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the contract was executed. It certainly could make no possible difference to the defendant or to what was contemplated by the parties when the sale was made, whether a subcontract had been actually made, or whether one would be made immediately upon the execution of the contract with the defendant. We have seen that the fact that the price at which the goods had been sold by the subcontract was not mentioned to the vendor was not controlling. What the parties did understand was that the plaintiffs were purchasing these goods to resell in England, and that as soon as the contract in suit was executed the plaintiffs would make a contract in England to resell the goods; and certainly the parties must have had in contemplation that the plaintiffs would sustain as damages occasioned by a breach of the contract with the defendant just the difference between the contract price and the price at which they would be able to sell the goods in England. Such was the proximate and necessary injury that would be occasioned to the plaintiffs by a breach of the contract by the defendant, and for that, it seems to me, the plaintiffs were clearly entitled to a verdict. It is hardly necessary to again state that, if there had been a market here at which the plaintiffs could have purchased the merchandise and so fulfilled their contract with their English vendees, the general rule would have applied, and the plaintiffs be restricted to the difference between the market price here or at San Francisco, where the merchandise was to be delivered, and the contract price. But as it appears from the evidence that there was no market either here or at San Francisco at which these goods could be purchased except from the association—as whose agent the defendant had made the contract with the plaintiffs—and the association had absolutely refused to sell this merchandise to the plaintiffs, it is clear that there was no market in which the merchandise could be purchased; and the only other method that has been suggested which would indemnify the plaintiffs is that before mentioned, which I think I have established is sustained by both principle and authority.
The court in its charge to the jury submitted to them the questions of fact which they were to pass upon, to which, as before stated, no exception was taken, and in which the questions at issue were clearly submitted for their determination. The court then stated to the jury the general rule in relation to the measure of damages in actions for a breach of contract for the sale of merchandise. He thus formulated the rule that the jury applied:
“But there is another rule of damages, and that is, where a person sells goods to another with the knowledge that the purchaser is to use them in a certain way, for certain purposes, and the understanding between the par. ties at the time of the contract of purchase and sale was that the purchaser did intend to use them in a certain way, and if by the act of the seller the purchaser is prevented from using them in that way, and he afterwards is not in a position to get the goods, he is entitled also to special damages, because the law says that a man must get the damages that is within the contemplation of the parties, and such damages as one can find would rea. sonably flow from a breach of the contract under such circumstances.”
The court then left it to the jury to say whether this contract so made between the parties was made in contemplation of a resale in Great Britain, and that such a condition of the market in America was
shown that the plaintiffs were unable to procure goods of that character as were subsequently sold to purchasers in Great Britain as would enable them to complete their contract; that if the facts are established in favor of the plaintiffs, then the plaintiffs would be entitled to recover such damages as the jury find would flow by reason of that situation, and they would be measured by the price at which they sold the goods to the Great Britain firm of Hooper & Co., less expenses. To this instruction the defendant excepted, when the court said to the jury:
"Suppose I put that this way: That where a sale is made of goods with knowledge that the goods are being purchased for a particular purpose, then, in case of breach of such a contract of purchase and sale, the purchaser is entitled to such damages as naturally would flow from the breach of the contract, and which he or any reasonable person might expect would flow from the breach. And you may use as a basis of reaching that the sale which it is alleged was made to Hooper & Co. if you think that would be within the reasonable contemplation of the parties.”
It seems to me that this was an admirable statement of the principle which, as I think I have shown, is the settled law both in England and in this country, and the jury, finding the facts in favor of the plaintiffs, were fully justified in awarding the plaintiffs the verdict which they subsequently rendered.
There are no other questions that I think require consideration, and it therefore follows that the judgment appealed from must be affirmed, with costs. All concur except HOUGHTON, J., who dissents.
HOUGHTON, J. (dissenting). The defendant, by its contract to act as sales agent for the Alaska Packers’ Association, was prohibited from selling canned salmon for export to Europe, Australia, and New Zealand. The packers' association had established an agency in England, and agreed to protect those sales agents from invasion of their territory. So far as appears, the defendant was anxious to sell to the plaintiffs the 28,000 cases of the specified brands of salmon, provided they were not to be exported to England. The plaintiffs insisted that they had purchased that quantity for the sole purpose of exporting it to England for sale, to the knowledge of the defendant, and demanded that the contract be fulfilled for that purpose. The defendant insisted, on the contrary, that they could not and would not and did not agree to sell for export to England, and would not sell at all unless the sale was restricted for domestic consumption. The plaintiffs refused to recognize any restriction, and the defendant refused to deliver.
