Court Opinion

ID: 8192943
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:16:03.703637+00
Date Added: 2024-06-11T16:40:40.079997
License: Public Domain

Eschweiler, J.
(dissenting). By the affirmance of the judgment of the court below judicial sanction and thereby judicial approval is given .to the allowance as stipulated damages of an amount of not less than $4 per barrel for breach of a contract to buy such a staple necessary essential as flour, sold at the agreed price of $12.10 per barrel.
This item of so-called damages necessarily includes the profits of the transaction, and under the facts here can be reasonably construed to include nothing but profits.
If this is a legitimate, reasonable, and lawful profit between miller and wholesaler, it would have to be held to be such in a similar contract for the further sale of this same flour from the wholesaler to the retailer, and then again between the retailer and consumer. It presents a vista of hope for him who wishes to profit in the necessaries of life, but a rather hopeless horizon for the producer and the consumer.
This contact was made May 7, 1917, for delivery between September 15th and January 1st following. The United States Food Administration, by a regulation published August 24, 1917, declared that the maximum average profit of twenty-five cents per barrel of flour was reasonable and any profits in excess “unjust and unreasonable.” This twenty-five cents per barrel profit, although of course not controlling as to this contract of an earlier date, is cited here in contrast with the $4 per barrel allowed by this judgment.
’ In the same bulletin appears the following:
“In order to prevent hoarding and speculation in contracts for futures, no miller shall make, or have outstand*406ing at any time, any contract for the sale of flour or feed, except such contracts as require shipment of such produce within thirty days after the making of such contracts.”
This quotation speaks for itself as to the view taken by the federal food administration on the possibility of just such contracts as are here involved being aids or instruments for hoarding and for speculation in contracts for futures, which is but another expression for gambling.
In the absence of evidence showing such a state of facts or circumstances surrounding this particular contract as would overthrow the prima facie showing of grossness, exorbitance, and swollen profits, I think the court should declare that such a stipulation resulting in such damages, whether it was therein definitely fixed at $4 per barrel or the same result reached by the agreed application of the multiplication table, is prima facie for a penalty and not for legal recoverable damages; leaving open to the plaintiff, however, the right of showing the court upon evidence that the facts and circumstances in this case warrant the allowance of these amounts as within the field of reasonable damages.
' From these elements of exorbitance and the apparent absence of any reasonable connection between the method of computation and the actual performance of the contract, it meets all the requirements so repeatedly recognized under the general rule, and particularly by this cqgrt, as distinguishing a penalty from liquidated damages. Seeman v. Biemann, 108 Wis. 365, 374, 84 N. W. 490; Davis v. La Crosse H. Asso. 121 Wis. 579, 589, 99 N. W. 351; J. G. Wagner Co. v. Cawker, 112 Wis. 532, 541, 88 N. W. 599; Grant M. Co. v. Marshall & Ilsley Bank, 166 Wis. 547, 555, 165 N. W. 14. See, also, Joeckel v. Johnson, 178 Iowa, 231, 159 N. W. 673, 676.
Both of the elements of extraordinary disproportion between the agreed damages and the damages which might result, or of exorbitance, are always recognized as throw*407ing such a stipulation into the class of penalties rather than of stipulated damages in those cases even where the indefinite and uncertain element of time delay is the basis. It is so expressly stated in the case cited in the majority opinion of U. S. v. Bethlehem S. Co. 205 U. S. 105, 121, 27 Sup. Ct. 450, and repeated in Maryland D. & C. Co. v. U. S. 241 U. S. 184, 190, 36 Sup. Ct. 545; Wise v. U. S. 249 U. S. 361, 365, 39 Sup. Ct. 303; In re Liberty Doll Co. 242 Fed. 695, 701.
And such penalties are not enforced not from any desire to — quoting now from the majority opinion herein — “regard with paternalistic solicitude the situation of a party who has deliberately broken his contract,” but because a court refuses to be the third and enforcing party to an unconscionable agreement which for that reason is against public policy. Richmond v. Conservative L. Ins. Co. 166 Wis. 334, 341, 165 N. W. 286. Neither is he who speculates in food entitled to sympathy or solicitude.
It has long stood as a definitely declared principle recognized by this court that in executory contracts of sale the right to break such a contract, subject of course to respond in damages, is on substantially the same footing as the right to malee just such a contract. Haueter v. Marty, 156 Wis. 208, 212, 145 N. W. 775; Woodman v. Blue Grass L. Co. 125 Wis. 489, 494, 103 N. W. 236, 104 N. W. 920; Badger State L. Co. v. G. W. Jones L. Co. 140 Wis. 73, 79, 80, 121 N. W. 933. And again in Malueg v. Hatten L. Co. 140 Wis. 381, 384, 122 N. W. 1057, where this court adds that such breach of contract, without proof of legal damages, gives to the other party no right of recovery. Page 386.
There being no element of tort involved here, the general rule of liability for breach of contract is as was stated in McLennan v. Church, 163 Wis. 411, 422, 158 N. W. 73, “the limit of recovery is such damages as may be reasonably considered to have been in contemplation by the parties at the time of making the contract as the probable result of a *408breach of it” See, also, Malueg v. Hatten L. Co., supra, at p. 385.
Conceding for the purposes of this case that although parties to such a contract have the legal right to breach it as to the conditions therein contained as to performance, but must nevertheless be held as to the conditions therein expressed as to the damages, yet such damages must nevertheless be such as were within the field of legal, reasonable anticipation of the parties at the time of making. If the final result savors of a penalty rather than legal damages, then such result was not within the' reasonablé anticipation of the parties and ought not to be enforced by the court.
