43 Ind. App. 342 | Ind. Ct. App. | 1909
Lead Opinion
This action was brought by the appellee against appellant to recover damages for the breach of executory contracts entered into between the parties. Appellant’s demurrer to each paragraph of the complaint was overruled. Issues were formed, a jury trial had, and a verdict returned in fayor of appellee; appellant’s motion for a new trial was overruled, and judgment rendered on the verdict against appellant.
The errors assigned call in question the ruling of the court below upon the demurrer to the complaint and the motion for a new trial.
The complaint averred the making of the contract, and its breach. This was sufficient to make it good for at least nominal damages. The averments of the complaint, the evidence introduced, the instructions given by the court to the jury, and the verdict returned by the jury, all proceed upon the theory that the proper measure of damages for the breach of the contract sued upon was the difference between the cost of furnishing articles, which were the subject-matter of the contract, and the contract price. If this theory is correct, there is no error in the record. If it is not, the cause must be reversed,
“Terre Haute, Indiana, December 30,1903.
W. J. Holliday & Company,
Indianapolis, Indiana.
Gentlemen:
We propose to furnish you 650 tons bar iron, assorted hardware specifications, as follows:
One hundred fifty tons to be specified for and shipped promptly. Price on same to be $1.30 rates and half extras, f. o. b. Indianapolis, Indiana, car-load lots.
Five hundred tons to be specified for and delivered prior to July 1, 1904. Price on same to be $1.35 rates and half extras, f. o. b. cars Indianapolis, Indiana, carload lots.
The 500 tons to be specified for so that it ivill not be necessary for us to ship over 150 tons in any one month.
Direct shipments, less than car-load lots, five tons and over, to be billed at the above named prices, f. o. b. mill. Less than five ton lots, $1 per ton extra, f. o. b. mill.
Terms: Net cash thirty days, less one-half of one per cent discount for cash on receipt of material.
It is mutually understood that the full tonnage herein provided for will be furnished by us, and specifications furnished and iron received by you at the price stated above, regardless of market conditions.
Your acceptance hereof to constitute contract between us.
The Highland Iron & Steel Company. Accepted January 22, 1904.
W. J. Holliday & Company. ’ ’
The contract upon Avhieh the second paragraph of the complaint Avas based, Avas in the same terms, except that the quantity of iron to be furnished was 500 tons, and the price AAas different, and the iron was to be ordered by appellant after the completion of the first contract, and up to September 1, 1904. It is averred in the complaint that there Avas a breach of the contract on appellant’s part, in that it failed to furnish the appellee AAdth orders and specifications for a part of the iron contracted for under the first contract, and notified appellee that it Avould not order
It is contended by appellant that the contracts between the parties are contracts for the purchase and sale of the goods therein specified; that it is not a contract requiring appellee to manufacture the goods which it contracted to furnish; that its terms call for no goods of a peculiar or special make, but for a common article of merchandise manufactured by every rolling-mill in the country, and having a well-known market value, and that the rule invoked by appellee, and applied by the court below in the measurement of damages, that where a contract is made for the manufacture of an article not then in existence, and the contract is repudiated by the buyer before its execution is entered upon, the measure of damages for the breach is the difference between the cost of production and the contract price, does not apply.
In the case of River Spinning Co. v. Atlantic Mills (1907), 155 Fed. 466, the suit was by the seller for a breach by the buyer of an executory contract, which the court holds was a contract for the sale of a specified quantity of yarn. The court say of the contract that it did not impose upon the plaintiff the obligation to spin the yarn. It might have furnished it from some other factory, or have bought it in the open market, but the parties to the contract contemplated that it would be spun by the seller, who was a manufacturer of yarn. The contract in that respect was precisely like the contract sued upon in this ease. The court allowed as damages in that case the profits the plaintiff would make on the goods by their manufacture. The defendant contended, as is contended here, that the rule did not apply, and for the same reasons here urged, that the contract was one for the purchase and sale of a staple article of commerce, having a well-established market value; and that the true rule was the difference between the contract price and the market price of the goods at the time of the breach. The court, in affirming the case, and in refusing to adopt the rule insisted upon, said: “This is a just rule to determine the loss of profits on goods ready for delivery at the time of breach. * * * It is not the true rule as to goods not then made and ready for delivery. It is a just rule for the buyer in a suit by him, because on the breach, having the money on hands, he may procure the goods on the market, and charge the seller with the difference. But to measure the damages of a seller who has not the goods on hand by the difference between the contract price and the market price is often impracticable, and would often be unjust. It ivould be equally unjust in a case where the seller was to make the goods himself, and in a case where he was to procure the goods from other manufacturers or jobbers.
In the case of Roehm v. Horst (1890), 178 U. S. 1, 20 Sup. Ct. 780, 44 L. Ed. 953, the action was by a seller, a merchant, against the purchaser, for a breach of an ex-ecutory contract for the sale of certain bales of hops, the court holding that the measure of damages was the difference between what it would cost the seller to procure and deliver the hops in accordance with the terms of the contract and the contract price. In passing upon the question the court said: “If the vendor has to buy instead of to manufacture, the same principle prevails, and he may show what was the value of the contract by showing at what price he could have made subcontracts, just as the cost of manufacture in the ease of a manufacturer may be shown. ’ ’
We are referred by appellant to the case of Dolph v. Troy Laundry Mach. Co. (1886), 28 Fed. 553, as an authority in support of its contention that the proper measure of damages, as applied to the case at bar, is the difference between the contract price and the market price of the ar
None of the decisions of our own courts, either Supreme or Appellate, in anywise conflict with the views that are here expressed, and we think that they are recognized by a recent decision of the Supreme Court in the case of Connersville Wagon Co. v. McFarlan Carriage Co. (1906), 166 Ind. 123, where the court, on page 134, after discussing the question of the measure of damages as applied to the breach of contract by the seller, uses this language: “In speaking of the general rule which disallows unearned profits for a breach of contract, clearness requires that the distinction should be pointed out between a suit for a breach, where the complaining party seeks to recover the difference between the agreed price and the ascertainable value of performance, and a claim for damages based upon something which is purely hypothetical.’’ Citing, Masterton v. Mayor, etc., supra; Philadelphia, etc., R. Co. v. Howard (1851), 13 How. 307, 14 L. Ed. 157.
Judgment affirmed.
Dissenting Opinion
Dissenting Opinion.
The object of the law is to make the injured party whole — to furnish compensation. Probable profits ought not to be the rule of damages, except as necessity makes them so. This necessity may arise when the article purchased has no market value. When the article manufactured has a fixed market value there is no necessity for resorting to the proof of probable profits, as such profits are too speculative and uncertain to be considered as damages. Acme Cycle Co. v. Clarke (1901), 157 Ind. 271; Western Gravel Road Co. v. Cox (1872), 39 Ind. 260; Montgomery County, etc., Soc. v. Harwood (1893), 126 Ind. 440, 10 L. R. A. 532; Rahm v. Deig (1889), 121 Ind. 283. I do not think that, the seller of commodities which have a fixed and provable market value, such as sugar and iron, can secure a different rule of damages for himself, by reason of the fact that he manufactures, as well as sells, or takes orders in advance of delivery. The difference between the contract price and the market price measures his damage, since such commodities are, in his hands, worth what they will sell for in open market. Rahm v. Deig, supra; McComas v. Haas (1886), 107 Ind. 512; Dwiggins v. Clark (1884), 94 Ind. 49, 48 Am. Rep. 140. I therefore dissent.