Case Name: FRIEDMAN IRON & SUPPLY CO. v. J. B. BEAIRD CO., Inc.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1952-02-18
Citations: 222 La. 627
Docket Number: No. 40256
Parties: FRIEDMAN IRON & SUPPLY CO. v. J. B. BEAIRD CO., Inc.
Judges: HAMITER, J., concurs in the decree;
Reporter: Louisiana Reports
Volume: 222
Pages: 627–653

Head Matter:
63 So.2d 144
FRIEDMAN IRON & SUPPLY CO. v. J. B. BEAIRD CO., Inc.
No. 40256.
Feb. 18, 1952.
On Rehearing July 3, 1952.
On Second Rehearing Jan. 12, 1953.
Smith, Hunter, Risinger & Shuey, Shreveport, for plaintiff-appellant.
Melvin F. Johnson and Johnson & More-lock, Shreveport, for defendant-appellee.

Opinion:
HAWTHORNE, Justice.
Plaintiff, Friedman Iron and Supply Company, instituted this suit against J. B. Beaird Company, Inc., praying that the defendant be judicially ordered and condemned to accept delivery of 500 tons of scrap steel at $41 per ton and to pay the sum of $20,500, and praying in the alternative for damages against the defendant for breach of the contract to purchase the steel.
Plaintiff's suit for specific performance was dismissed on exception of no cause of action and has now been abandoned by plaintiff. In due course, after trial on the merits, the lower court rendered judgment denying plaintiff's alternative plea for damages and dismissing its suit. Plaintiff has appealed.
The record in this case clearly establishes that during the month of February, 1949, plaintiff and defendant entered into a binding contract by which plaintiff was to sell to defendant 500 tons of scrap steel at a price of $41 per gross ton, to be delivered on various dates as specified by the defendant in its acceptance of plaintiff's offer to sell. The record also' discloses that on March 7, 1949, defendant notified plaintiff not to ship any of the scrap steel until requested in writing so to do, and, according to' defendant, on March 8 it cancelled in writing its order for the purchase of this scrap steel in its entirety. On March 12 plaintiff requested the defendant to accept the scrap steel which it had purchased, assembled, stockpiled, and allocated for sale to the defendant. Defendant refused tO' accept the steel and pay the purchase price,, and plaintiff instituted this suit.
In its petition plaintiff alleged that it had retained the entire 500 tons of scrap' steel on its yard, segregated, stockpiled,, and allocated to fill the contract order with defendant; that this amount of steel SO' segregated, stockpiled, and allocated on its. yard was awaiting shipment to defendant,, and that delivery had been tendered and refused.
The lower court denied the plaintiff recovery, holding that under the law as announced by this court in Mutual Rice Co. of Louisiana v. Star Bottling Works, Ltd., 163 La. 159, 111 So. 661, 663, and followed, by one of the Courts of Appeal in Scott Mfg. Co. v. Stoma, 10 La.App. 469, 121 So. 335, an actual resale by the plaintiff was a. condition precedent to an action for damages in a case such as this.
An examination of the Mutual Rice Co_ case shows that the part of the decision relied on by the trial judge is purely obiter dicta. In that case plaintiff was suing for' damages for an alleged breach by the defendant of a contract to accept and pay for two carloads of sugar. After reviewing-all of the evidence this court concluded that the negotiations for the sale of the sugar between the plaintiff and the defendant had not become a completed contract. After so concluding, however, the court, assuming for the sake of argument that the negotiations had reached that stage, went on to say that, " When a buyer breaches the contract of sale, the measure of damages which the seller is entitled to is the difference between the price stipulated in the contract and the market price at which the goods can be readily sold at the time and place of delivery; and it is the duty of the seller to minimize his loss by reselling the goods as soon as practicable after the buyer has refused to accept". The following cases were cited by the court as authority for that statement: Bartley v. City of New Orleans, 30 La.Ann. 264; Jochams v. Ong, 45 La. Ann. 1289, 14 So. 247; Robinson Lumber Co. v. W. O. & C. G. Burton, 128 La. 120, 54 So. 582; C. F. Bonsor & Co., Inc., v. Simon Rice Milling Co., 151 La. 1094, 92 So. 711; National Wholesale Grocery Co. v. Simon Rice Milling Co., 152 La. 1, 92 So. 713; J. H. Garrison & Son v. Sherill Hardwood Lumber Co., 156 La. 147, 100 So. 253; Wertham Bag Co. v. Roanoke Mercantile Co., Ltd., 157 La. 312, 102 So. 412; Burglass v. J. C. Healy Co., Inc., 159 La. 393, 105 So. 384. Not one of these cases, however, makes it the duty of the seller to minimize his loss by reselling the goods as soon as practicable after the buyer has refused to accept as a condition precedent to instituting suit for damages for breach of the contract. (All italics ours.)
