Schwab Safe & Lock Co. v. Snow

152 P. 171, 47 Utah 199, 1915 Utah LEXIS 109

• Court: Utah Supreme Court
• Decided: September 16, 1915
• Docket: No. 2798
• Status: Published

Opinions

FRICK, J.

The plaintiff sued the defendant to recover an alleged balance due “for goods, wares and merchandise sold and delivered” to him. The case was here before on the defendant’s appeal. The dismissal of his counterclaim was held erroneous, and the case was remanded for a new trial. Schwab Safe & Loch Co. v. Snow, 44 Utah 341, 140 Pac. 761. A new . trial was accordingly had to the court without a jury, and the court entered judgment for the plaintiff on the balance agreed to be due it, and also made findings of fact and conclusions of law in favor of the defendant on his several counterclaims and entered judgment in his favor for the difference between the amount allowed plaintiff on its claim and the amount found due on the defendant’s counterclaims. This time the plaintiff appeals.

The case was practically tried and submitted on the evidence introduced on the first trial, nearly all of, which is in the form of letters passing between the parties. The printed abstract used on the former appeal is filed as the abstract on this one, with a few material yet what may be called merely formal, additions. The facts are sufficiently set forth in the opinion on the former appeal, and we shall not pause to repeat them here.

After carefully considering the relationship of the parties and the correspondence passing between them, it ivas on the former appeal held that the evidence was sufficient to authorize a finding in favor of the defendant on his counterclaims. Mr. Justice Straup, after considering the evidence, in speaking for the court, said:

“Under the circumstances disclosed and the shown relation between the parties, the defendant’s sending in the orders and the plaintiff’s acknowledging receipt of them, stating they had been entered, would receive prompt attention, and that shipments would be made as soon as possible, sufficiently shows an acceptance.”

What was there said by Mr. Justice Straup was, however, intended as applying to the counterclaims as a whole, and not to any particular one. Nor was it intended to foreclose the plaintiff from interposing any defense, in part or in whole, that it might have. All that was intended is clearly expressed in the quotation, namely, that the orders and acceptances prima facie were sufficient to constitute contracts of purchases and sales. Upon that particular subject there is practically nothing new; in the evidence, with possibly one or two exceptions, to which we shall specifically refer hereafter. The court made separate-and specific findings upon all the defendant’s counterclaims, eight in number, and plaintiff’s counsel assails those findings as not supported by the evidence.

1, 2 The court found that there was due from the plaintiff to> the defendant as damages on the eighth counterclaim the sum of $294.68, for failure to deliver a certain No. 160 safe which the defendant had ordered on the 28th day of November, 1906, for one W. H. Bishop,' and which order the court found the plaintiff had duly accepted «on the 4th day of December following. The evidence justified the finding that the safe in question was ordered by the defendant, and that the order was duly accepted by the plaintiff. The matter, however, did not end there. On May 8, 1907, the defendant wrote the plaintiff respecting the order now under consideration as follows:

“We feel very much grieved in having to request you to cancel the order of W. H. Bishop for a No. 160 which you have had since November, 1906. ’ ’

In response to that request the plaintiff replied:

“We are also» grieved that it is necessary to cancel the Bishop No. 160 safe, but it was impossible for fis to fill the order any sooner. ’ ’

