Arthur Delapierre Co. v. Chickasaw Lumber Co.

Sykes, J., delivered the opinion of the court. This is an appeal from a judgment of the circuit court of the First district of Chickasaw county for seven thousand, five hundred dollars, damages for profits claimed to have been lost by the appellees because of the failure of the appellant to deliver to them at their mill certain logs claimed to have been purchased by appellees from appellant. The material allegations of the declaration necessary to an understanding of the case are about •as follows, viz: That on or about the 7th day of April, 1909, the defendant entered into a contract with the plaintiffs, whereby it sold the plaintiffs the amount of two million, two hundred thousand feet of timber in logs, two hundred thousand feet of which was poplar, and two million feet of red oak and white oak; said defendant was to ■cut said timber and haul the same to Pyland, and there yard it for inspection, measurement, and delivery to the plaintiffs at that point, at certain specified prices. That the defendant, under this contract, delivered a certain number of logs to the plaintiffs, and then failed and refused, without just cause, to deliver the balance. Plaintiffs alleged that they were making a profit of twenty-three dollars and fifty cents per thousand feet on all poplar logs received from the defendant under this contract ; that upon the oak logs they were to have made a profit of six dollars and ninety cents per thousand feet if the contract had been complied with, claiming in all, as their damages, the profits they would have made on the logs after they were manufactured and sold of over sixteen thousand dollars. They further claim that, owing to the refusal of the defendant to deliver logs according to this contract, they were greatly damaged by not being able to secure timber, and were compelled to stop running their sawmill and shut down; that under the contract, if the defendant had fulfilled the same, plaintiffs would have had sufficient timber to have kept their mill running for twelve months; that in view of their contract — 609 — •with the defendant, they refused and failed to make contracts with other people for logs; and that they were .greatly damaged because they had to pay the labor and running expenses of the mill while the same was shut down, which damage amounted to the sum of five thousand dollars, wherefore they sued, claiming as damages •over twenty-one thousand dollars. The testimony of the plaintiffs in this case is that iheir agent and an agent of the defendant made an oral •contract for the purchase and sale of these logs; the testimony of the plaintiffs as to the exact amount being rather indefinite. Mr. A. F. Smith, who claims to have made the contract on behalf of the plaintiffs, when asked do tell the jury all about the contract, stated as follows: “In the spring of 1909, Mr. Shepardson came up to our mill on the M. & 0. branch out here and wanted to ■sell us some logs. He said he had between two million and three million feet of red and white oak, and between two hundred thousand and three hundred thousand feet of poplar; and we contracted with him for between two million or three million feet of oak and between two hundred thousand and three hundred thousand feet of poplar.” It will therefore be seen that the contract as alleged hv the plaintiff, was for between two million and three million feet of red and white oak, and between two hundred thousand and three hundred thousand feet of poplar. If recovery can be had at all upon this contract, it will have to be for the smaller amount as testified to by this witness. We might say, in passing, that the agent •of the defendant^ denied absolutely the making of the. ■contract. The testimony for the plaintiffs also shows that the mill was shut down for several weeks, because of the failure of the defendant to deliver this timber, and that at other times they were not able to saw their full ■capacity of timber because of the breach of said contract. It does not show expressly what efforts were made by the plaintiffs to buy other logs of like kind and — 610 — character after said breach. It was contended by the appellant that Mr. Shepardson had no authority to sell over five hundred dollars worth of timber for the appellant at a time; that he exceeded his authority if he made the contract in suit here. The testimony in this case shows, however, that this party was the manager of the timber and of the mill of the appellant, in Chickasaw county, and that he had the apparent authority, at least, and was so held out to the world by the appellant, to make this contract. We, therefore, see no merit in this contention of the appellant. It is contended by the appellant that the instructions as to the measure of damages given the plaintiffs are absolutely erroneous. The first instruction told the jury,, in effect, that if they found for plaintiffs, they should— “assess the damages at that amount that the jury reasonably believe from the evidence in the case would have been a reasonable profit that would have been made by the plaintiffs on the undelivered logs.” The second instruction, in effect, told them that, in assessing these damages— “you are to take into consideration the contract price of said logs and what the evidence shows that they would have been worth to the plaintiffs had they been furnished according to the contract, deducting therefrom the cost of preparing the lumber from said logs, and the cost of marketing the same including'the freight and all expenses.” From a. consideration of the declaration and these instructions, it will be seen that it was the theory of the plaintiffs that because of the breach of the contract, the plain tiffs-had to shut down their sawmill, and were thereby prevented from sawing the logs into lumber and making the profit they would have made from the sale of this, lumber. If the testimony in this case had shown that the plaintiffs had a regularly established business for the sale of this lumber, which was known to the defendant af the time. the contract was made, and that — 611 — because of a failure of the defendant to deliver the logs, the plaintiffs were unable to-have gotten more logs out of which to manufacture the lumber, thereby causing the mill to shut down and preventing them from selling the