Merely because the plaintiff asserts in its contract and defendant acquiesces that the milling business is so complicated and mysterious that its profits cannot be ascertained, ought not to deter a court from examining into its business, any more than a similar suggestion to the tax assessor should bind him to accept what is offered rather than to insist on what is due. Joint declarations of the parties that the unconscionable is conscionable, or that their ways of doing business are beyond ken, should neither blind nor bind the court.
Furthermore, the provision of the contract now offered, fixing the measure of damages by the fluctuation in the price of No. 1 Northern wheat on the Minneapolis market, is, from what appears in this record, a gamble and therefore void. When the principal contract is so tainted or a subsidiary contract is, with knowledge qf the party seeking to recover thereon, based upon such a tainted transaction, there can be no recovery. Kassuba C. Co. v. Blodgett, 155 Wis. 529, 531, 143 N. W. 1060, 145 N. W. 177; Carson v. Milwaukee P. Co. 133 Wis. 85, 91, 93, 113 N. W. 393; Olson v. Sawyer-Goodman Co. 110 Wis. 149, 85 N. W. 640; Atwater v. Manville, 106 Wis. 64, 81 N. W. 985.
There is here evidently no attempt at a compliance with *409sec. 2319a, Stats., relating to board of trade contracts. That there was no intention to either purchase for defendant, or to use in the manufacture of the flour which was the subject of the contract, No. 1 Northern wheat whose falling price determined the measure of plaintiff’s damages and profits (plaintiff having carefully reserved the right under par. 2a, applicable as here but in the case of a rising market, to “treat the contract as if rescinded without damages to either party”), is evident from the following;
First, there is no provision in the contract for such purchase or use and no allegations of such in the complaint; there was therefore nothing in that regard for the defendant to deny.
’ Second, at no time could either defendant or plaintiff successfully have maintained under this contract that plaintiff was holding or obliged to hold for defendant any quantity of wheat of any grade.
Third, the idea of a wheat contract is expressly negatived by the language of the contract itself, in paragraph 10, “this contract is for the purchase of goods to be manufactured,” and in paragraph 5, “goods shall not be deemed manufactured until shipped;” plaintiff thereby expressly excluding the idea of any obligation on its part to manufacture flour for this contract prior to an order for shipment, and therefore is really binding itself to ship from a stock of flour only and not from a stock of wheat, and that is all that its allegations of readiness and compliance with the contract on its part should reasonably be extended to cover.
Under the method of computation provided’ for of four and one-half bushels of wheat to the barrel of flour, there is a resulting surplus of seventy-four pounds in weight, certainly of some value to plaintiff but not accounted for to defendant in assessing the damages, and yet upon which he is charged. If this contract contemplated the purchase for *410him of wheat, it is manifest that plaintiff has withheld items of value from defendant’s wheat for which it should account.
If, as a matter of fact, plaintiff bought no wheat for this particular sale of flour or bought none until it was ready to deliver upon order of defendant pursuant to the contract, it could then have bought, to make good its depletion in its stock of flour, wheat at the then market price, and there would have been no actual damage, and it would have paid no actual carrying charges, although it has been allowed that also as damages in this case in addition to the $4 per barrel.
If it did manufacture this order of flour it was its duty to minimize damages arising from the breach of defendant in refusing to buy by disposing of this flour at the best market price then obtainable. Centennial E. Co. v. Morse, 227 Mass. 486, 490, 116 N. E. 336. If such price was not below the contract price there was no recoverable damage; if lower, the difference measured the legal damage and is the proper measure thereof. Stock v. Snell, 213 Mass. 449, 100 N. E. 830; Hall v. Paine, 224 Mass. 62, 65, 112 N. E. 153.
This case was disposed of in the court below on the case quoted in the majority opinion of Sheffield-King M. Co. (this plaintiff) v. Domestic S. B. Co. 95 Ohio St. 180, 115 N. E. 1014. There must be noted, however: The contract there was made in 1912 and the price was $4.75 per barrel as against the $12.10 here; there is nothing to show what proportion the amount recovered as damages bore to the contract price there, or that the question of grossness of profits was before the court. And there, by implication at least, the court recognized the necessity of plaintiff’s doing in that case what, it appeals to me, the plaintiff should be required to do here, namely, show that it purchased the wheat for that contract, if it desires to recover damages for any depreciation in wheat price, when that opinion says: “In this situation, when the plaintiff proved it had per*411formed the terms of the contract on its part, had purchased the necessary wheat, and showed the damages that had accrued on the basis agreed on, it was entitled to recover.” Erie B. Co. v. Hubbard M. Co. 217 Fed. 759, also cited in the majority opinion and in the Ohio case, based the right to recover such a difference in wheat price upon an express showing made therein by plaintiff of an actual purchase of wheat made at the time of the making of the contract to meet the requirements. That essential fact is missing in this case.
If the answer herein was not sufficient to properly present the issues that should be tried between these parties, then, under sec. 2405m, Stats., it is the duty of this court to direct that they shall be tried.
I think the judgment should be reversed and the plaintiff put to its proof to show that what on its face appears to be illegitimate was legitimate, and what stares- out from this measure of damages as an element of extortion and speculation was nevertheless an actual, substantial, and legal element of damage.