Defendant’s counsel, however, calls attention to some letters that passed between the plaintiff and the defendant concerning the Bishop sale. These letters, however, all antedate the cancellation and acceptance of the Bishop order, and therefore can be given no effect in so far as the cancellation of that order is concerned. The defendant, no doubt, had a right to propose the cancellation of any order that had been accepted by the plaintiff, and the plaintiff had a clear legal right to accept his proposal. After the proposal to cancel any standing order was accepted, that terminated the contract respecting the order thus canceled, and we cannot see how the same could be reinstated, except by a new agreement between the parties. To be more specific: The order by the defendant and the acceptance thereof by the plaintiff, as a matter of course, constituted a contract binding upon both parties. The defendant, however, proposed an unconditional cancellation of the order, and the plaintiff accepted the proposition. This, in law, constituted a rescission or cancellation, whatever it may be called, of an executory contract by mutual consent, and in view that thé contract was executory the acceptance by plaintiff of defendant’s proposal to can-’ cel or rescind the order was a sufficient consideration to support such rescission or cancellation. 1 Page on Contracts, Section 317. In view, therefore, that the defendant uneon-ditionally canceled the order and the plaintiff unconditionally joined in the proposed cancellation, it inevitably follows that the contract which arose by reason' of the accepted order ceased to exist. In view that the contract was executory, if it was canceled or rescinded as to one party, it of necessity must also have ceased to exist as to the other. To illustrate: Suppose the plaintiff had sued the defendant for a breach of the contract after it had accepted his proposition to cancel the order; could it maintain an action for breach of contract? The question answers itself. If, therefore, the contract is canceled so that one of the parties may not .sustain an action for its breach, it must likewise be so as to the other, unless there is a reservation of some kind by one. of the parties. In view of the unconditional. cancellation of the order for the Bishop safe by the defendant and its unconditional acceptance by the plaintiff, we think the defendant cannot recover damages as for a breach of the contract which arose from the acceptance of the canceled order.

3 "We remark that plaintiff’s counsel, with much vigor, insists that nearly all, if not all, of the other orders, were also canceled by the defendant. The evidence does not justify such a conclusion. When the defendant’s customers had refused to wait longer for the safes which they had ordered from him, all that he, in effect, did was to notify the plaintiff of that fact, and in connection therewith advised it not to ship any of the safes thereafter. This did not amount to a cancellation of the orders, as in the Bishop case. The defendant had the right at any time, for any reason or for no reason, to cancel a particular order, and if the plaintiff joined in the proposal for cancellation, that ended the contract. But when the plaintiff delayed in filling the orders until the defendant’s customers refused to accept the safes ordered, and all that the defendant did was to apprise the plaintiff of that fact, such conduct on his part did not amount to an unconditional cancellation of the orders and was not intended as such. There is no evidence in-the record which would justify a finding that the' defendant had canceled any order except the one for the so-called Bishop safe.

By what we have said we do not wish to be understood as holding that, even though an order,, after its acceptance, be mutually canceled, there may not be some remedy, for a party who may have parted with some consideration or who has done something in reliance on the contract before its cancellation. Whatever the remedy may be, if any, in such a ease, however, it is quite clear that it is not for damages for breach of the contract, since the defendant cannot now insist upon a breach which he had waived by his unconditional cancellation of the contract.

4 We are clearly of the opinion, therefore, that there.is no evidence to sustain the finding respecting the eighth counterclaim. Plaintiff’s counsel also insists that the same result should follow respecting the first counterclaim. Three safes were covered in the first counterclaim, including one ordered for one W. H. Davis. The court allowed the defendant damages for the failure to deliver the Davis safe in the sum of $177.33, with interest thereon amounting to $102.62, or a total of principal and interest of $279.95. On June 24, 1908, the defendant wrote the plaintiff regarding the Davis safe. He wrote that a safe “with special cabinet should be shipped to W. H. Davis” right away. Plaintiff acknowledged receipt of that letter on June 29, 1908, and in reply stated:

‘‘1 In regard to the 80 safe for W. H. Davis, Mina, Nevada, which takes a special cabinet, desire to say that we cannot furnish you this safe with the special cabinet. We are herewith returning you diagram of the special cabinet. * * * We can fill an order for our regular safe within a week, and if this safe is satisfactory to Mr. Davis please let us know by return mail and we will make prompt shipment.”

It appears that Mr. Davis did not want the “regular safe,” and hence the order never was filled. As near as we can make out, the court found against the plaintiff upon this counterclaim for the sole reason that there were two other safes included with the Davis order, and the order was by the plaintiff accepted in general terms. When plaintiff was advised, however, that the Davis safe was to be provided with a “special cabinet,” it at once informed the defendant that “we cannot furnish you this safe. ’ ’ The truth of the matter therefore is that the minds of the parties never met on the Davis safe order, and hence there was no binding contract with respect thereto. This feature differentiates the order for the Davis safe from all other orders. We are of the opinion, therefore, that plaintiff’s assignment should prevail with regard to that counterclaim.

