Court Opinion

ID: 9685217
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:26:23.444491+00
Date Added: 2024-06-11T18:18:03.364726
License: Public Domain

*641On Rehearing
PONDER, Justice.
. The plaintiff contends that we erred in using the market value of scrap, steel at the date of the trial as a criterion in determining whether it had suffered a loss or been deprived of a profit as a result of the defendant’s breach of contract. The plaintiff takes the position that the true measure of damages is the difference between the contract price and the market price of the scrap steel on the date the contract was breached.
The defendant purchased 500 tons of scrap steel from the plaintiff at a price of $41 per gross ton, to be delivered in carload lots on specified dates between April 4 and June 6, 1949. On March 8, 1949, prior to the delivery of the scrap steel, the defendant notified the plaintiff, by letter, that it was cancelling the order in its entirety. On March 12th, the plaintiff, requested the defendant to accept the scrap steel and the defendant thereafter refused to accept it or pay the purchase price. In this suit the plaintiff is seeking to recover damages for the breach of the contract.
Under the provisions of Article 1934, LSA-Civil Code, the damages due the plaintiff for the defendant’s breach of the contract is the amount of the loss the plaintiff has sustained and the profit of which it has been deprived, except, in the absence of fraud or bad faith, the defend-ant is liable only for such damages as were contemplated or may have reason? ably been supposed to have entered into the contemplation of the parties at the time the contract was entered into. It is presumed, in the sale of personal property, that the parties contemplated the difference between the contract price of the thing sold and the market value at the time and place at which it was to be delivered when they entered into the contract. Rob-inson Lumber Company v. W. O. & C. G. Burton, 128 La. 120, 54 So. 582 and ’the authorities cited therein. This court has on numerous occasions pointed out that the measure of damages for the breach of a contract of sale, where no fraud is shown,' is the difference between the contract price and the- market price of the goods on the date of the breach. See Interstate Electric Company v. Frank Adam Electric Company, 173 La. 103, 136 So. 283 and the authorities cited therein to that effect. This rule of law is based on solid grounds because neither a plaintiff nor a defendant should be permitted to select the market value of a date different from that on which the contract was breached for the purpose of determining whether any loss was suffered or profit deprived to the detriment of either-party. The facts in this case amply demonstrate the reasonableness of and the necessity for this rule. The defendant breached its contract when it saw the market for scrap steel was rapidly declining. At the time the suit was tried, more than a *643year after the contract had been breached, the price for scrap steel had advanced in excess of the price called for in the contract. The record shows that scrap steel had continued to decline for more than two months after the contract was breached but it does not show when the prices took an upward trend. If the suit had been tried at an earlier date when the market price of steel might have been on the further decline, the defendant’s liability would have been greater if the value of the steel at the date of the trial was to be used as a criterion in determining whether the plaintiff had suffered a loss or been deprived of a profit. If such were to be used as a criterion, the rights of the parties would depend on conditions arising at an uncertain future date. In fact, it would leave the rights of the parties uncertain and encourage litigants to jockey for a trial on a date when the market was favorable. The rule, that the measure of damages for the breach of the sale of personal property is the difference between the contract price and the market price at the date of the breach of the contract, is a .salutary one and does not depend on uncertain events that may occur sometime in the future.
