Lincoln v. Charles Alshuler Manufacturing Co.

125 N.W. 908, 142 Wis. 475, 1910 Wisc. LEXIS 207

• Court: Wisconsin Supreme Court
• Decided: April 5, 1910
• Status: Published

Opinion

Maeshall, J.

This case seems to have been disposed of •on a wrong theory. The contracts, notwithstanding words ■of sale in prcesenti, were obviously mere agreements to sell in consideration of agreements to purchase. They did not contemplate the passing of title to the goods till arrival at the delivery point in Wisconsin, freight paid. Therefore, as the goods were never so delivered or tendered, the contingency never happened rendering it competent for respondents to sell the goods as the property of appellant. They merely sold their own property.

Again — as the contracts were mere agreements to sell and ■agreements to purchase; neither sales in prcesenti, nor agreements to manufacture and sell specific articles, or sell specific identified articles, but to sell quantities of goods, manufactured or unmanufactured at the time, of the ordinary output •of the factory, and the second agreement was not only repudiated by the executory vendee before any goods called for thereby were set aside as its particular goods, but before they were tendered at the delivery point, so that the contracts were never completed by the executory vendors so as to enable them to treat the property as, in any sense, that of such executory vendee, and, after, its repudiation, the second contract could not have been performed by such vendors so as to enable them to treat the goods as property of such vendee or enhance its liability for the breach — respondents’ cause of action was-not for a balance due upon a sale of goods, but for damages for breach of contract, determinable as of the time of the breach, and limited according to the familiar rule that such damages can only be such as may be reasonably considered to have been in mutual contemplation by both parties at the time of making the contracts as the probable result of the breach thereof. Guetzkow Bros. Co. v. A. H. Andrews & Co. 92 Wis. 214, 66 N. W. 119; Serfling v. Andrews, 106 Wis. 78, 81 N. W. 991; Malueg v. Hatten L. Co. 140 Wis. 381, 122 N. W. 1057.

The optional rights of action suggested in Pratt v. S. Freeman & Sons Mfg. Co. 115 Wis. 648, 92 N. W. 368, do not. all apply to such a situation. There the article was specially manufactured and set aside for the vendee at the delivery point so it was competent for the vendor to deal therewith as the property of such vendee. Here the goods could-not be dealt with as property of the executory vendee without its consent till the executory vendors had done everything on their part, so that in a case of destruction of the-goods by fire or otherwise the loss would have fallen on the-former because of the title having passed.

The rule formulated in Pratt v. S. Freeman & Sons Mfg. Co., supra, is elementary, but was there adopted, as to its-phrasing, from Van Brocklen v. Smeallie, 140 N. Y. 70, 35 N. E. 415, where the facts were that the title to the property-had actually passed to the vendee, leaving nothing executory but the mere act of delivery. The court held that the rule-applies in cases where the title passes in prwsenti and where the contract is executory, but the property is identified, and there is a valid tender as contemplated ■ in the sale contract and a refusal to perform. The facts of this case do not satisfy either of such situations. ’The title did not pass at the date of the contract, the property was never tendered at the agreed place of delivery and was not specific prior to the breach.

Again, it is an elementary principle that, in case of a bargain and sale of goods, not specific, arid before they are set aside for the vendee, he notifies' the executory vendor that he elects to and does cancel the contract and will not receive the goods, he cannot be made liable for the purchase price, as on a sale of goods, but only for damages for his breach of contract. That being upon the theory, often declared, that, ordinarily, any person has a right to breach his mere executory agreement and submit to damages therefor. Ward v. Am. H. F. Co. 119 Wis. 12, 96 N. W. 388; Malueg v. Hatten L. Co., supra. Unexcelled F. W. Co. v. Polites, 130 Pa. St. 536, 18 Atl. 1058, is a good illustrative case.

The facts in the last case cited are on all-fours with .those in this case. The court remarked that:

“.Whilst the manifest tendency of the cases in the American courts, now, is to the doctrine that when the vendor stands in the position of a complete performance on his part, he is entitled to recover the contract price as his measure of damages, in the case of an executory contract for the sale of goods not specific, the rule undoubtedly is that the measure of damages for a refusal to receive the goods is the difference between the price agreed upon and the market value on the day appointed for delivery.” And the court might well have added, to accurately round out the rule, at the place of delivery.

In this case, as before indicated, the agreements were with reference to goods from the ordinary output of a manufac-tory to be selected from stock to be accumulated or on hand. That is plain. The second agreement was repudiated about a month and a half before expiration of the time for delivery and some three weeks before delivery could have been requested. It is very evident that no goods had been set aside for appellant, even at the necessary starting point of the contemplated transit, prior to the notification that the second agreement would not be carried out by appellant. It may well be that if they existed at all it was as a part of the general stock. So respondents, in any view, never had a cause of action against appellant for the contract price of the twenty-five cases of goods.