For instance, in Bartley v. City of New Orleans, the first case cited, plaintiff sued the city for the breach of a contract for the sale and delivery of timber. After the breach of the contract plaintiff sold the timber. In the course of the opinion this court said: "It is objected on the part of the city that plaintiff could not sell at private sale for her account and risk. This may be true; but it is shown that he got for the timber all he could in the then state of the market, and as the city would not take the timber, he had a right to sell it for his own account, and claim from the city as damages the losses sustained."
The other cases cited are authority merely for the general rule for measurement of damages for the breach of a contract of sale.
Plaintiff-appellant relies on the case of Wilbor v. M'Gillicuddy, 3 La. 382, for the proposition that a resale is not required of the plaintiff as a condition precedent to the recovery of damages. Plaintiff in that case sued to recover from the defendant damages for failure to comply with the contract by which the defendant was to purchase a certain quantity of molasses hogsheads at a fixed price. This court said: "Again it was urged [by the defendant], that no damages were proved, because the plaintiff had not shown he had re-sold the same merchandise, and sustained a loss by doing so.' A re-sale is certainly one way of establishing the injury arising from breach of contract, but it is not the sole zvay. If it were, then it would follow, that where a second sale could not be made at all, the vendor would be in a worse position than if he had' readily found another purchaser at a slight diminution of price."
In White v. Kearney, 9 Rob. 495, plaintiff sued the defendants for the breach 'of a contract to purchase lime. After he had tendered.the lime to defendants, who refused to accept it, he then sold the lime and-claimed as damages the difference between the price at which it sold and that which the defendants had agreed to give for it. In the course of the opinion in that case this court said: " Chancellor Kent, in speaking of cases of this kind, says: 'If the buyer unreasonably refuses to accept of the articles sold, the seller is not obliged .to let it perish on his. hands, and run the risk of the solvency of the buyer. The usage on the neglect, or refusal of the buyer to come in. a reasonable time, after notice, and pay for and take the goods, is for the yendor to sell the same at auction and to bold the buyer responsible for the deficiency in the amount of sales.' This rule is, we think a fair one; but it is not to be considered as the exclusive mode of ascertaining the amount of damages for failing .to comply with contracts."
Although we know of no case in our jurisprudence which requires an actual resale by the seller as a condition precedent to an action for damages for breach of the contract, under the established ¡jurisprudence of this court the vendor in such a case may sell, or has the right to sell, to •establish the quantum of damages, but he is. not bound or obliged to do so, and such resale is not the sole way of determining or measuring the damages. In the event he elects to resell, he should do so at the earliest practicable moment after the btiyer's absolute refusal to accept or within a reasonable time after the contract is breached, and sttch sale should be made at the prevailing market price. Jochams v. Ong, supra. In the event he elects not to resell but to keep the goods, he does so at his own risk, as he cannot by keeping the object of the contract speculate on the market price thereof, to the detriment of the purchaser, because damages under these circumstances would not be such as were within the contemplation of the parties when the contract •was made. See Robinson Lumber Co. v. W. O. & C. G. Burton, supra; National Wholesale Grocery Co. v. Simon Rice Milling Co., supra; J. H. Garrison & Son v. Sherill Hardwood Lumber Co., supra.
In the instant case plaintiff contends that it is entitled to recover for the breach of contract the difference between the contract price and the market price on the date of breach, which it alleges to be an amount between, approximately, $8000 and $14,-000, the exact amount depending on the prevailing market price on the date which this court should determine, as the date on which the contract was breached. The difference between the contract price and the prevailing market price on the date of breach is recognized as one means of measuring the -amount of damages, but that rule will not correctly measure the damages in the instant case because, under the particular facts here, we have concluded that the plaintiff has not sustained any damages whatsoever, and that the trial judge was correct in dismissing its suit.
