Salmon v. Helena Box Co. ( 1906 )

ADAMS, Circuit Judge.

This was an action at law instituted by the Helena Box Company, defendant in error, against Hamilton H. Salmon and R. Brandi, composing the firm of Hamilton II. Salmon & Company, plaintiffs in error, to recover damages for a breach of an executory contract for the sale of lumber, and in addition thereto, to recover a balance due for lumber actually sold and delivered. The terms of the contract are not disputed. They arc found in a letter written and signed by defendant of date, January 14, 1904, addressed to the box company, as follows:

•‘You may enter our order for the following cottonwood lumber: [Here follows a description of 4,000,000 feet of different grades and sizes of common commercial lumber and tiic agreed price for each kind.] All of the above on tlie Helena, Ark., rate of freight. [Here follows a description of one million feet more of such lumber, and its price.] To be delivered on Cincinnati, Ohio, freight rate. * * * We can start shipping on the above at once, and understand that you will be in a position to ship us from 40 to 50 cars por month, in accordance with shipping directions. Shipments to be made in accordance with instructions, as given l>y us from time to time.

“[Signed]

Hamilton II. Salmon & Co.

“Accepted:

Helena Box Company, by H. W. Uosby, Secretary.”

The main issue of fact on the claim for damages for breach of the contract was whether the plaintiff or defendants first breached it. Plaintiff claims that defendants, after giving shipping instructions for a certain quantity of lumber, ceased giving any further instructions and refused to take the lumber according to the requirements of the contract; that plaintiff was at all times ready to fill orders made according to the contract, and that after waiting a reasonable time for shipping directions, it sold the lumber for what it could get and sustained the loss sued for. Defendants claim that plaintiff first breached the contract by failing to fill orders according to instructions and by filling them, when done at all, with inferior quality of lumber; and for these reasons that they were justified in rescinding the contract. The case was tried to a jury and a large amount of proof taken on the issue just stated.

The learned trial judge after carefully stating the contentions of the parties so that there could be. no misunderstanding about the issue joined in the case, concluded that part of the charge relating to liability as follows:

“Now if you find from all the evidence in this case that the defendants were not guilty of a breach of the contract, that they acted in good faith and were ready to take the lumber and the only reason they did not take it was because the plaintiff was unable to fill their orders, then your duty would he to find Hie issues * * * in favor of the defendants and that would be the end of it.”

Then the converse of the proposition was stated and the jury was told that if defendants, and not the plaintiff, were guilty of a breach of the contract, the plaintiff was entitled to recover. Considering the care with which the court defined the issues between the parties and the clear statement of the ultimate fact on which liability depended we think the jury was fully instructed and that there was no reversible error in not giving the instruction requested by defendants’ counsel to the effect that plaintiff could not recover unless it had previously complied with the conditions imposed upon it by the contract. That proposition was substantially covered by the main charge, and it was not error to refuse to repeat it in the language chosen by defendants’ counsel.

The next question for our consideration relates to tlie proper construction of the contract of July 14, 1901. On this the trial judge charged the jury substantially that the contract was valid and imposed the duty upon defendants to order lumber shipped within a reasonable time, and as to what was a reasonable time lie charged as follows:

“What a ‘reasonable time’ is. depends upon the circumstances in' each particular case. Now, in view of the fact that this contract provides that the plaintiff was to he ready to ship between 40 and 50 cars a month, what do you, as reasonable men, think would he reasonable * * * to require defendants to order shipped out during that time? * * * But on the other hand the law docs not expect:, In view of the fact that, the contract: provides, that they shall await, shipping instructions, that the defendants must * * * have ordered every month between 40 and 00 cars."

Plaintiff was the owner and operator of two saw mills, and by contract entitled to the product of other mills situated at or near Helena, Ark., and had cither in stock or quickly available, cottonwood lumber of the dimensions in length, width, and thickness usually found in lumber yards. Defendants were large dealers, requiring such lumber to meet existing and future orders of their customers located in different parts of the country. In these circumstances the contract in question was made. It contains an express agreement for the purchase and sale of specified quantities of different dimensions of lumber, an agreement fixing the price of each kind specified, an agreement that shipments should be made according to shipping instructions to be given from time to time by defendants.