As to the ten cases it seems the finding that appellant refused to receive "them is contrary to the evidence. As we read the record, appellant ordered the ten cases forward, urgently, but respondents refused to send the same without prepayment, not only for the ten cases, but for the thirty-five cases. In face of the letters found in record ordering forward the .ten cases and the reply, in effect, refusing to ship except upon condition of payment for the thirty-five cases, it 'is not perceived how the finding that shipments were not made because no shipping directions had been given, and because appellant had refused to receive any of the goods, has any support whatever. The declination to ship the ten cases, was upon the sole ground that the sale price for the whole thirty-five had not been paid. The court must have assumed that circumstances existed when the goods were ordered forward, authorizing the executory vendors to eliminate the element of credit and demand prepayment before parting with possession of the goods, under the familiar rule applied in Pratt v. S. Freeman, & Sons Mfg. Co. 115 Wis. 648, 92 N. W. 368, though there is no finding of insolvency or of any fact justifying even the elimination from the contract of the element of credit.

True, in case of an executory agreement for sale of property on credit^ if before the time for delivery the executory vendee becomes insolvent, or shows evidence of insolvency by defaulting in payment of existing indebtedness, he may insist upon completion of the sale contract, eliminating the element of credit, but not eliminating any other element of the contract, as that in this ease to deliver the subject of the sale f. o. b. cars at a point distant from the location of the goods at the time of the sale or that of the contemplated commencement of the transit to the purchaser. Much less can the vendor, as was done here, not only eliminate the element of credit, but a material part of the contract in addition by imposing the condition of payment for goods under other contracts, especially goods not recoverable for, in any event, because of the agreement to purchase the same having been seasonably repudiated, leaving the vendor only his action for damages. So the record not only does not support the finding, but negatives any right to recover on the first contract either the purchase price of the goods or damages for breach of contract. That contract was breached by respondents, not by appellant.

As to the twenty-five cases, it seems the finding that appellant repudiated the contract is well supported, and also the evidence seems conclusive that appellant never' after first taking that attitude changed it by agreeing to take the goods as promised, or withdrew the request for respondents to liquidate their damages by selling the goods in their discretion for its account. It is quite likely that had appellant, after breaching the contract, seasonably changed its attitude, respondents would have refused to start the goods for delivery at the agreed termination of the transit, only eliminating the element of credit, so as not to lose control of the property before receiving payment therefor or stood ready to do so, but would have insisted upon payment before starting the goods on the journey, in which case they could not have recovered damages, but on the contrary might have been liable for damages for their breach of contract. However, that course was not taken so the right of respondents to-reimbursement for damages for the breach, which became fixed by the refusal to receive the goods before and at the-agreed time for forwarding, remained to the end.

The measure of damages, by the ordinary rule, is the difference between the amount the appellant agreed to pay for1 the goods and the reasonable market value thereof at the agreed delivery point in Wisconsin, at the time of the breach,, less the freight, which respondents agreed to, but did not, under the circumstances, have to pay. That is subject to the exception that where there is no fair market value at the delivery point, such value may be determined at some other-point, just to both parties, which in this case not only seems, as above, to have been the place where the goods were sold, but the one consented to by appellant by the request for a sale thereof on its account.

It must be remembered that this is not a case of manufacture of an article to order, which was not a stock article having a general marketable quality, in which case sometimes the full price is the measure of damages for breach of the contract-to accept after the article has been completed, or substantially so, nor a case where the article though of a gen-, eral marketable quality was completed and ready for delivery before the breach. It is a case where, so far as the record shows, while the material for the proposed sale was still the property of the executory vendors and in their hands, or the subject formed part of the general stock of manufactured goods at the factory, the vendee refused to perform. In such a case the profits on the contract, is the true measure Oof recovery.

Now while this was not a case for liquidation of damages by a sale of goods, substantially as property of the vendees, as in Pratt v. S. Freeman & Sons Mfg. Co. 115 Wis. 648, 92 N. W. 368; Van Brocklen v. Smeallie, 140 N. Y. 70, 35 N. E. 415; and Moore v. Potter, 155 N. Y. 481, 50 N. E. 271, appellant has no reason to complain, (1) because it consented, in advance, to such, liquidation; (2) because, in any event, such a sale is, in effect, only a manner of making evidence of damages, which in this case, were the same whether the action be regarded as one on contract for balance of the purchase price, or for mere damages for breach of contract; and (3) because the evidence shows that the sale price was the fair market value at the place of sale and in excess of what could have been obtained at the agreed delivery point, or at the nearest point thereto where the goods were fairly marketable.

Again, while the time the market value was determined as a basis for recoverable damages, was several months after the date of the breach, which fixed the rights of the parties, that is rather to appellant’s advantage than otherwise, since the evidence is to the effect that property of the sort increased in value in the meantime, rather than decreaséd. _

Further, while the action was for the balance of the purchase price for goods instead of a mere action for damages for breach of contract, as it should have been, that is not to appellant’s prejudice, since the recoverable amount, under the circumstances, would be no different in one case than in the other.

It follows that the judgment must be considered as one for damages for breach of contract to buy goods and erroneous as to the ten cases. It must, therefore, be reduced as of the time of its rendition to the extent of two sevenths, to wit, to the sum of $1,060.40, and further reduced by the amount of the damages awarded on the excess of goods in the twenty-five cases over 2,000 yards per case, which seems to be 4,096-| yards, on which damages were incorporated in the judgment, including interest, of substantially $19.49, making the amount for which judgment should have been rendered $980.91, to which sum it is reduced as of its date. As so reduced it should be affirmed.

By the Court. — So ordered.