Court Opinion

ID: 9636111
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:16:58.586388+00
Date Added: 2024-06-11T12:06:22.028401
License: Public Domain

FRANK, Circuit Judge
(dissenting).
I dissent with respect to the decision awarding damages to the buyer (defendant) on its counterclaim because I think my colleagues are stretching Rule 56 as to summary judgments far beyond what the Supreme Court intended in promulgating that Rule. That intention the Supreme Court put beyond question when it said in Sartor v. Arkansas Natural Gas Co., 321 U.S. 620, 624, 64 S.Ct. 724, 727, that “at least a summary disposition of issues of damage should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party.” To make clear my reasons for thinking that my colleagues are disregarding that admonition, it is first necessary to discuss their rulings as to damages and as to the alleged “admission” made by the seller (the plaintiff).
1. The purpose of awarding damages, in situations like that in the instant case, is to put the buyer in as good a position as he would have been had the seller performed his obligations under the contract.1 But the buyer, if he wishes more than nominal damages, has the obligation of showing to what extent he has actually been damaged.2 Thus, here, the buyer must show that, if it had paid the contract price and the seller had delivered the goods in Brazil and if they had been shipped to New York, the seller paying the freight as it agreed to do, the cost to the buyer would have been less than if the buyer, on the delivery date, had bought the goods in Brazil and had shipped them at its own expense to New York.
The loss in the present case, therefore, must be computed in this manner: To (a), the amount by which the market price in Brazil at the time and place for delivery per contract exceeded the contract price at that time, there must be added (b) the cost of freight to New York, which the seller agreed to pay. If (a) is zero, then the loss *406is (b). But if (a) is less than zero — if the contract price exceeds the market price— then the loss is less than (b); indeed, it may be zero or less. I cannot see how the buyer can recover merely by proof of (b), since the loss cannot be ascertained unless both (a) and (b) are known.
My colleagues make the curious suggestion that the buyer is entitled to a judgment for item (b) unless the seller introduces proof by way of what my colleagues call an “offset,” through evidence as to item (a). Surely there is no such rule. The buyer has the burden of proving that he suffered a loss, and that loss here is a unitary fact.3
2. In excusing the buyer here from making any showing as to (a) — the market price in Brazil — my colleagues reason thus:
(A) The contract price, they say, is some evidence of the market price. I agree. It could be the basis of an inference which; had the case gone to trial, a jury could have drawn. But surely that evidence is not conclusive even as to the market price at the date when the contract was made; for the seller may have made a good bargain (i. e., may have contracted to sell at a price well above the market). On such evidence, the court, after a trial, could not, I think, have directed a verdict for the buyer on the damage issue. Moreover, here the breach occurred several months after the contract was made.
(B) Presumably because they recognize the insufficiency of such evidence, my colleagues fall back on what they call the seller’s “clear-cut admission,” which they purport to find in its letter of January 9, 1941, to the Brazilian Mines & Timber Corporation, the intermediary. That letter is not an admission. It purports to be only a statement of the seller’s price, not the market price. The suggestion of an increase was based solely on the increase in the cost of the freight transportation; the letter did not discuss or intimate anything whatever as to the market price in Brazil of the lumber itself. From the context of the letter, the quotation of price appears to be set forth either as a supporting argument (together with the increased freight charges) for its request for cancellation or as a suggestion for novation (compare the statement that “from now on” the seller would accept business only on an F. O. B. basis, with the buyer responsible for the freight), or as both.
The most that can be said is that, the seller, when seeking to re-negotiate the item of the freight cost, remained silent as to the contract price of the lumber itself. Surely there is no justification for saying that such conduct comes within the doctrine of admission by silence; that doctrine covers only situations, unlike that here, where a party by failure to dissent acquiesces in a statement made in his presence, or makes an evasive response to a direct question, or the like.
At best, the letter and negotiations are merely some evidence from which an inference might properly be drawn by a jury. Such an inference is not compulsory, especially as the letter and negotiations occurred on or prior to January 9, 1941, and the critical market price, if we accept the trial judge’s finding as to the date of the breach, is as of January 31.4 In a fluctuating market the price may well have fallen drastically in that interval.
The cases cited in the majority opinion are therefore not in point: In Pence v. United States, 316 U.S. 332, 62 S.Ct. 1080, 86 L.Ed. 1510, the court sustained a verdict directed against the plaintiff (in the same position as the buyer on its counterclaim here) because plaintiff’s decedent had made, under oath, unequivocal admissions against his interest completely at variance with his claim. Again in Galloway v. United States, 319 U.S. 372, 63 S.Ct. 1077, 1084, 87 L.Ed. 1458, a directed verdict against a plaintiff *407was sustained because he had not been able “to demonstrate by more than speculative inference” the facts necessary to support his claim. In Brady v. Southern Ry. Co., 320 U.S. 476, 64 S.Ct. 232, the court sustained a decision reversing a judgment for the plaintiff because there was clearly insufficient evidence to justify the verdict rendered in plaintiff’s favor. In Hull v. Littauer, 162 N.Y. 569, 57 N.E. 102, a directed verdict was sustained against the plaintiff, a seller under a contract of sale of goods, where he offered no evidence whatever with respect to the terms of the contract and the wholly uncontradicted testimony offered by the defendants showed that there was an entire contract only part of which had been performed by plaintiff. In Princess Furnace Co. v. Virginia-Carolina Chemical Co., 4 Cir., 215 F. 329, at page 333, a directed verdict for damages was affirmed where the evidence for the plaintiff was undisputed and the problem of assessing damages was “a mere matter of calculation from definite and certain data.”
3. My colleagues thus are here making a remarkable ruling: a court on a summary judgment motion has the power to treat a permissible inference as conclusive, although the court could not have done so had the case gone to trial. To put it differently, my colleagues are saying that a court on a motion for summary judgment has far wider power to dispense with a jury than after a trial — and that, too, on the issue of damages despite the Sartor case.
Moreover, if the seller here had not pleaded to the counterclaim but had defaulted, the trial court would have been required to call a jury on the issue of damages. Rule 55(b) (2). I cannot believe that, had the buyer then offered evidence before the jury consisting only of what now appears in this record, a jury verdict for more than nominal damages could have been sustained. If this is correct, then the seller in this case is worse off because it responded to the summary judgment than if it had allowed itself to be defaulted. That conclusion seems passing queer to me.
My colleagues’ basic reason for their decision appears to be this: The seller should have disclosed in its affidavits any evidence it had which bore on the question of market price; its silence should therefore be penalized. In other words, to induce discovery, my colleagues are using a harsh rule on a motion for summary judgment. I think such a device is improper. I favor liberal rules for discovery.5 But since it can be had directly — by examination before trial, answers to interrogatories, and the like — I see no reason for springing on the seller here an indirect method, no excuse for employing a threat of summary judgment as a sort of rack or thumb-screw to bring about disclosure of evidence. I think the majority decision is unfair to the seller and creates an unfortunate precedent improperly magnifying the power of a trial judge.