5 There is still another assignment which relates to a safe ordered by defendant for one J, C. Fuller, for which, plaintiff’s counsel contends, no acceptance was shown. While the evidence as to that counterclaim is not as strong as it might be, yet there is some substantial evidence in support of the court’s finding. The case being a laiv ease, we cannot interfere so long as there is some substantial evidence in support of the findings which are assailed.

The evidence upon the remaining five counterclaims is ample to sustain the findings in favor of those counterclaims.

6 Nor is the evidence sufficient to sustain plaintiff’s contention that the defendant had waived his right to recover damages for plaintiff’s breaches of the several contracts, except for the Bishop case, by failing to deliver the safes and which orders it had fully accepted.

Plaintiff’s counsel next assails the amount of damages allowed by the court. The court entered judgment for the defendant for the full amount for which he had sold the safes, less the cost price and freight. Thus the court treated the transactions as though all of the safes ordered by the' defendant, which orders were accepted by the plaintiff, had been promptly shipped by it to the persons to whom the defendant had sold them, and as though those persons had paid the defendant the selling price, deducting only therefrom the cost price and the freight from the place of shipment to the place of delivery; in other words, the court allowed the defendant all the profits he would have made upon his contracts of sales. Plaintiff’s counsel contends that this is hot the usual or ordinary measure of damages for a breach of a contract for failure to deliver articles of merchandise which have been sold. In ordinary cases such is not the measure of damages. The usual rule is that in such cases the injured party must obtain the article in the market if he can do so, and Ms measure of damages is the difference between the price he agreed to pay for the article and the market value or -market price there of. This rule in cases where the article can be obtained in the general market is fair and just to all concerned. When a purchaser can obtain the article in the open market (and if he can he must do so), he, ordinarily at least, cannot recover any profit he would have made upon a resale of the article purchased by him. There are exceptions to this rule, however. There are instances where the article purchased is not delivered by the vendor and cannot be obtained in the market, but it has nevertheless been resold to a third person in reliance on the contract of purchase, and the vendor was informed of such resale and the price thereof. Under such circumstances it is held that the purchaser may recover the profits of the resale from the vendor as damages. The rule of damages applicable in such cases is learnedly discussed by Mr. Justice Marshall of the Supreme Court of Wisconsin in Guetzkow Bros. Co. v. A. H. Andrews & Co., 92 Wis. 223, 224, 66 N. W. 122, 52 L. R. A. 209, 53 Am. St. Rep. 909. The justice, after a lengthy discussion and review of some of the American as well as some of the English cases, lays down the following rule:

“Wien tie vendor is informed tiat tie purchase is made to enable tie vendee to fulfill a contract which he has theretofore made with a third person, and such vendor furnishes the goods, but not according to contract, and there is no market price for such goods, and the purchaser furnishes such goods to such third person, but is not able to recover of him the price stipulated in the contract with such third person, by reason of the breach of the contract committed by such vendor, in determining the damages for such breach such vendor is bound by the price his vendee was to receive from such third person, whether such price was communicated to him at the time of the making of the contract with his vendee or not, unless the price was such as to yield an extraordinary and unusual profit, which could not reasonably have been presumed to have been in contemplation by him at the time he made his contract. In such a case he would not be bound beyond such sum as would yield a reasonable and fair profit to his vendee. Ordinarily, the price to the first vendee would, presumptively, be held to be a reasonable price; but if the facts in any given case are such as to show such price to yield an extravagant or extraordinary profit, the second vendor will not be bound by such price, in the absence of evidence of previous knowledge, as before stated; and, in order to assess the damages, the court must he put in possession of sufficient evidence to enable it to arrive at a conclusion in respect to what would amount to a reasonable profit on the transaction.”

