond a nominal amount, and the judgment will therefore be for the plaintiff for the sum of one dollar, without costs.