Skeele Coal Co. v. Arnold

WARD, Circuit Judge. In March, 1909, the Skeele Company agreed to take 100,000 tons of coal from the Meriden Coal Company, in equal monthly proportions between April 1, 1909, and April 1, 1910, at 65 cents a ton f. o. b. mines. Early in April,. 1909, the Skeele Company repudiated the contract. The Meriden Company, after some negotiations, must be taken to have acquiesced in this repudiation in May, 1909, because after that it ceased to ask the Skeele Company for shipping directions and ceased to mine or to tender coal. The Meriden Company mined some 1,500 tons of coal in April, and then closed the mines down to October 1, 1909, when it began again to mine and sell. The year is therefore divided into two periods, of six months each, during the first of which the Skeele Company should have taken 50,000 tons which it did not take, and during which the Meriden Company ceased to mine, and during the second of which the Skeele Company should have taken 50,000 tons, which it did not take, and the Meriden Company did mine and sell to others about 33,000 tons. [1, 2] The question to be determined is the proper measure of the Meriden Company’s damages. As the purpose of the law is compensation, the Meriden Company should be put as far as possible in the same position it would have been in if the contract had been carried out. It could have brought suit to recover its entire damages in May, 1909, when it acquiesced in the Skeele Company’s repudiation of the contract. Dingley v. Oler, 117 U. S. 490, 6 Sup. Ct. 850, 29 L. Ed. [395] 984. It ought then to have disposed of its coal to other parties, it being a staple article, at the market price, if that exceeded the cost of production. The measure of damages would then have been the difference between the contract price and the market price for coal to be delivered in the future under a contract as similar to the repudiated contract as it could obtain. However, it elected, as it .had a right to do, to bring suit after the term of the contract had expired. At that time it was possible to show the market price of coal for each month of the term of the contract. [3] There was a conflict of testimony as to the market price of coal between April 1 and October 1, 1909. Witnesses for the Skeele Company testified that it was higher than the contract price, while witnesses for the Meriden Company testified that it was less than the cost of production. There was no obligation upon the Meriden Company to mine in the latter case. The verdict of the jury shows that they believed the Meriden Company’s account. Therefore the measure of damages for the Skeele Company’s failure to take 50,000 tons between April 1 and October 1, 1909, was the difference between the contract price and the cost of production. The cost of production would have been, including the royalty, 50 cents a ton. If the brokerage commission of 5 per cent., which the Meriden Company owes to the broker who negotiated the contract, be added as a part of the cost of production, then the difference is 10 cents a ton, or $5,000. As, however, the Meriden Company did nots save this commission, being still liable for it to the broker, it should be added, and the proper measure would be $7,500. If the commission be not treated as a part of the cost of production, then the difference between the cost of production and the contract price would be 15 cents a ton, resulting in the same sum of $7,500. ¡4] For the period October 1, 1909, to April 1, 1910, the plaintiff did mine and sell its coal at more than the contract price, but not to the amount of 50,000 tons. As it says that the capacity of the mine was 100,000 tons a year, which was the amount it agreed to deliver, there is nothing to show that it could not have produced 50,000 tons in that period. Therefore it lost nothing. The verdict being for $10,-000, it seems quite clear that the jury must have allowed the plaintiff the commission of 5 cents a ton on the whole 100,000 tons. That question was raised by counsel after the charge, and the judge ruled that the whole commission of $5,000 should be allowed, without any exception being taken by the defendant. The judgment is affirmed.