Court Opinion

ID: 9859301
Source: CourtListenerOpinion
Date Created: 2023-09-24 19:39:29.305052+00
Date Added: 2024-06-11T10:27:59.314646
License: Public Domain

HAWTHORNE, Justice
(dissenting).
I disagree with the views expressed in the majority opinion for the determination of the quantum of damages on the remand of this case.
First I cannot agree that it was error for the Court of Appeal to treat the exchange transaction as two sales. That is the recognized theory of exchange in the civil law.
Article 2667 of the Civil Code, which concerns the exchange contract, provides:
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“And in this * * * contract each of the parties is individually considered both as vendor and vendee.”' (Italics mine.)
Pothier in his treatise on the contract of sale describes exchange as follows:
“The contract of exchange bears some resemblance to the contract of sale. * * * The principal difference is, that, in the contract of sale, we distinguish the thing and the price; we distinguish between the contracting parties, one of whom is the seller and the other the buyer. On the contrary, in the contract of exchange,' each of the things is both the thing and the price; *584each of the contracting- parties is both seller and buyer * * Pothier, Treatise on the Contract of Sale, Cushing’s tr. 1839, no. 620, p. 373. See also 2 Planiol, Treatise on the Civil Law, Eng. tr. 1939, no. 1658, p. 1.
Article 1934 of our Civil Code provides that “Where the object of the contract is any thing hut the payment of money, the damages due to the creditor for its breach are the amount of the loss he has sustained, and the profit of which he has been deprived * * * ”. In this case by breaching the contract of exchange Sternberg breached two obligations which did not contemplate the payment of money, his obligation as vendor to deliver his house and the mortgage paper to Womack, and his obligation as vendee to accept delivery of Womack’s house. It was entirely proper-under our civil law to consider him as a defaulter in each of these roles, and it is more appropriate to do so in this case because the contentions between the parties are now essentially in regard to the houses exchanged; damage resulting from the failure to deliver the mortgage paper is not an issue.1
Second I cannot agree that the damages which Womack has sustained by the breach should be measured by the difference in the market value of the things exchanged at the time of the breach. This method of measurement may allow Womack to recover a profit which is unjust under the civil law, and it may deprive him of a profit he is justly entitled to as an item of damages. It may allow Womack to recover a profit which is unjust because in this case he argues to the court that he took advantage of Sternberg in this bargain inasmuch as the Sternberg house was worth a great deal more than the value of $35,000.00 stated in the exchange agreement, and that he is entitled to his “bargain” as damages. If he did in fact take advantage of Stern-berg in this manner, the method of measuring the damages set out in the majority opinion will reflect that “loss of bargain” of Womack.
It has long been settled in this state that our courts will not entertain any such argument for the recovery of damages against a defaulting party to a contract of sale. In the case of Burrows v. Peirce, 6 La.Ann. 297, where damages against a defaulting vendor were sought on the basis that the vendee had gotten a great bargain, the court rejected such a profit as a just claim for damages:
“It is true, the principles of speculation in this trading community give countenance to the rule claimed by * * * the vendee, *586that he should recover the value of the property which was fifty times the price paid for it. But speculation should not mislead us from the true principles of the contract of sale. It is the rule of morality, favored as far as possible by both law and equity, that the buyer should give the full value of the thing purchased and seek to acquire it for no less; and the seller should dispose of it for its fair value and seek for no more ; and that the only basis of the transaction should be that the property and its use is more convenient and useful to the purchaser than the money and its interest, and vice versa, that the money and its interest is more useful to the seller than the property. Keeping these principles in view, if from any cause without fault on either side, the sale is annulled, the price paid should alone be restored. Damages indeed may be given, but they must grove out of other circumstances than that the purchaser got a great bargain or made a fine speculation out of the vendor.” (Italics mine.)2
The rule of the above case is well founded in the civil law. See Pothier, op. cit. supra, nos. 234, 242, pp. 142, 149. I am of the firm opinion that it should not now be rejected and thus make of this court of justice a vehicle for Womack to realize the fruits of his sharp practices as damages.
