Opinion
March, 1917.
Philip Goldfarb, for plaintiffs.
Arthur Furber, for defendant.
This controversy turns upon several interesting questions as to the practical working out of the rule of the damages recoverable for so-called "anticipatory breach" of contracts to sell and deliver goods — questions owing their novel form, if not their origin, to recent calendar improvements which enable the plaintiff in a commercial action to have a trial, if he so desires, well within a month from the time his cause of complaint arises. In June and July of last year, the defendant entered into written contracts to make installment deliveries of thirty-nine cases of goods to the plaintiffs. The first installment was promised for February 15, 1917; deliveries were to continue during the spring and be completed in June. In December, 1916, the defendant notified the plaintiffs that it would make no deliveries. Suit for damages for breach of the contract through this anticipatory notification was thereupon instituted by the plaintiffs. At the time of the December renunciation, the conditions of prospective supply of the goods were very unfavorable, and it seemed probable that before February arrived the shortage would force the market price far above the contract price and perhaps make deliveries impossible. After suit was started, but before the first installment would have been due, market conditions changed and the defendant notified the plaintiffs of its willingness to perform the contracts in all respects, including deliveries at the contract price on each of the specified dates. Four days after the delivery date for the first two cases and before the plaintiffs would have been entitled to receive any of the remaining thirty-seven cases under the contracts, the action was brought on for trial.
Under these unusual and apparently unadjudicated circumstances, the defendant contended, in substance, that although, under Hochster v. De la Tour, 22 L.J. (Q.B.) 455; Roehm v. Horst, 178 U.S. 1; Windmuller v. Pope, 107 N.Y. 674, and similar landmarks of that hard-fought battle ground of the law, the defendant's renunciation of its contract obligations gave the plaintiffs a right, at their election, to treat such announcement as a breach and thereupon to bring suit before any delivery date arrived, any award of more than nominal damages upon a trial in advance of the delivery dates could not be made, at least as to installments for which the delivery dates under the contract had not arrived at the time of trial. It was urged that, under section 148 of the portion of the Personal Property Law (Laws of 1911, chap. 571), commonly known as the Sales Act, an award of damages for non-delivery of commonly marketable goods cannot be made until arrival of the delivery date has disclosed the market price which fixes "the upper boundary" in any computation of the buyer's recovery. Upon the facts of the instant controversy, the defendant accordingly contended (1) that inasmuch as the plaintiffs had given no replacing orders following the December renunciation and had pleaded no "special circumstances" within the meaning of section 148 they had sustained no damage at all, in view of the defendant's offer, in December, to perform fully the contracts, under which no delivery was called for until February fifteenth; and (2) that, irrespective of the plaintiff's right to start suit before the delivery date for the first installment, they could not, in a trial four days later, be awarded damages representing "the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered" (§ 148), as to any installments for which the delivery date had not actually arrived at the time of trial. On the other hand, the plaintiffs contended (1) that section 148 does not undertake to state the rule of damages applicable to an action begun and tried before the delivery date, and predicated on breach through anticipatory notification rather than failure to deliver; (2) that the defendant's attempted recantation did not require the plaintiffs to regard the contract as again in force; (3) that the doctrine of the buyer's duty to reduce his damage by accepting opportunities for replacing orders has no application to contracts for commonly marketable goods; and (4) that, at least in the absence of allegations or proof of special circumstances, the rule of damages applicable to (1) above is that indicated by Masterton v. City of Brooklyn, 7 Hill, 61; Barnes v. Denslow, 30 N.Y. St. Repr. 315, 318; affd., 130 N.Y. 687; Boyd v. Quinn Co., 18 Misc. 169; Williams v. De Soto Oil Co., 213 Fed. Repr. 194, 198; Follansbee v. Adams, 86 Ill. 13, and similar decisions, which seem to make the market price at the time of the breach the standard of comparison with the contract price, in measuring the plaintiff's loss through the defendant's anticipatory refusal to do something for which the time of performance has not arrived at the time of trial.
