Jobbers Overall Co. v. E. R. Deputy Co.

Raper, District Judge. Action by plaintiff to recover damages for - breach of contract for sale of 150 dozen overalls. Plaintiff pleaded as its damages the difference between the cost of manufacturing and the agreed price; that is, the profit it [704] would have made on. the completed, sale.- Some, other items of special ■ damages als,o were - claimed, but were excluded on the trial. ..The.-defendant offered proof, to show that,-,at the time of the cancellation of the order, the goods were worth- more on the market than the contract price. Such proof was rejected on the ground that it Avas immaterial. The court instructed the jury that if they found for plaintiff it was entitled to.recover the difference between what-it cost the plaintiff to furnish the goods at Lynchburg, Virginia, and the price named in the contract.' - There was a verdict and judgment for plaintiff; defendant appeals. The 'rejection' 'of defendant’s evidence as to the market price of the overalls and the giving of that instruction are,alleged as errpr. . There is evidence that, after the receipt and acceptance of the written order, the plaintiff; an extensive manufacturer of overalls at Lynchburg,- Virginia, made up the goods, and that the profit of the company on the contract, if the goods had been accepted and paid for by defendant, would have been |900, which testimony was received over the objection of defendant. Evidence also. aaus given that some of the garments were of unusual size, but nothing so extraordinary in that respect as to indicate they may not have found a sale on the market. Defendant’s rejected testimony was to the effect that such’ goods did have a ready market.' ’ , ’ The trial court evidently' followed the conclusion of the majoiity -opinion -in Diels v. Kennedy, 88 Neb. 777, which seems to hold that, on a breach of contract for the sale of flour, the meásure of damages would be the difference- betAveen. the cost .Of manufacture and. the'contract price (three judges dissenting).-. > In that case it Avas not necessary for the court. to ■ determine that question: ‘ The court was oníy called upon to say Avhethef there Ávás any élement of damá'gé alleged in the petition'to AVhich a demurrér hád been'sustained. The sixth paragraph of the petition, which alleged as damage the difference-' betAveen the necessary' cost' ‘ of production [705] and the contract price, had been stricken ont by' the trial court, and a demurrer then interposed to the. petition with that paragraph out.-, In the lower court the demurrer was sustained and the action dismissed. The real question at issue, ■ and the only one necessary to determine, was: Did the petition without the sixth paragraph state a cause of action?. Chief Justice Reese in the opinion says (p. 781) : “Our conclusion is that, in.any view of the case,-the action of the district court in sustaining the demurrer was' erroneous. Even had the sixth paragraph of the petition been correctly stricken out, enough remained to constitute a cause of action for.' some damages, and the demurrer should have been overruled.” So the conclusion announced- in that case, to the effect that the measure of damages was -the difference-, between cost of production and the contract price, was obiter dictum and- cannot be considered as; authoritative,- and such rule is not applicable-' to- a situation where the subject of the sale contract of personal property, has a market value that can be readily and definitely fixed.The conclusion stated by Chief Justice Reese has never been adopted by this court in any case, so far as known, where it is shown that the commodity has a market value, but several cases have announced the principle in sub-, stance applicable to cases-like the one at-bar, as follows:. “The general rule is that the measure of damages where the buyer repudiates the contract • and refuses ■ to receive and accept the goods is the difference between the contract price and the market value of the goods at the: time and place of delivery.” 35 Cyc. 592. See, also, 24 R. C. L. 116, sec. 386. The text in those two works is- supported by nearly all the states in the Union, as well as the supreme court -of the United States and other federal decisions. In Nebraska, that general rule has the' support of the following cases: Dodge v. Kiene, 28 Neb. 216; Funke v. Allen, 54 Neb. 407; Allen v. Rushforth, 77 Neb. 840; Trinidad Asphalt Mfg. Co. v. Buckstaff Bros. [706] Mfg. Co., 86 Neb. 623; Tacoma Mill Co. v. Gilcrest Lumber Co., 90 Neb. 104; Fahey v. Updike Elevator Co., 103 Neb. 245. The uniform sales act (Comp. St. 1922, sec. 2533) fixes the liability of the buyer who wrongfully refuses to accept and pay for the goods, which is, in. substance, the rule quoted from Cyc., but that does not apply to sales made before the act went into effect, July 28, 1921. Where there is no market value, or under certain conditions, the rule is different, and the characteristic distinctions are pointed out in Murray v. Stanton, 99 Mass. 345, and Todd v. Gamble, 148 N. Y. 382, 52 L. R. A. 225. In the first of the two cases cited it is said .(p. 349) : “When there is ‘a market value,’ it shows the price at which either party may have relief from the consequences of the default of the other; and therefore it properly measures his damages. But when there is no such standard, the damages must be estimated from other means of valuation.” In the New York case,. Judge Gray’ says (p. 385) : “Market value, in the ordinary sense, is generally, but not always, the, measure of damages, and the application of the rule necessarily must 'be to a cáse where it is shown that there is a market value for the subject of the contract of sale.” In 35 Cyc. 594, it is further said: “If the article has no market value the measure of damages is the difference between the contract price and the cost of producing it, but to render such a measure of damages applicable there must be proof that the goods have no market value.” In the case at bar, there was no testimony that the goods had no market value. . A case from circuit court of appeals, Manhattan City & I. R. Co. v. General Electric Co., 226 Fed. 173, is in principle very like the one at bar, and it holds that proof to show that a manufactured article has a market value should be received. Furthermore, if there was a market for the goods, the burden of proof is upon the [707] seller to establish the market price. Sweetser v. Mellick, 4 Idaho, 201; Jones v. Jennings Bros. & Co., 168 Pa. St. 493. The refusal of the trial court to admit the proffered testimony and the giving of the instruction complained of was error, and the cause is reversed and remanded. Reversed.