Tillinghast v. Cotton Mills.

*271 Hoice, L, after stating tbe case: There is no merit in tbe exception of defendant to tbe refusal of tbe Judge below to enter judgment by default on bis counter-claim. In tbe first place, pursuant to leave given by tbe Court, a formal denial was entered, and tbe order allowing sucb denial was in tbe sound discretion of tbe Judge below. Eevisal 1905, sec. 512. Again, the plaintiff’s cause of action set out in tbe complaint was, in itself, a direct denial of tbe counter-claim. Tbe complaint alleged a contract of sale and a breach thereof on tbe part of defendant. Defendant denied that this was an absolute sale; and speaking to tbe same transaction, alleged, by way of counterclaim, a consignment of goods for sale and demanded an account. Tbe one was in direct contradiction of tbe other, and °a judgment by default on the counter-claim before tbe issues in reference to plaintiff’s cause of action were determined would have been irregular and improper. Phipps v. Wilson, 125 N. C., 106. This being tbe only relevant exception, there is, therefore, no valid objection shown to tbe verdict as rendered by tbe jury. We think, however, that on this verdict tbe 'judgment against defendant should have been entered for $333.69, the difference between tbe contract price and market value at tbe time and place when the goods should have been delivered, adding tbe $8.69 found to be due by reason of default in another shipment, instead of $433.69, estimated on tbe difference between tbe contract price and tbe amount plaintiff was compelled to pay for yarn in order to malee good contracts of sale between him and other parties, and under tbe circumstances established by the verdict. In Hosiery Co. v. Cotton Mills, 140 N. C., 454, we stated tbe rule to be “That on failure by tbe bargainor to deliver *272 goods having a market value, the measure of damages is the difference between the contract price and market value at tbe time when and place where the goods should have been delivered by the terms of the contract.” This follows from the principle, generally recognized and accepted, that damages for breach of contract are such as are the natural and probable results of the breach according to the usual course of things. In goods having a market value like these and usually procurable, the probable loss occasioned by a breach, of the contract in the ordinary and usual course of things would be the sum required to buy other goods of like kind and at the market price. Hadley v. Bauxendale, Exch., 341; Lumber Co. v. Iron Works, 130 N. C., 584; Critcher v. Porter Co., 135 N. O., 542. If the plaintiff seeks to recover different and additional damages arising by reason of special circumstances, he is required to show that defendant had knowledge of these circumstances, and of a kind from which it could be fairly and reasonably inferred that the parties contemplated that they should be considered as affecting the question of damages. 'Tiffany on Sales, 239; Wood’s Mayne on Damages, sec. 20; Van Lindley v. Railroad, 88 N. C., 547; Booth v. Milling Co., 60 N. Y., 487. It is not established by this verdict, nor is it declared anywhere in this record, that the defendant at the time the contract was entered into had any knowledge of special sales made by plaintiff dependent on this contract, or otherwise. And if it be conceded that a general perusal of the pleadings and evidence would disclose a general knowledge on the part of defendant that plaintiff was buying the goods to sell again, here too, in the absence of special circumstances, the method of computing plaintiff’s profits or loss would be the difference between the contract and market value; and any special *273 price paid by plaintiff to cover against his own sales could only be considered as evidence on the question of market value. Lewis v. Rountree, 79 N. C., 122; Marsh v. Patterson, 67 Conn., 473. On what principle should plaintiff be allowed to recover in this case on” a basis of 23 cents per pound, when the market value was 22 cents ? If he paid this extra cent because of some “corner” of or on the market, such a price, paid by reason of abnormal conditions, would not ordinarily be the correct basis for determining the damage. As said by Agnew, Judge, in Kountz v. Kirkpatrick, 72 Pa., 384: “It is the market value, and not necessarily the price paid, that should determine the amount.” The price paid being evidence on that question. Marsh v. Patterson, supra. Or if plaintiff, after he was aware of a definite breach of contract, delayed and neglected to purchase against "his own sales till there had been an additional rise of the market, an increase of damage on this account should not be allowed him. It is an established principle that when there has been a breach of contract definite and entire, the injured party must do what fair and reasonable business prudence requires to save himself and reduce the damage, or the damage which arises from his own neglect will be considered too remote for recovery. As is said in Benjamin on Sales (7 Ed.), p. 934: “In every case, the buyer, to enable him to recover the full amount of damages, must have acted throughout as a reasonable man of business and done all in his power to mitigate the loss.” And in Sedgwick on Damages, vol. 1, sec. 201: “The same principle which refuses to take' into consideration any but the direct consequences of 'an illegal act is applied to limit the damages where the plaintiff, by using reasonable precautions, could have reduced them.” And again, at sec. *274 202: “It is frequently said that it is the duty of the plaintiff to reduce the damages as far as possible. It is more correct to say that by consequences which the plaintiff, acting as prudent men ordinarily do, can avoid, he is not legally damaged. Such consequences can hardly be the correct or natural consequence of the defendant’s wrong, since it is at the plaintiff’s option to suffer them. They are really excluded from the recovery as remote. . In this view, the doctrine would rest on the intervention of the plaintiff’s will as an independent cause. Ad hoc he is not damaged by the defendant’s act, but by his own negligence or indifference to consequences.” If, therefore, the plaintiff, at the time of the breach -of contract, in the exercise of reasonable business prudence, could have saved himself this increase of damage by then making purchases against his own sales, he should have done so, and the increased damage incident to: such failure will not be awarded against defendant. We are not inadvertent to the finding that after the breach of contract the defendant had notice of plaintiff’s collateral sales in time to have shipped the goods, and saved this extra loss. This fact might be a relevant circumstance if the contract was in the course of performance, and the contract relation still subsisted. • Such a suggestion was made by Bramly, Baron, in case of Gec v. Railway, 6 Exch., 211, referred to in Wood’s Mayne on Damages; and the principle may have been applied in subsequent decisions; but no such conditions exist in the present case. As heretofore suggested, the obligation of the contract had matured and the breach was absolute, causing an entire severance of the contract relations. Defendant has never, for an instant, changed his attitude about the matter. He has maintained all along that the transaction was a consignment of goods for sale,, and that he *275 bad. a right to terminate the relation whenever he saw proper. The jury have determined this against him; but he has never requested any postponement or indulgence, or indicated in any way that he intended to' comply with plaintiff’s demand. In such case the notice of special circumstances required to fix a party with special and increased damage means notice given or knowledge had at the time the contract was entered into; and notice given after the contract was definitely and completely broken would not avail to enhance the damages. As said by Chief Justice Andrews in delivering the opinion of the Court in Marsh v. Patterson et al., supra: “Notice to defendants after the contract was entered into would not increase their liability. If these subsales could not reasonably be considered to have been in contemplation of the parties at the time they made the contract, then the defendant could not be made responsible for special profits to be derived therefrom.” We are of opinion, therefore, and so hold, that on the facts established by the verdict, the correct rule for awarding the damages is the difference between the contract price and market value as fixed by the jury, and, applying this rule, that the judgment should be reduced $100 as of the time when the same was first rendered. Modified and Affirmed.