Court Opinion

ID: 5210727
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:12:04.668445+00
Date Added: 2024-06-11T08:27:22.017974
License: Public Domain

Houghton, J. (dissenting):
The defendant by its contract to act as sales agent for the Alaska Packers’ Association was prohibited from selling canned salmon for export to Europe, Australia and Hew Zealand. The Packers’ Association had established an agency in England and had agreed to protect those sales agents from invasion of their territory. So far as appears the defendant was anxious to sell to the plaintiffs the 28,000 cases of the specified brands of salmon, provided they were not to be exported to England. The plaintiffs insisted that they had purchased that quantity for the sole purpose of exporting it to England for sale to the knowledge of the defendant and demanded that the contract be fulfilled for that purpose. The defendant insisted, on the contrary, that they could not and did not agree to sell for export to England and would not sell at all unless the sale was restricted for domestic consumption. The plaintiffs' refused to recognize any restriction and the defendant refused to deliver.
In view of the decision of this court on a former appeal (99 App. Div. 622) I acquiesce in the finding of the jury in the present case to the effect that the plaintiffs held an unlimited contract of purchase, and that defendant’s agent, Stubbs, was authorized to make the erasure which he did and deliver the contract to the plaintiffs so reformed.
*588I am of the opinion, however, that an erroneous rule of -damages was adopted by the- learned trial court, and that the plaintiffs-did not make sufficient proof of the non-existence of a market for the various brands of salmon contracted for, to entitle them to recover as their measure of damages tli-e-profits which they might have made - on a resale. The jury were instructed that the ordinary rule of damages on breach of contract of sale was the difference between the contract price and the market price, but that such rule liad certain exceptions, one of which was that -where the buyer, to the knowledge of the seller, purchases the goods for the purpose of fulfilling a contract, the buyer may, on breach, recover the profit which he would have made. The jury were told, however, that they could not assess plaintiffs’ damages under this rule, because plaintiffs had no contract for resale when they made the contract of purchase from the defendant ; but that another rule existed, to wit, that where the goods are purchased for a particular purpose, to be used in a certain way, to be dealt with in a certain manner to the knowledge of the seller, on breach the buyer might recover the profits which he would have made on a resale. It was upon this latter theory that the plaintiffs recovered the full amount of the profits which they would have made on a resale to their English buyers.
The learned trial court was entirely correct in instructing, the jury that the plaintiffs could not recover under the ¡second rule of damages which he explained to; them.
An existing contract and a purchase for the purpose of fulfilling it, all to the knowledge of the seller, are necessary' to charge- him as damages on breach with the profits which the buyer Would have made. (Messmore v. N. Y. Shot & Lead Co., 40 N. Y. 422; Booth v. Spuyten Duyvil Rolling Mill Co., 60 id. 487,492; Griffin v. Colver, 16 id. 489, 493.) This- rule was recognized in Laird v. Townsend (5 Hun, 107), and the judgment was reversed on the express ground that the plaintiff- had failed to establish the existence of a contract of resale at the time of Iris purchase.
The plaintiffs entered Into their contract with the- defendant on the thirtieth day .of August. On the. following day their representatives in London submitted an offer of sale of the entire 28,000 cases to English jobbers, and a- contract for such resale was signed on the following day, September first. So there can be no question *589that the plaintiffs did not have a contract of resale when they purchased from the defendant, and did not buy the goods for the purpose of fulfilling an existing contract.
I cannot see how the third rule, as it is denominated, and which was the rule upon which the jury were permitted to assess damages against the defendant, can be applicable in any case to the purchase of goods. It is possible that it might be applied to a contract for the manufacture of a certain article to be used for a certain purpose if such article was not procurable elsewhere. Every jobber who buys goods in quantity buys them for the purpose of reselling and not for individual consumption. Every seller who sells goods in quantity to jobbers knows that they are bought for the purpose of resale. Such purpose and such knowledge, however, do not make the defaulting seller liable for loss of profits. In Thol v. Henderson (L. R. 8 Q. B. Div. 457) knowledge on the part of the seller that goods were bought for resale was held not to be sufficient to charge him with loss of profits, and it was expressly said that such knowledge "lid not bring the seller within the rule established in the leading English case of Hadley v. Baxendale (9 Exch. 341). The case of France v. Gaudet (L. R. 6 Q. B. 199), cited as to the contrary in the prevailing opinion herein, was in tort and not on contract, and in the opinion that distinction is pointed out and given' as the reason for not requiring notice to be proved of an existing contract of resale.