 It is a “fundamental principle that damages are only to provide indemnity.” Weirton Steel Co. v. Isbrandtsen-Moller Co., 2 Cir., 126 F.2d 593, 594; Potts v. Village of Haverstraw, 2 Cir., 79 F.2d 102, 105; Ed. S. Michelson, Inc. v. Nebraska Tire & Rubber Co., 8 Cir., 63 F.2d 597, 601.

 1 Sedgwick, Damages, 9th Ed.1913, § 170 ; Burke, Kuipers & Mahoney v. Dallas Dispatch Co., 253 App.Div. 206, 1 N.Y. S.2d 674; Tinsley v. Jemison, 2 Cir., 74 F. 177; Oklahoma Natural Gas Corporation v. Municipal Gas Co. of Muskogee, 10 Cir., 113 F.2d 308.

 The case cited in the majority opinion, Beinhauer v. Gleason, 48 Hun 614, 15 N. Y.S.Rep. 227, 235, completely fails, I think, to justify my colleagues’ “offset” suggestion. There in a suit by a contractor for money due him under a contract for the erection of a building, the contract provided that if the contractor deviated from the contract, the difference for work omitted should be deducted from the amount otherwise due under the contract. The evidence showed that the plaintiff, the contractor, had omitted to install wash-trays, the value of which was about $200. It was also shown that the plaintiff had installed a better trim in the main hall and more panels in the parlor-doors than the contract required. There was no evidence that the defendant had agreed to make payment for such improvements. The court merely held that the plaintiff did not have a right to set off an item not provided for by the contract.

 The majority opinion refers to a repudiation on January 23rd; but negotiations between the parties continued into March.

 See, e.g., Hoffman v. Palmer, 2 Cir., 129 F.2d 976, 997.