Badger State Lumber Co. v. G. W. Jones Lumber Co.

121 N.W. 933, 140 Wis. 73, 1909 Wisc. LEXIS 249

Opinion

Barnes, J.

The rule is well settled that in executory contracts, where specific performance cannot be enforced, either party has the power to stop the performance on the other side by an explicit order to that effect, by subjecting himself to such damages as will compensate the other party for being stopped in the performance on his part at that point or stage in the execution of the contract. In such cases it is held that an action cannot be maintained to recover the contract price, but may be maintained to recover damages for the breach of the contract. Ward v. Am. H. F. Co. 119 Wis. 12, 25, 96 N. W. 388; Fountain City D. Co. v. Peterson, 126 Wis. 512, 106 N. W. 17; Merrick v. N. W. Nat. L. Ins. Co. 124 Wis. 221, 226, 102 N. W. 593; Tufts v. Weinfeld, 88 Wis. 647, 60 N. W. 992; Woodman v. Blue Grass L. Co. 125 Wis. 489, 494, 103 N. W. 236, 104 N. W. 920; Engeldinger v. Stevens, 132 Wis. 423, 424, 112 N. W. 507.

The decisions of this court upon the question under discus sion are in liannony with the great weight of authority elsewhere. Mr. Page states the rule apjdicable where one party to a contract, who is not himself in default, has covenants still to he performed when the breach is committed by the other party, as follows:

“The adversary party cannot ignore the breach, perform the covenants of the contract on his part to be performed, and recover the entire contract price as if no breach had occurred. This state of facts often exists in breach by renunciation.” 3 Page, Contracts, § 1435. See cases cited in notes 2 and 3, p. 2219.

If the contract was still executory the defendant might breach it, and would thereby subject itself to the payment of such damages as would fairly compensate the plaintiff for the breach, and ordinarily such damages would be the difference between the contract price of the lumber and its value at the' time of the breach. Ganson v. Madigan, 13 Wis. 67, 72; S. C. 15 Wis. 144, 150; Chapman v. Ingram, 30 Wis. 290.

The general rule that a breach of an executory contract gives a right of action for damages for the breach and not for recovery of the purchase price is not modified by the case of Boyington v. Sweeney, 77 Wis. 55, 45 N. W. 938. It is there held that where the vendor tenders a delivery in accordance with the terms of the contract, and an actual delivery is prevented by the refusal of the vendee to accept and receive the article at the time and place agreed upon, the vendor may sue for and recover the purchase price. In this case the plaintiff failed to furnish cars within a reasonable time, and before they were furnished a portion of the logs sold were burned, and it was held that the offer to deliver was-tantamount to an actual delivery, and that the vendor had in fact performed his part of the contract. The case-of Pratt v. S. Freeman & Sons Mfg. Co. 115 Wis. 648, 92 N. W. 368, holds that where a vendor, in an executory contract for the sale of goods to be paid for on delivery, discovers that the vendeo has become insolvent, he may store the property for the buyer and sue for and recover the purchase price. No other case in this court is called to our attention that has any tendency to mitigate the rigor with which the general rule referred to has been enforced.

It is a conceded fact in the case that the defendant wrote plaintiff on November 29, 1907, stating explicitly that it would he impossible for it to take the stock bargained for. Certain reasons were stated in the letter for the decision arrived at, which were found by the jury to he groundless. The letter was received in due course of mail and was replied to by the plaintiff upon the day following its date. The important questions in the case therefore are: (1) Was the contract executory when defendant’s letter was received ? (2) If it was, did the defendant by its subsequent conduct waive the renunciation of the contract contained in its letter? Whatever difficulties the ease may present do not arise out of any uncertainty as to what the law is on the points involved. A correct application of the facts to the established rules of law is all that is necessary in order to determine the rights of the parties.

When does a contract, executory when made, become executed so that the vendor may sue and recover the purchase price of the article contracted for ? In the early case of Ganson v. Madigan, 13 Wis. 67, 72, the court held:

“Where the vendor has actually .taken all the steps necessary to vest the title to the goods sold in the vendee, he may sue for goods sold and delivered, and the rule of damages would be the contract price; but where he is ready and willing to perform, and offers to do' so, but the vendee refuses, even though the title is not vested in the vendee, the vendor still has his action on the contract for damages; but the rule of damages in such case would be the actual injury sustained, which is ordinarily the difference between the value of the property at the time of the refusal and the price agreed on.”

TRe contract in this ease was for tRe sale of a reaper, and tRe vendee was informed tRat Re could Rave Ris pick of a large number of reapers skipped to tRe agent of tRe vendor in knocked-down form. TRe vendee refused to make any selection, and tRe court Reid tRat because of tRe failure of the vendor to set up tRe reaper and make an offer or tender of it as an entirety Re could not recover tRe purckase price, but only damages for tRe breacR of tRe contract. TRe decision was re-examined at some lengtk and re-affirmed on a second appeal. 15 Wis. 144, 150. TRe rule adopted in this case Ras not been departed from in any substantial particular, and it has in effect been followed in a number of cases since decided. Tuffs v. Weinfeld, 88 Wis. 641, 60 N. W. 992; Hoffman v. King, 58 Wis. 314, 317, 17 N. W. 136; Ward v. Am. H. F. Co. 119 Wis. 12, 25, 96 N. W. 388; McMillan v. Fox, 90 Wis. 173, 62 N. W. 1052.