On the other hand the measurement for damages in the majority opinion may well deprive Womack of a profit which has always been recognized as legitimate damages in the civil law. If the Sternberg house increased in value after the contract was made, that increase is properly a profit of which Womack has been deprived. See 1 Pothier, Treatise on the Law of Obligations (Evans’ tr. 1826), no. 161, p. 81. As I understand the majority opinion its views for measuring the damages on the remand may well not allow for this well-recognized element of damages. If Womack’s house decreased in value after the contract, that should properly be considered also as a loss compensable as damages. See Civ. Code Art. 2565.
Third, I cannot agree that there is any doubt as to Sternberg’s bad faith in the breach of this contract. He attempted to avoid the inference that his breach was from “some motive of interest or ill will” (there was nothing whatever to prevent his carrying out the agreement in good faith) by contending that he considered himself not yet bound so that he could withdraw *588from the agreement. This contention as to his state of mind is clearly refuted by the evidence in this record as to his statements to witnesses that he and Womack had exchanged houses and by the fact that he and Womack celebrated the completion of their agreement in the presence of others at a restaurant after the negotiations were ended. I am in thorough accord with the finding of the district court that he breached this contract in bad faith.
Fourth, I cannot agree that the district judge ought to be restricted on the remand to measuring the damages at the time of the breach. Sternberg, because of his bad faith, is liable for all damages which are the immediate and direct consequence of the breach, unforeseen as well as foreseen. A continuing increase or decrease in the value of the houses exchanged down to the date of trial might not be assessed against a good-faith defaulter because this circumstance might not be contemplated by the parties at the time of contracting. One who breaches in bad faith ought not, however, have the benefit of such a limitation on the general rule of damages by which the plaintiff is placed in as good a position as he would have been if the obligation had. been fulfilled.
Now if the obligation had been fulfilled in this case, Sternberg would have been the owner of Womack’s house at the time of the trial and Womack would have been the owner of Sternberg’s house at the time of the trial, so that to compensate for his bad-faith breach, the condition of things at that time ought to be considered in putting Wo-mack in the same condition he would have been in if the contract had been carried out. In my opinion the trial court was fully justified in measuring the damages at the time of the trial in this case.
The courts of France, which have substantially the same general rules to guide them in assessing damages as we have (see Arts. 1149 et seq., French Civil Code), have wisely recognized that the time for evaluating the damages should largely be left to the discretion of the trier of fact so that a time can be selected which will best result in a zvhole reparation of the prejudice caused by the breach. The an-noted French Code reveals:
The Court of Cassation, considering that the fixing of the indemnity is a point of fact left to the sovereign appreciation of the judges below, permits them to calculate the damage, according to the circumstances of the case, either on the day of the decision, or on the day when the prejudice was experienced by the creditor. The judge will regulate it on the day of his decision when, for example, the works of reparation will have augmented in price between the moment of the damage and that of his decision. 3 Fuzier-Herman, Code civil annoté (1936), Art. 1149, n. 9, p. 268.
*590The view of the majority in this- case that in all cases of breach of a contract of sale damages must be measured on the date of the breach has no basis in our Code or in the civil law. It may well be that in the majority of cases the damages ought to be measured at the time of breach because the plaintiff thus will be put in the situation in which he would have found himself if the execution had taken place. But it has been recognized by the French authorities that circumstances can alter the time for measuring damages.
According to Dalloz, the whole indemnification to which the creditor has a right should consist of the payment of the monetary equivalent of the damage on the day of its reparation; it is then the business of the judge, called upon to fix the indemnity due for non-delivery of goods, to take account of the rise of currency at the date of the judgment, under the influence of monetary variations. Dalloz, Code civil annoté (1958), Art. 1149, n. 4, p. 458.
The whole matter is clearly stated by Planiol and Ripert in their general discussion of the time of evaluation of damages:
The prejudice in principle ought to be evaluated on the day when it was experienced by the creditor because this is the means of putting him back exactly in the situation where he would have found himself if the execution had taken place. However, when the inexecution has entailed a prejudice which increases progressively by reason, for example, of the constant elevation of the cost of materials or of the work which would increase the loss suffered by the creditor, he can obtain an indemnity established by evaluating the prejudice on the day of the decision. By that alone the creditor obtains in such a case a whole reparation. That solution becomes the rule in a period of economic and monetary instability. There are cases, however, when that rule would be discarded because the reason of its being would no longer be met. Thus when the creditor has proceeded to replacement before the decision of the court, he has a right only to the price which he had to disburse; the prejudice is definitely fixed at that moment. The judges below sovereignly set the date on which the prejudice ought to be evaluated. 7 Planiol et Ripert, Traité pratique de droit civil franqais (1954), n0 856, p. 185. See also 2 Ripert et Boulanger, Traité élémentaire de droit civil de Planiol (4o éd. 1952), n° 744 bis, p. 260.