Commenting upon certain of the foregoing contentions as to which we have indications of judicial opinion, if not definite adjudication, I think it may be said, without elaboration of reasoning, or authority, to be the rule of this jurisdiction: (1) That the Sales Act (Pers. Prop. Law), including section 148 thereof, applies fully to contracts for the future delivery of goods (§§ 86, 126, 148, subd. 3); (2) that the buyer after renunciation and suit was under no obligation to acquiesce in the seller's effort to withdraw that renunciation or accept delivery when tendered on the contract dates; (3) that where the executory contract renounced related to goods for which there is an available market at the time and place set for delivery the law does not require the vendee to purchase their goods, give replacing orders, or do any thing to reduce his damages below the difference between the contract price and the market value at the time and place set for delivery ( Saxe v. Penokee Lumber Co., 159 N.Y. 371, 378, 379; Pers. Prop. Law, § 148); (4) that the rule of the vendee's duty to do what he can to mitigate his damage applies only, under section 148, to cases in which there was no available market where the goods could be bought and sold, at the time and place of delivery, or the vendee proposes to plead and prove "special circumstances showing proximate damages of a greater amount" than "the difference between the contract price and the market or current price of the goods at the time when they ought to have been delivered;" (5) that section 148, subdivisions 2 and 3, does not authorize the renouncing vendor to plead or prove "special circumstances" showing that the proximate damages ( e.g., the loss which the vendee necessarily sustained) was less than the difference between the contract price and market price, even though, before the date for any delivery arrived, the vendor offered to do that which would enable the vendee to have full and prompt performance and avoid any loss at all; (6) that "anticipatory breach" through announced intention to withhold performance does not fictitiously move the contract specifications of times for performance ahead to the time of such repudiation and enable the vendee to regard the vendor as liable for failure to perform a new obligation to perform as of the date of repudiation; "anticipatory breach" confers an optional right to sue as of that date, but not of necessity to recover damages admeasured as though the contract called for performance as of that date ( Roper v. Johnson, L.R. [8 Com. Pl.] 167; Brown v. Muller, L.R. [7 Ex.] 319; Josling v. Irvine, 30 L.J. Ex. 78; Boorman v. Nash, 9 B. C. 145; Leigh v. Paterson, 8 Taunt. 540); and (7) that although in an "action for failing to deliver goods," subdivision 2 of section 148 provides that "the measure of damages is the loss directly and naturally resulting in the ordinary course of events from the seller's breach of contract," this is applicable to goods for which "there is an available market." as for the goods here in controversy, only upon taking into account the provisions of subdivision 3, by which the buyer of such goods is entitled to receive at least "the difference between the contract price and the market price" at the time and place of delivery and may recover a greater sum by pleading and proving special circumstances showing that his actual proximate loss was greater than that difference. 2 Sedg. Dam. (9th ed.) § 636d et seq.; Williston Sales, §§ 584-587, 599; Wald's Pollock Contracts [Williston's 3d Ed.], 369.
Novelty attaches to the instant suit by reason of the fact that the plaintiffs press their case to trial before the "market or current price" at the times the goods should have been delivered had been disclosed by the arrival of the specified days. The rule laid down in section 148, declaratory of common-law authorities such as Roehm v. Horst, 178 U.S. 1; Windmuller v. Pope, 107 N.Y. 674; Todd v. Gamble, 148 id. 382; Parsons v. Sutton, 66 id. 92, has been often applied to actions begun before, but tried after, the delivery period. I cannot, however, regard trial before the arrival of part, or any, of the delivery dates, as authorizing the application of a different rule of damages than that declared in section 148. The Masterton case and others like it do not state a rule in any event applicable to executory contracts for the delivery of goods commonly obtainable in the market; they state, if anything with precision, the rule applicable to certain of the circumstances where "anticipatory breach" confers a right of action for the value of the contract lost through such repudiation — the difference between the contract figure for performance and the market cost of performance, of contracts outside the purview of section 148, subdivision 3. In other words, if one party to a contract is engaged in performing, or is to perform, thereunder certain work or supply certain materials, not in the nature of goods possessing a market value within the purview of subdivision 3, advance renunciation by the adverse party may be held to entitle the contractor to the value of the contract to him of the date when he was notified to do nothing further thereunder; but the Masterton case states no rule superseding the plain provision of section 148. On the other hand, trial in advance of the delivery date does not seem to me to preclude the award of compensatory damages, measured by ascertainment of the probable market price on the future delivery date. The question therefore becomes one of evidence, rather than of rule; the difficulty is inherent in the doctrine of "anticipatory breach," but the right to have the damage rule applied arises from acceptance of the doctrine at all. Error in the jury's ascertainment of the probable current price on the future date is one of the risks which the vendor assumes in advance renunciation and the vendee assumes in seeking trial before the delivery date arrives.