I do not understand the majority of the court to hold that the mere purchase of goods by a jobber for the purpose of resale to the knowledge of- the seller entitles the buyer to recover the profits which he would have made, but they say .no other rule of damages than loss, of profits could have been applied in the present case, because the Alaska Packers’ Association, the principals of the defendant, controlled the output of the particular brands of salmon contracted for, and, therefore, there was no market.
If there be a market, it is clear that, unless the goods be purchased to fulfill an existing contract to the knowledge of the seller, the buyer must go into the market and replace the goods or rely upon the difference in market pnce for his damages. When the buyer can go into the' market and buy the article which the seller has failed to deliver, this is the only rule to be applied, as it affords the *590buyer full indemnity. Special damages are allowed only when this rule will not furnish full indemnity. (Todd v. Gamble, 148 N. Y. 382; Parsons v. Sutton, 66 id. 92.)
I think the plaintiffs failed to prove that there was no market in which they could repurchase. The fact that the Alaska Packers’ Association produced and controlled all of the brands which the plaintiffs contracted for did. not take those brands from the market. The general market might be and not infrequently is flooded .with an article produced by only one producer. The 28,000 cases which the plaintiffs contracted for were still for sale. Balfour, Guthrie & Co., the English selling- agents of the Packers’ Association, dealt in the same brands, and they maintained an office in San Francisco as well as in London. One of the plaintiffs testified that he did not make any effort to buy through these agents because he knew he was competing with them on the other side. For all that appears there Was an ample market in which the goods might be purchased in London or a market price by which plaintiffs’ loss might be measured. While technical delivery of the 28,000 cases was to be made in San Francisco, the ultimate place of delivery and sale was Liverpool and London. The plaintiffs did not intend, if they could avoid it, to even break packages at San Francisco or Mew York, but. the goods were to be- shipped in bulk direct to the English market. If the plaintiffs’ theory of the contract of purchase with’ the defendant is correct, the defendant knew that the ultimate place of delivery and sale of the entire lot was England. So far as the plaintiffs themselves were concerned they had no intention of selling them at any other place. I see no reason, therefore, why, if the goods could not be purchased in this country, the market price at the place of ultimate delivery and sale, which was England, Was not competent and necessary proof, or, in the alternative, proof of the fact that no market price existed there.
In Durst v. Burton (47 N. Y. 167) cheese was sold and delivered at Frankfort, M. Y., to be shipped to Mew York city for sale Chdbch, Oh. «L, says : “The place of delivery was Frankfort, but by the terms of the contract Mew York was the market to which it was to be forwarded and w'here it ivas to be sold, and the market price there may be regarded as within the contemplation of the parties.” Harris v. Panama Railroad Co. (58 N. Y. 660) was *591an action to recover the value of a horse being transported over the defendant’s road, and proof of the value of the horse at San Francisco, the place of its ultimate destination, was held to be competent. And the court intimated in Heinemann v. Heard (50 N. Y. .27) that proof of the market price of silk in Hew York city, purchased in China destined for the Hew York market, was not an improper rule upon which to base damages for non-delivery. In Lyles v. Hagy (15 Wkly. Dig. 456) it was held that if there be no market at the place of delivery and the goods are purchased for transportation and sale at another place, the market price of the latter place controls, and it is competent to prove value at the place of sale with the cost of transportation deducted. To like effect are Vanstone v. Hopkins (49 Mo. App. 386); Johnson v. Allen (78 Ala. 387); Campbellsville Lumber Co. v. Bradlee (96 Ky. 494); Cockburn v. Ashland Lumber Co. (54 Wis. 619), and Grand Tower Co. v. Phillips (23 Wall. 471).
It is held in some of the above cases that the fact that the defaulting seller controlled the market did not change the rule. Hor does it change the rule that the defendant claimed that it did not make a contract of sale for resale in England. ■ The whole theory of plaintiffs’ case is that the defendant did make such contract and the jury has so found, notwithstanding the defendant’s position, therefore, it stands that the plaintiffs’ claim has been adopted and that the goods were in fact purchased with technical delivery at San Francisco but for ultimate delivery and sale in England. I think under such a state of facts it was incumbent upon the plaintiffs to prove lack of market in England, and that in the absence of such proof the plaintiffs could not recover by way of special damages the profits which they would have made on a resale to their English buyers.
I, therefore, vote for a reversal of the judgment.
Judgment and order affirmed, with costs.