Court Opinion

ID: 5313512
Source: CourtListenerOpinion
Date Created: 2022-01-08 04:00:49.014729+00
Date Added: 2024-06-11T08:29:14.510966
License: Public Domain

Finch, J. (dissenting).
An analysis of this record seems to me to negative any implication that the parties contemplated a liability for special damage on the part of the defendant. The principal, and simple, question upon this appeal relates to damages ( more specifically, whether the parties contracted at the time of the making of the contract, or subsequently, that other than the ordinary rule of damages should apply to this contract for the ■rendition of a usual service by the defendant upon a standard article, namely, the raw sugar furnished by the plaintiff. There are certain outstanding facts which to my mind clearly negative any implication that the parties contemplated a liability involving special damages. Briefly, some of these facts may be enumerated as follows:
First, both parties practically concede, and the parties them- • selves weie particular to emphasize in their correspondence, that the contracts between the parties hereto were not sales contracts but were contracts for services, known as toll or milling contracts, *211whereunder the plaintiff delivered to the defendant raw sugar, which the defendant refined at a small charge for service.
Second, the original contracts between the parties were for the delivery by the defendant of sugar for export. In fact the president of the plaintiff conceded that prior to April 21, 1920, the dealing of the plaintiff in refined sugar consisted solely of purchases for export.
Third, the contracts in suit upon which the plaintiff claims the light to apply the rule of special damage were made on September 15, 1919, March 8, 1920, and April- 21, 1920, and it was not until May 18, 1920, June 22, 1920, and July 2, 1920, respectively, that defendant was instructed to ship sugar to domestic customers of the plaintiff.
The rule of law is clear that in order to recover special damages based upon loss of profits, it must appear that at the time the contract was made the parties had in mind a possibility of such damage and contracted with reference thereto. Mere knowledge of the likelihood of a sale arising out of a known intention to resell is insufficient. (Globe Refining Co. v. Landa Cotton Oil Co., 190 U. S. 540, 544; Setton v. Eberle-Albrecht Flour Co., 258 Fed. 905, 907.) Since the only information had by the defendant of a sale by the plaintiff was through instructions received in each instance subsequent to the making of the contracts between the parties, this is a very important fact, taken in connection with the other facts contained in this record, in arriving at the conclusion that in the case at bar the parties did not contract so as to permit a recovery of special damages following a breach. In addition, the conclusion applies with even more force where, as in the case at bar, the contracts were milling contracts and not sales contracts.
If it were not for the coincidence that the defendant was good enough to give an option to the plaintiff to sell to the domestic trade and also to oblige the plaintiff by shipping the goods directly to those who subsequently purchased of the plaintiff, I do not believe that the plaintiff would have even made a claim to apply other than the ordinary rule of damage for breach of contract. In the ordinary case, a seller who sells to a buyer who purchases for resale, makes as much profit as he reasonably can, and his buyer upon a resale does likewise. The ordinary intermediate buyer, in addition to obtaining his subbuyer, takes the risk of loss of profit should the goods he is selling be rejected because of faffing to correspond to his description. In the case at bar the plaintiff, asking to be regarded as a purchaser from the defendant, as seller, nevertheless limits the defendant to a profit of less than two cents a pound arising out of a small charge for services rendered *212in refining the sugar, while it exacted what profit it could. In other words, plaintiff claims it undertook itself no risk of loss of profit on resale in the event of rejection because of lack of quality under each toll contract, but that in effect it received, for no other consideration than payment for services in refining the sugar, what in effect amounted to an insurance policy with each lot of sugar refined against any loss of profit, approximating in the case at bar twenty-five cents a pound, under a contract whereunder the defendant received less than two cents a pound in payment for services actually rendered. . Upon this record also there appears nothing which prevented the plaintiff fiom having all the inspection that it desired in order to ascertain whether the refined sugar complied with the contract. When the plaintiff requested the defendant to send goods directly to the subbuyers, defendant did not, by acceding to this request, assume a greater liability for damage than if the delivery had been directly to the plaintiff as contracted for. Clearly the contracts as first made did not contemplate special damage, and when the plaintiff asked the first favor, namely, for the privilege and option to sell to the domestic trade, and subsequently asked the second favor, namely, that the defendant should ship directly to the subbuyers of the plaintiff, I am unable to bring myself to the conclusion that these two favors should be construed into a contract whereby the original milling contract was altered so as fco make a contract between the parties that would make this defendant liable for special damages.
The kindness of the defendant’s employee, Lowry, to his friend, Costello, plaintiff’s representative, cannot be construed to create a liability after a breach of the contract, which did not exist before. If special damages were not contemplated when the contracts were made, subsequent acts of the parties do not create a liability. (Chapman v. Fargo, 223 N. Y. 32; Globe Refining Co. v. Landa Cotton Oil Co. 190 U. S. 540, 543.)
In Lamborn v. Czarnikow-Rionda Co. (221 App. Div. 737) the court was considering only the sufficiency of the allegations of a pleading and not whether the evidence at the trial sustained these allegations.
¡The judgment under the facts disclosed upon this record should be modified by reducing the amount of the recovery to the difference between the respective market values of the sugar.
McAvoy, J., concurs.
Judgment and order affirmed, with costs.