The rule is not so guardedly stated by all the courts. In McKay v. Riley, 65 Cal. '623, 4 Pac. 667, the rule is stated thus:

“Ordinarily, the rule of damages in actions like the present is the difference between the price1 agreed to be paid and the market value, because the vendee can obtain the article contracted for at the market price. When, however, the circumstances are such that the ven-dee cannot thus supply himself, the rule does not apply, for the reason of it ceases. Bank v. Reese, 2 Casey (26 Pa.) 143. In such case the true measure of damages is the actual loss sustained by the vendee by reason of his not receiving an advance of profit through agreements which he himself has made in reliance upon the fulfillment of his vendor’s contract.”

- To the same effect are Rose v. Foord, 96 Cal. 154, 30 Pac. 1114; McHose v. Fulmer, 73 Pac. 365. The rule is also discussed by the author in 3 Sutherland on Damages (3d Ed.), Sections 652, 653.

In the case at bar the defendant alleged in his counterclaims that he had informed the plaintiff in each case of the price for which he had sold the particular safe and to whom sold and the place of delivery, and that the plaintiff had accepted the defendant’s orders in the light of that information. The court also found these allegations to be true, and further found that the defendant could not obtain other-safes in the market, and there is evidence in support of the findings. We are of the opinion, therefore, that the case falls squarely within the rule laid down by the Supreme Court of Wisconsin, which, in our judgment, is sufficiently guarded to prevent injustice in particular eases. We can see no escape from the conclusion that, under the evidence and findings when applied to the law, the defendant is entitled to recover the profits allowed by the trial court, except on the Bishop and Davis orders. On the Bishop order there must be a conditional deduction of $294.68, and on the Davis order one for $279.95, or a total deduction of $574.63.

7 Plaintiff’s counsel also insists that the court erred in its allowance of interest. The court upon each order allowed interest at the statutory rate, dating the allowance in each case two months after the acceptance of each order. An examination of the orders discloses that they also constituted the contracts of sales made by the defendant with his customers. In most every instance the purchase price agreed upon was made payable in installments so that the payments extended over a period of six months, and in some instances perhaps more. No interest is mentioned in those orders or contracts, and in view of the theory followed by the court in allowing the defendant damages, that theory being as though his contracts with his customers had been fully performed, we cannot see how it can logically be contended that the plaintiff should pay interest on money until it was due to payable to the defendant from his customers. If the defendant is to be treated as though the orders had been filed by the plaintiff, why should he have interest from the plaintiff when he would have received none from his customers? We think the court allowed too much interest, that is, for too long a period, upon nearly all of the counterclaims. We shall not pause here, however, to determine the precise amount that should be allowed on each counterclaim. That is what the attorneys can do when a rule for their guidance is given. We think that no interest should be allowed on any of the counterclaims until the last payment became due and payable under the orders taken by the defendant from his customers, and which he, in effect, forwarded to the plaintiff, and upon which it acted. In view that nothing is said about interest in the orders or contracts between the defendant and his customers, and in view of the large profits, in every instance more than 100 per cent., and in some as high as 150 per cent., the defendant contracted for, it may well be assumed that the interest was provided for in the enhanced contract price. We think that under the rule for the allowance of interest in this jurisdiction, and under the circumstances of this case, it is only fair that interest should be allowed the defendant oniy from the date that the last payment on his contracts with his customers fell due.

In view that this is a law case, we cannot dispose of it, except conditionally. In case, therefore, that the defendant shall consent to remit from the judgment the sum of $574.63 on the two counterclaims we have mentioned, and shall further consent that the interest on the remaining six counterclaims shall be computed from the dates herein suggested and shall remit from the interest allowed in the judgment such excess, if any, and shall file his consent to such remittitur within twenty days after the filing of this opinion, then the judgment as modified shall stand affirmed; but in case the defendant shall refuse to so remit, then the judgment shall stand reversed, and the case shall be remanded to the District Court, with directions to grant a new trial. In case the defendant accepts the conditions hereby imposed, each party shall pay his own costs; but in case he elects to stand upon a reversal of the judgment, then the appellant • shall recover costs on this appeal.

STRAUP, C. J., and MeCARTY, J., concur.