In the absence of any contrary provision found in the contract for delivery, the general rule fixing the place of delivery at the place where the goods are located when sold, must prevail. Benjamin on Sales, § 682; Hatch v. Oil Co., 100 U. S. 124, 131, 25 L. Ed. 554. The trial court properly held that the parties made a valid and enforceable contract obligating defendants to give shipping instructions to plaintiff within a reasonable time and requiring plaintiff, within like reasonable time, to make shipments according to the instructions. No option was left to either party. The buyers could no more neglect to give shipping instructions without violating their obligation than the seller could neglect to make shipments after receiving the instructions without violating its obligation. The contention of defendants’ counsel that the clause requiring shipments to be made according to shipping instructions to be given from time to time by the buyers renders the contract void for uncertainty or enforceable only .at the option of the buyers is not sound. Hinckley v. Pittsburgh Bessemer Steel Co., 121 U. S. 264, 7 Sup. Ct. 875, 30 L. Ed. 967; Cold Blast Transp. Co. v. Kansas City Bolt & Nut Co., 62 C. C. A. 25, 114 Fed. 77, 57 L. R. A. 696; George Delker Co. v. Hess Spring & Axle Co. (C. C. A.) 138 Fed. 647; Boyington v. Sweeney, 77 Wis. 55, 45 N. W. 938; Excelsior Wrapper Co. v. Messinger, 116 Wis. 549, 93 N. W. 459; Ault v. Dustin, 100 Tenn. 366, 45 S. W. 981. It is contended that the following clause of the contract, "We understand that you will he in a position to ship us from ■10 to 50 cars per month in accordance with shipping directions” imposed upon defendants the obligation to order that much, at least, monthly. This clause was treated by the trial court as a limitation interposed in favor of the box company to safeguard it against excessive orders at any one time; and this, we. think, in the light of all the other terms of the contract, was its intended function. This clause was also properly treated as one of the terms of the contract which the jury might consider in determining what, within the contemplation of the parties, would be reasonable expedition in the matter ol giving shipping instructions.

Was the true rule governing the measure of damages given to the jury? Plaintiff’s secretary testified as a witness for his company concerning the efforts made to sell lumber during 1904 and the prices received for what was sold. Another witness connected with a different lumber company testified at the instance of plaintiff, about makiifg two-trips, in July and August, 1904, through the states of Ohio, Illinois, Michigan, Iowa, Kansas, and Nebraska, a route which he says presented the most desirable market for sale of cottonwood lumber. Both of these witnesses referred to’ “a market price,” and one of them to-the market price at Plelena. Moreover, the evidence discloses that St. Louis, Louisville, Cincinnati, Chicago, Kansas City, and Omaha each afforded a market for lumber such as contemplated by the contract.

Notwithstanding evidence of this character, the court charged the-jury concerning the measure of damages as follows:

“All that the law requires the seller to do when there is a breach of the-contract is to exercise reasonable diligence such as any business man similarly situated would exercise to get the best price that he can and if he obtained that price, if he does that, and there is still a loss then the loss must fall on the party who breached the contract. So in this case it is for you to determine, if you find this issue in favor of plaintiff, (that the defendants breached the contract) how much less did the plaintiff have to take for the lumber in. order to sell it, having exercised due diligence to obtain the best price, than it would have received under the contract price.”

An exception was taken to this portion of the charge by identifying it in a way satisfactory to and approved by the trial court. Expressing the same thought the court in another part of the charge told the jury as follows:

“The only measure of damages which is to govern you is this: What price could the plaintiff, after there was a breach of the contract on the part of the defendants, obtain by the exercise of reasonable diligence for the lumber which the defendants under their contract ought to have taken and did not take,” etc.