The primary aim or principle of the law of damages for a breach of contract is to place the plaintiff in the same position he would be in if the contract had been •fulfilled, or to place the plaintiff in the position he would have occupied had the breach of the contract not occurred. When this' is accomplished, the primary aim or principle of the law of damages has been fulfilled.
In Goodloe v. Rogers, 9 La.Ann. 273, this court said in discussing the measure of damages:
"The measure of damages for the in-execution of contracts, as we have seen, by Article 1928 of the Louisiana ' [Civil] Code, is the amount of loss sustained by the obligee, and profit of which he has been deprived, subject to the modification that when there is no bad faith or fraud, the obligor is liable only for damages that may reasonably be supposed to have been contemplated by the parties at the time of the contract.
"The rule with its modification, is taken verbatim from the Code Napoleon, Articles 1149 and 1150. And those Articles .of the French Code in turn, were borrowed from Pothier on' Obligations, No. 159 and 160. It must-not be supposed, however, that Pothier was the author of the rule. He tells us himself that it is as old as the Roman Law, and gives us the text of the Pandects in which it was expressed. It is known to American jurists by the name of Consequential damages; and those are distinguished into proximate and remote. Mr. Sedgwick, in the third chapter of his treatise on the measure of Damages, has collected authorities on this subject from many different quarters. From his researches, it appears that the doctrine of the civil and common law is not materially different. "
. Further, in Gauthier v. Green, 14 La. Ann. 788, it was stated:
"The general rule for the measure of damages for inexecution of a. contract, by Article 1928 of the Code, is the loss suffered, or the profit of which the obligee has been deprived. "
McCormick on Damages states the primary aim or principle of the law of damages as follows:
"The primary aim in measuring dam- ' ages is compensation, and this contemplates that the damages for breach of contract should place the plaintiff in the position He would be in if the contract had been fulfilled." Sec. 137, p. 560.
Williston states also that the general principle is that the measure of damages for breach of an obligation is the sum which will put the plaintiff in as good a position as he would have been in if the obligation had been fulfilled. 3 Williston on Sales, sec. 599, p. 293.
In the instant case the contract was entered into in February of 1949 and provided for 500 tons of scrap steel at $41 per ton. The breach of this contract occurred during March or April of the same year, the exact date being immaterial under the conclusion which we have reached. Suit was instituted on July 1, 1949, and trial was actually begun on June 27, 1950, more than a year after the time of breach. At that time, according to plaintiff, it had stockpiled and segregated the steel and had it on its yard awaiting delivery to defendant. According to plaintiff's own witness, Mr. Joseph A. Creevy, field representative for Youngstown Sheet and Tube Company, the market price for scrap steel of the kind which was the subject of the contract was from $47 to $47.50 per ton at the time of the trial, or an amount from $6 to $6.50 more than the price called for in the contract. Under these circumstances, for the district court to have permitted the plaintiff to recover damages in any amount (much less the sum of from $8000 to $14,000 for which it prayed) would have placed it in a much better position than it would have been in if the contract had been fulfilled, because plaintiff still had the scrap steel which was the object of the contract, for which there was a market at a greater price than the defendant had promised to pay. An award of damages here, rather than placing the plaintiff in the same position it would have been in if the contract had been fulfilled, which is the primary purpose or principle of the law of damages, would enrich the plaintiff because of the breach of the contract, and, further, would award plaintiff as damages an amount in excess of that reasonably supposed to have been contemplated by the parties at the time of the contract. This, as pointed out by the foregoing authorities, is not the purpose of awarding damages.
In conclusion, we agree that the rale urged by the plaintiff that damages for the breach of a contract of sale are measured by the difference between the contract price and the market price on the date of breach is well recognized, and generally its application will accomplish the primary aim in measuring damages; that is, ordinarily it will operate to place the plaintiff in a case such as this in as good a position as he would have been in if the contract had been fulfilled. But, as pointed out hereinabove, application of this rule to the facts of the instant case will not accomplish this result.
For the reasons assigned, the judgment appealed from is affirmed at appellant's costs.
HAMITER, J., concurs in the decree;