In the case at bar, therefore, the plaintiffs were entitled to have the jury determine and award them, at the trial four days after the delivery date for the first installment of two cases, the difference between the contract price and the market price for the two cases on the delivery date, and also the jury's computation of the same difference as to the quantities deliverable on the enumerated dates down to June first. The market price of the goods for immediate delivery on the renunciation date was not controlling, nor was the price at which the plaintiffs could, on that date, have made replacing contracts for delivery on the dates specified in the broken contracts. To establish their damages, the plaintiffs were not required, on the renunciation date or at any time thereafter, to secure replacing contracts at the best market price obtainable, for the whole or any part of the original contracts ( Saxe v. Penokee Lumber Co., 159 N.Y. 371), nor were they required to show the market price for the whole quantity of the agreed shipments, by the indicated installments, if sought to be procured from others. Dana v. Fiedler, 12 N.Y. 40. The plaintiffs would have had a right, I think, although that is not necessarily decided here, to fix definitely the measure of their damage by securing replacing orders for the whole contract quantity, as soon as possible after renunciation, although it has been held that if they had done so, and had become thereby obligated to pay more than the market price for the goods on the delivery date when it actually arrived, they could recover only the difference between the original contract price and the price on the delivery date, no matter what replacing contracts had fairly cost them at the time of renunciation. York-Draper M. Co. v. Lusk, 6 Kan. App.629. What the market or current price of the goods in suit would probably be upon the date enumerated in the original contracts would be for the jury to determine, as best it could, from the evidence adduced on either side. Such a determination is at least no more speculative, difficult and uncertain than a discharged employee's probable earnings during the portion of a contract unexpired at the time of trial. The market price and conditions on the first delivery date would obviously be admissible in the case at bar; likewise proof as to those prices and conditions, before and after that date, down to the day of trial. The market price on the day of renunciation would thus be admissible, if not palpably too remote. It would not be binding on the jury, or fix automatically the extent of the recovery, as the plaintiffs claim, although, in the absence of proof as to later prices and conditions, it might sustain a verdict based on that figure on the theory of the presumed continuance of a condition not shown by the vendor or vendee to have changed, even as the discharging employer has the burden of showing that his liability should be diminished by earnings of the discharged employee during the remainder of the contract term. Proof that inquiries among dealers in the goods had led to the quoting of a price and the actual purchase of goods at the price, even for less than the contract quantity, would be admissible, if relating to a time not too remote. Goldstein v. Arkell Douglass, Inc., N.Y.L.J. March 30, 1917. "A price-list, stating the price at which a manufacturer will sell, or statements of dealers in answer to inquiries, are competent evidence of the market-price of a marketable commodity, and is a common way of ascertaining or establishing a market-price." Harrison v. Glover, 72 N.Y. 451. Competent evidence of the price at which, at the time of trial, orders could be placed with responsible firms for delivery of the goods on the remaining delivery dates specified in the renounced contracts would be admissible — not on the theory of mitigation, but as an aid to the jury in reaching a conclusion as to what the price will probably be on the eventual dates. Competent evidence would be admissible of prospective changes in conditions affecting market value before the delivery dates — conditions of supply, demand, and the like.
On the other hand, the offer of the defendant, at the end of December, to withdraw its repudiation and make deliveries on the contract dates at the contract price, does not seem to me material or competent upon the issue before the jury. Such an offer has no competency or bearing, as we have seen, unless as index of market price on the delivery dates from February fifteenth to June first. Emanating as it did from the defendant in the action, after the vendee had treated the contract as broken by renunciation and had brought suit therefor, the offer of the defendant has only the status of a December offer of replacing contracts, and it comes from a source so interested and provocative of such suspicion that the courts have commonly denied its admission to the record at all on the question of market value.
In view of the vigor and ability with which the foregoing aspects of the case have been discussed in the submitted briefs, it has seemed fair to make a summary of my conclusions concerning them. In a number of respects which need not be itemized the rulings made upon the trial will be perceived to have been radically at variance with what should have been in the light of the conclusions enforced by a more careful examination of the subject. It follows that the verdict rendered should be set aside, and the case restored for retrial. An order to this effect may be submitted, setting the case down for trial before me, in Trial Term, Part III, on April 12, 1917, or sooner if mutually desired.
Ordered accordingly.