Erom these excerpts it is obvious that the court below took no heed of the evidence tending to show that there was a market value for- the lumber at Helena or at any other place. It announced a. general rule which in the absence of one more specific and applicatory might be the only available rule. 1 Sedgwick on Damages,. § 170 et seq; Benjamin on Sales, §§ 758, 869, and cases cited. But we think the present case is subject to more specific treatment, and is governed by well-established rules applicable to different phases-disclosed by the proof. It certainly does not clearly appear from the proof that there was no market value for cottonwood lumber at Helena in the summer of 1904. If there was such a market value plaintiff’s measure of damages would have been the difference between the contract price and the actual market value of the lumber at that place at the time or times when delivery was required by the contract; and in that event, the rule adopted by the trial court would have béen erroneous. If Helena afforded no market for the lumber in question and if there was any available market therefor, plaintiff’s-measure of damages, as will be presently seen, would have been the: difference between the contract price and the market value at the nearest available market where it could have been sold, with deduction of freight and other expenses attending the transportation of the lumber to that market. Xone of these hypothetical conditions were submitted to the jury for its determination, but the conclusion of the court below seems to have been predicated upon the hypothesis that there was neither*a market value at Helena nor anywhere else for the lumber in question. This, for reasons already stated, we think, the record docs not warrant.

The Supreme Court of the United States in Grand Tower Co. v. Phillips, 23 Wall. 471, 23 L. Ed. 71, had occasion to consider this subject. That was a case where the Grand Tower Company entered into a written contract with Phillips and others to deliver to them at Grand Tower, Ill., 150,000 tons of coal per year in equal daily proportions between Bebruary 15th and December 15th of each year. The company breached the contract by failing to deliver coal as required. Mr. Justice Bradley, in delivering the opinion of the court, after alluding to the familiar rule which regards the price at the. place of delivery as the normal standard by which to estimate the damage for nondelivery, and to the obvious unfairness of confining plaintiffs to the prices at Grand Tower, where there was no general market and where the prices were under the control of defendant company, lays down the following rule:

“The tnv> rule would seem to be, to allow the plaintiffs to show the price they would have had to pay for coal in the quantities which they were entitled to receive it under the contract, at the nearest available market where it could have been obtained. The difference between such price and the price stipulated for by their contract with the addition of the increased expense of transportation and hauling fi£ any], would be the true measure of damages.”

In Yellow Poplar Lumber Co. v. Chapman, 20 C. C. A. 503, 74 Fed. 444, which was a case where damages were sought by the seller against the buyer for failure to receive timber sold under a contract for its sale and delivery at certain times, the court says:

“We have no hesitancy, on the pleadings as they now stand, in announcing the true measure of damages in this case, — if damages there were, — as the difference between the contract price of the timber and its market value at the places where it was to have been delivered; and if the defendant below had entire control of the market at those places, as is claimed by defendant in error, then the measure of damages was the difference between the contract price of the timber at such points and the price of like timber in the nearest available market, less the additional cost of delivering such timber from said points to such nearest market” — citing McNaughter v. Cassally, 4 McLean, 530. Fed. Cas. No. 8,911; Pope v. Filley (C. C.) 9 Fed. 65, and Tower Co. v. Phillips, 23 Wall. 471, 23 L. Ed. 71. To the same effect are Lawrence v. Porter, 11 C. C. A. 27, 63 Fed. 62, 26 L. R. A. 167; 1 Sedgwick on Damages, § 246, and cases cited; Benjamin on Sales, pp. 883, 894.

As the record now appears we think the learned trial judge entertained an erroneous view concerning the measure of damages applicable to the facts of this case and erred in charging the jury as stated on that subject. Some exceptions were taken to the action of the Circuit Court concerning several small items of account involved in the claim for balance due for lumber actually received by defendants, but after careful consideration, we find no reason for disapproval. Substantial justice was reached in those particulars. The reference- by the trial judge in his charge to the rules of the National Hardwood Association as affecting widths of lumber, to which exception was taken, appears to have been inadvertent, and to have been properly explained when attention was called to it in the exception taken. Whether widths were fixed by the rules of the association or by the contract seems unimportant. The judge, at worst, onty referred to the wrong document as making provision for certain unquestionable widths, about which he was instructing the jury. - The mistake, if any, was harmless.

It results that because of the adoption of an erroneous standard for computing" the damages, the judgment must be reversed, and a new trial ordered.