Under tRe autRorities cited, and assuming that tRe title to tRe lumber contracted for did not pass to tRe vendee in tRe contract, we fail to see any logical ground for saying that suck contract was not an executory one in so far as it related to lumber not delivered when tRe letter of renunciation was written. A portion of tRe lumber was sawed and in pile at Du-rand, Wisconsin. As to suck lumber it was necessary to separate tRe No. 3 and better lumber from tRat below tRe grade of No. 3 and to ascertain tRe quantity of tRe same. EacR party migkt furnisR an inspector, and in case of disagreement it was provided tRat an inspector of tRe National Hardwood Lumber Association should act as umpire to settle the dispute. If tRe vendee failed to select an inspector, then tRe vendor might inspect, and suck inspection skould be final. TRe vendor was required to Raul tRe lumber from the pile and deliver it on board cars at Durand. A portion of the lumber was at two or three different country mills several miles distant from Durand. TRe contract required suck lumber to be inspected and tallied in tRe same manner as tRat located at Durand, and also required the vendor to haul the same to Du-rand and deliver it on hoard cars. There was also a small quantity of lumber not sold under the contract mixed with that which was, and it necessarily would have to be separated before the contract was completed by the vendor. The evidence failed to show the expense which the plaintiff would necessarily incur in completing the contract, but it is apparent that it would be a very material item, and that the contract was not substantially performed by the vendor on November 29th. That it was ready, able, and willing to perform is not the equivalent of performance for the purposes of this case. Ganson v. Madigan, supra. The defendant might have ordered all of the lumber during the.month of December, and the plaintiff would have been obliged to grade, tally, haul, and deliver the lumber on board cars. Prior to November 29 th the defendant was not in default to the extent that it was not entitled to have the lumber delivered f. o. b. cars, and upon that date it renounced its contract and refused to carry it out. The rights of the parties must be determined as of that date, and we fail to see how we could logically hold that at that time the contract was even substantially performed by the plaintiff.

The contention that the contract was entire, and that the acceptance of and payment for one carload of the lumber was an acceptance of the entire stock and a waiver of any right to resist payment of the purchase price thereof, is not tenable. The contract required the lumber to be shipped in carload lots, and provided that each car shipped before January 1st should be paid for in “cash fifteen days from date of shipment, less two per cent. Sixty days from date of shipment, net.” The contract was an apportionable one, and the defendant might receive part of the lumber thereunder and breach the contract as to the portion which was not delivered without subjecting itself to liability for the purchase price thereof, provided the contract had not been performed by the plaintiff as to the un delivered portion of the stock. Ketchum v. Wells, 19 Wis. 25, 33; McDonald v. Gardner, 56 Wis. 35, 41, 13 N. W. 689; Clark v. Clifford, 25 Wis. 591; T. B. Scott L. Co. v. Hafner-Lothman Mfg. Co. 91 Wis. 667, 65 N. W. 513; McMillan v. Fox, 90 Wis. 173, 176, 62 N. W. 1052; La Coursier v. Russell, 82 Wis. 265, 52 N. W. 176; Hildebrand v. Am. F. A. Co. 109 Wis. 171, 85 N. W. 268; Tilton v. J. L. Gates L. Co. post, p, 197, 121 N. W. 331.

It is argued that the defendant waived any rights it might have under its attempted rescission of November 29th by counterclaiming in its answer for damages for alleged breaches of the contract on plaintiff's part. The cases of Main v. Procknow, 131 Wis. 279, 111 N. W. 508, and Pfeiffer v. Marshall, 136 Wis. 51, 116 N. W. 871, are cited to the point that a counterclaim for damages for breach of a contract is an affirmance of the contract and is inconsistent with and is a waiver of a plea of rescission. We do not understand that the defendant has ever asked that the contract be rescinded, or even claimed that any facts existed which would warrant a. rescission. Contracts are usually rescinded because a party has been fraudulently induced to enter into the contract obligation. The facts that will ordinarily warrant a rescission must have existed at the time the contract was made. The position of the defendant here was that the plaintiff had breached its contract in material particulars and that for such reason defendant would not perform. The defendant by its pleading denied the right of the plaintiff to recover the contract price of the lumber. It then stated that, if it should be held liable to take and pay for any portion thereof, it should be allowed $5 per thousand damages by way of recoupment and setoff because of poor manufacture. We do not think this answer comes within the principle of the cases cited, or that there was any waiver on defendant’s part of its right to insist that the only recovery that could be had against it was the amount of damages occasioned by the breach of its contract.

It is urged that the contract constituted a sale of the lumber in prcesenti, either when made or when the lumber was manufactured, notwithstanding the reservation of title made by the vendor, until the lumber was paid for. The contract obligated the vendor to deliver the lumber f. o. b. cara. A number of such contracts have been before this court, and it has been held that the title under such a contract does not pass to the vendee until the article sold is delivered by loading it on cars. Vogt v. Schienebeck, 122 Wis. 491, 100 N. W. 820; Fromme v. O’Donnell, 124 Wis. 529, 103 N. W. 3; Murphy v. Sagola L. Co. 125 Wis. 363, 103 N. W. 1113; Engeldinger v. Stevens, 132 Wis. 423, 112 N. W. 507; John O’Brien L. Co. v. Wilkinson, 117 Wis. 468, 94 N. W. 337; State ex rel. Pittsburgh C. Co. v. Patterson, 138 Wis. 475, 120 N. W. 227. The contrary rule adopted in Boyington v. Sweeney, 77 Wis. 55, 45 N. W. 38, has been overruled. Vogt v. Schienebeck, supra.

The conclusions reached render i-t unnecessary to consider various other matters discussed in the briefs and in the oral argument.

By tJie Oourt. — The judgment of the circuit court is reversed, and the, cause is remanded for further proceedings according to law.