There is dispute in the evidence as to the date the contract was br.eached but we have arrived at the conclusion that the plaintiff received notice of the cancellation of the contract on March 9, 1949., This is borne out by the fact that the plaintiff consulted' attorneys as to its rights under the contract within three or four days after that date. While there is dispute as1 to the market value of the scrap steel on March 9th, we have reached the conclusion that the testimony produced by the plaintiff, based on the trade journal “The Iron Age”, which is the accepted trade journal of the iron and steel industry, that the price quotations for scrap steel listed from date to date therein are accepted in the trade as being reliable and authentic and that they serve as a ■ basis for the buying and selling of scrap steel. This publication bases its prices on the Pittsburgh market, which is the center of the buying and consuming of scrap steel, and, of course, if these prices are to be the guide it is necessary to deduct the freight charges from Shreveport to Pittsburgh in order to determine the value of this scrap steel now located in Shreveport. On March 9, 1949, No. 1 scrap steel was listed at $36.50 to $37 per ton and phosphate steel was listed at $42 to $43 per ton. The scrap steel specified in the contract involved herein is a type of scrap especially selected and prepared for small electric furnaces similar to that of defendant’s which has no premium value to large mills and .according to the testimony of the expert witness, who testified in behalf of the plaintiff, it is bought and sold in the 'market as No. 1 steel except when there exists a scarcity of scrap steel which compels the Pittsburgh buyer to pay the premium low phosphate price in order to ob*645tain the scrap steel. At the time the contract was breached, the market was declining rapidly and a seller could only expect to receive the prevailing price of No. 1 steel. The highest price for No. 1 steel at Pittsburgh on the date of the breach was $37 per ton and the cost of freight to ship it to the Pittsburgh market on that date was $13.3248 per ton. Under the contract the defendant was to pay $41 per ton for the scrap steel. At the date of the breach of the contract, the steel was worth $37 per ton at Pittsburgh. Deducting the freight charges from Shreveport to Pittsburgh of $13.3248, the steel would have had a market value at Shreveport of $23.6752 per ton. The contract price called for $41 per ton. After deducting the present market value at Shreveport, the plaintiff suffered a loss of $17.-3248 per ton on the steel. The contract calling for 500 tons, the loss suffered by the defendant would be $8,662.40. The plaintiff is entitled to recover this amount as it is the difference between the contract price and the market value of the steel at the date the contract was breached.
Under the provisions of Articles 1932 and 1933, LSA-Civil Code, damages are due from the moment that there is an active violation of the contract and the creditor is not under obligation to place the debtor in default, but when the breach is passive only it is necessary to place the debtor in default. Irrespective of whether the cancellation of the contract is considered as an active violation or a passive violation of the contract, there would be no necessity to place the defendant in default because it would have been a vain and useless thing after the defendant had notified the plaintiff that it did not intend to comply with the contract by ordering its cancellation.
For the reasons assigned, the decree heretofore handed down is reversed and set aside. The judgment of the district court is reversed and set aside. It is ordered, adjudged and decreed that there be judgment in favor of the plaintiff and against the defendant in the sum of $8,662.40 with legal interest from judicial demand. All costs to be paid by the defendant. The right to apply for a rehearing is reserved to defendant.
HAMITER and HAWTHORNE, JJ., dissent.
On Rehearing
HAWTHORNE, Justice (dissenting).
In this case, had the contract been consummated, the plaintiff would have received for 500 tons of scrap steel at $41 per ton the sum of $20,500. The identical 500 tons of steel were in possession of the plaintiff at the time of trial and had at that time a minimum market value of $47 per ton,. so that the steel had) a value of $23,500 or a sum in excess of the total contract price of $3000. This amount, together with the award of $8662.40 granted *647to it in the majority opinion, permits the plaintiff to realize as of the day of the trial more than $11,000 above the contract price of the steel. In other words, by virtue of the breach of the contract the plaintiff is permitted to retain the steel and realize a sum in excess of $11,000 above the contract price.
Does this result accomplish the primary aim or principal purpose of the law of damages for the breach of a contract, which is to place the plaintiff in the same position he would be in if the contract had been fulfilled or the breach had not occurred? Obviously it does not.
I adhere to the views expressed in my original opinion.
On Rehearing
HAMITER, Justice (dissenting).
As I view this case there were two alternatives available to plaintiff on defendant’s breach of the contract. It had the right either (1) to try to place itself in as good position as it would have been if the contract had been carried out, claiming as damages any .resulting difference; .or (2) to retain the scrap steel and have the opportunity of speculating on the market price thereof.
A resort to the first alternative required that plaintiff make reasonable efforts to mitigate or reduce the damages. 15 American Jurisprudence, verbo Damages, Section 30; 25 C.J.S., Damages, § 34. For accomplishing this it was necessary that a good faith attempt be made for the sale of the material (there was a market for it, although a highly fluctuating one) at the earliest practicable moment after the buyer’s absolute refusal to accept. And the damages recoverable would be the difference between the contract price and the market price at the time of the bona fide attempt to sell (whether the sale be effected or not).
But plaintiff made no attempt whatever to sell and to minimize the damages. Rather, it elected to pursue the second alternative of retaining the scrap steel. And at the time of the trial, occurring more than a year after the contract’s breach, the material was still in its possession with a market value in excess of the agreed purchase price.
Having elected to keep the scrap steel indefinitely, the value of which is governed by a fluctuating market, plaintiff, in my opinion, is not entitled to recovery herein. Damages under these circumstances would be purely speculative and of the kind not contemplated by the parties when entering into the contract.
I respectfully dissent.