In a lengthy doctrinal discussion of this matter it has been pointed out that the judges of France have taken advantage of the great liberty which the general laws on damages give them, to measure the damages in each case at the time which will *592best wholly repair the prejudice, and they have more and more considered increases and decreases in value down to the day of reparation when they concluded that it was that time of evaluating the damages which wholly compensated for the prejudice. Derrida, L’évaluation du prejudice au jour de sa reparation, Jurisclasseurs périodiques (Semaine juridique) 1951, I, 918. Restricting our district judges, as does the majority opinion in this case, to measuring the damages in the breach of sales contracts at the same time in all cases does not, in my opinion, serve the purpose of damages. Our judges ought also to have the same great liberty as the French judges to decide the matter as the circumstances of each case require.
A simple illustration will demonstrate that in some cases it may be impossible to measure the damages on the day of the breach because the circumstance for their measurement arises after the breach. A contracts to purchase a horse from B for $300.00, and B breaches the contract by failing to deliver the horse. A cannot find another horse of like quality until three months after the breach at a price of $350.00. There is no question that A has sustained a loss of $50.00 by having to pay that amount over and above the price of the horse he had purchased from B. Yet if A is restricted to the date of the breach, the damages could not thus be measured because on that day A did not even know of the existence of the other horse. The proper time for measuring the damages, of course, is at the time of the new contract.
In the case of bad-faith breach, it should be obvious that the unforeseen damages will more than likely occur after the breach. One of our own cases makes clear that the time for measuring damages in a bad-faith breach of a sales contract may be beyond the date of the breach. Tulane Educational Fund’s Adm’rs v. Baccich & De Montluzin, 129 La. 469, 56 So. 371. In that case the plaintiff had agreed to purchase certain realty from one who could not deliver the property according to his promise because he was not the owner. The plaintiff after negotiation was able to purchase the property from the true owner, but at an increased price. In that case the defendant contended that he was in good faith, that he could not be expected to foresee that the plaintiff would have to acquire the property from the true owner at an advanced price, that the damages had to be measured on the day of the breach, and that there were no damages because the market price on that date was the same as the contract price. This court held that the defendant was in bad faith and was liable even for damages not foreseeable, and measured the damages *594at the time the plaintiff purchased the property from the true owner — a time after the breach.
The majority opinion infers that measuring the damages at the time of trial in this case would be contrary to the rule that only those damages are recoverable which are the immediate and direct consequence of the breach, and would “leave the rights of the parties uncertain and encourage litigants to jockey for a trial on a date when the market was favorable”, contrary to the Friedman case. I am of the opinion that the words “immediate and direct” in Article 1934 pertain to causation and not necessarily to time. There might well be a damage directly caused by the breach which occurs at a time somewhat remote from the time of breach. I am still of the opinion that the Friedman decision was wrong and the reasons for it unsound, but regardless of this it would not be controlling in this case because the court there was speaking only in terms of good faith.
For the reasons stated hereinabove I think the case should have been remanded to allow Womack to show (1) the increase, if any, in the value of the Sternberg house between November 15, 1960, the date the agreement was made, and May 16, 1962, the trial date in the lower court, and (2) the decrease, if any, in the value of Wo-mack’s house between those dates.

. We granted writs “Limited to the items of damages assessed by the Court of Appeal against the defaulting party.” The only items assessed were in regard to the two houses exchanged. The presentation of the ease in this court has been limited to these two items.

. Even one wlio breaches in bad faith should not be liable for such an unjust profit of which the plaintiff has been deprived by the breach. Assessing such a profit as damages would amount to making the defaulter liable for punitive damages which are not permitted in the civil law. See Art. 1934(2); Planiol, op. cit. supra, no. 247, p. 149; McCoy v. Arkansas Natural Gas Co., 175 La. 487, 143 So. 383, 85 A.L.R. 1147; Vincent v. Morgan’s Louisiana & T. R. & S. S. Co., 140 La. 1027, 74 So. 541.