lumber, then the rule above announced would have been correct, under the case »of White v. Leatherberry, 82 Miss. 103, 31 So. 358. In this case, however, the testimony does not show that the plaintiffs were unable, by the exercise of reasonable care and diligence, to have gone into the market and purchased other logs of like kind and. character. It shows that the plaintiffs bought some timber as a matter of fact, but not.how much. The testimony does not show that because of this breach, the mill was-shut down for the period of time during which it would have taken to have sawed up this number of feet of timber;; in fact, the testimony shows that the mill was only shut down for a short time. It is the contention of the appellees in this case that they are entitled to recover these profits regardless of the fact tha.t during the greater portion of this time their mill was running and manufacturing logs into lumber which was being sold by them at a profit. In other words, it is the contention of the appellees that they are entitled to keep, as profits, the profits they made out of other timber bought by them and manufactured into lumber during the time they would have been sawing the timber delivered to them by the appellant, had the appellant carried out its contract. The testimony shows that the appellees did make a profit out of the timber purchased by them after the breach of contract and manufactured by them into lumber. In other words, if the contention in this case of the appellees be sound, then the appellees would be making double profits, that is-to say, the profits that they made out of the timber purchased by them after a breach of this contract, and the profits that they would have made out of the manufacture of the logs purchased by them from the appellant. This is not the law. The mill of the plaintiffs was one' of limited capacity, ranging between seventeen thousand — 612 — and twenty-five thousand feet of timber a day. It would have taken in the neighborhood of ten or twelve months to have sawn all the timber under this contract; while, as a matter of fact according to the testimony, the mill was only shut down for a few weeks because of the breach of said contract. The true measure of damages in this case is as follows: When the defendant failed to deliver these logs, it was then the duty of the plaintiffs to use reasonable care and diligence to purchase other logs of like kind and character to manufacture into lumber. They are entitled to recover as damages the difference between the contract price and the price actually paid for logs to take the place of the others contracted for. If they were unable to purchase in the open market a sufficient number of logs to take the place of those contracted for, then they are entitled to recover as damages the profits they would have made on the manufactured lumber of this remainder of logs they were unable to buy in the market. If there were any other proximate damages growing out of the breach of this contract, then these damages could also be recovered by the plaintiffs. As to the item of five thousand dollars expenses because of the mill being shut down, we are unable to see how that could be a proper item of damages, because this item is necessarily included in the profits they would have made on the logs had they been delivered. Counsel for appellees, in his able presentation of the case, makes the contention that, regardless of whether or not other logs could have been bought in the market, and regardless of the fact that a part of them were bought, and that the mill was running nearly all the time, this court should not take this into consideration, and that plaintiffs can recover the profits they would have made on the logs when manufactured into lumber. Learned counsel misconceive the case of White v. Leatherberry and the other decisions of this court and the authorities cited in the White Case. He absolutely overlooks the rule that it is always the duty of the injured party — 613 — to use reasonable care and diligence to minimize his damages ; and, in this case, this duty was to attempt to purchase, in the open market, other logs to take the place of those the defendant failed to deliver. And the defendant is liable only for the difference between the profits actually made and those plaintiffs would have made had not the contract been breached. Since the mill was one of limited capacity, it is obvious that the plaintiffs could not have sawed but a certain amount of lumber a day, and that, in this case, it would have taken them in the neighborhood of ten or twelve months to have sawn the lumber contracted for. Consequently, if this timber had been delivered, they certainly could not have made any other profit out of any other timber while they were engaged in sawing this into lumber. Appellees contend that they could have put the timber away and kept it and sawed it whenever they got ready, and, for this reason, can claim these profits in this case. This, however, is not the law. If it were, a party who had sold a number of bales of cotton, say for fifteen cents per pound under an unusually good contract, when cotton was worth only ten cents per pound in the market, and who buys this cotton from another party in.the open market for ten cents per pound, explaining to his vendor that he is buying it for delivery to. another party at fifteen .cents per pound, upon a failure of his vendor to deliver the cotton, then, instead of purchasing the cotton in the open market to replace that not ..-delivered to him, he could, simply without any effort on his part, recover of his vendor the five cents per pound profits he would have made from the sale of the cotton, when, as a matter of fact, he could have bought the cotton in the market for the same price the party had agreed to sell it to him for, thereby not being damaged one cent. The controlling features in the recovery of loss of profits for the breach of contracts of this character are: First, that when the contract was made, the seller knew for what the com614 modify was being sold, consequently that he contracted with this idea; second, that the purchaser is unable to buy this commodity , in the market with which to fill his contracts. This is the rule laid down in the case of White v. Leatherberry, and is the general rule. Reversed and remanded.