In view of the decision of this court on a former appeal (99 App. Div. 622, 90 N. Y. Supp. 998), I acquiesce in the finding of the jury in the present case, to the effect that the plaintiffs held an unlimited contract of purchase, and that defendant's agent, Stubbs, was authorized to make the erasure which he did, and deliver the contract to the plaintiffs so referred.
I am of the opinion, however, that an erroneous rule of damages
make sufficient proof of the nonexistence of a market for the various brands of salmon contracted for to entitle them to recover as their measure of damages the profits which they might have made on a resale. The jury were instructed that the ordinary rule of damages on breach of contract of sale was the difference between the contract price and the market price, but that such rule had certain exceptions, one of which was that where the buyer, to the knowledge of the seller, purchases the goods for the purpose of fulfilling a contract, the buyer may on breach recover the profit which he would have made. The jury were told that they could not assess plaintiffs' damages under this rule, because plaintiffs had no contract for resale when they made the contract of purchase from the defendant; but that another rule existed, to wit, that where the goods are purchased for a particular purpose, to be used in a certain way, to be dealt with in a certain manner to the knowledge of the seller, on breach the buyer might recover the profits which he would have made on a resale. It was upon this latter theory that the plaintiffs recovered the full amount of the profits which they would have made on a resale to their English buyers.
The learned trial court was entirely correct in instructing the jury that the plaintiffs could not recover under the second rule of damages which he explained to them. An existing contract and a purchase for the purpose of fulfilling it, all to the knowledge of the seller, are necessary to charge him as damages on breach with the profits which the buyer would have made. Messmore v. N. Y. Shot & Lead Co., 40 N. Y. 422; Booth v. Spuyten Duyvil Rolling Mill Co., 60 N. Y. 487, 492; Griffin v. Colver, 16 N. Y. 489, 493, 69 Am. Dec. 718. This rule was recognized in Laird v. Townsend, 5 Hun, 107, and the judgment was reversed on the express ground that the plaintiff had failed to establish the existence of a contract of resale at the time of his purchase.
The plaintiffs entered into their contract with the defendant on the 30th day of August. On the following day their representatives in London submitted an offer of sale of the entire 28,000 cases to English jobbers, and a contract for such resale was signed on the following day, September 1st. So there can be no question that the plaintiffs did not have a contract of resale when they purchased from the defendant, and did not buy the goods for the purpose of fulfilling an existing contract.
I cannot see how the third rule, as it is denominated, and which was the rule upon which the jury were permitted to assess damages against the defendant, can be applicable in any case to the purchase of goods. It is possible that it might be applied to a contract for the manufacture of a certain article to be used for a certain purpose, if such article was not procurable elsewhere. Every jobber who buys goods in quantity buys them for the purpose of reselling, and not for individual consumption. Every seller who sells goods in quantity to jobbers knows that they are bought for the purpose of resale. Such purpose and such knowledge, however, do not make the defaulting seller liable for loss of profits. In Thol v. Henderson, 8 Q. B. Div. 457, knowledge on the part of the seller that goods were bought for resale was held not to be sufficient to charge him with
loss of profits, and it was expressly said that such knowledge did not bring the seller within the rule established in the leading English case of Hadley v. Baxendale, 9 Exch, 341. The case of France v. Gaudet, L. R. 6 O. B. 190, cited as to the contrary in the prevailing opinion herein, was in tort and not on contract, and in the opinion that distinction is pointed out and given as the reason for not requiring notice to be served of an existing contract of resale.
I do not understand the majority of the court to hold that the mere purchase of goods by a jobber for the purpose of resale, to the knowledge of the seller, entitles the buyer to recover the profits which he would have made; but they say no other rule of damages than loss of profits could have been applied in the present case, because the Alaska Packers' Association, the principals of the defendant, controlled the output of the particular brands of salmon contracted for, and, therefore, there was no market. If there be a market, it is clear that unless the goods be purchased to fulfill an existing contract, to the knowledge of the seller, the buyer must go into the market and replace the goods, or rely upon the difference in market price for his damages. When the buyer can go into the market and buy the article which the seller has failed to deliver, this is the only rule to be applied, as it affords the buyer full indemnity. Special damages are allowed only when this rule will not furnish full indemnity. Todd v. Gamble, 148 N. Y. 382, 42 N. E. 982, 52 L. R. A. 225; Parsons v. Sutton, 66 N. Y. 92.
I think the plaintiffs failed to prove that there was no market in which they could repurchase. The fact that the Alaska Packers' Association produced and controlled all of the brands which the plaintiffs contracted for did not take those brands from the market. The general market might be, and not infrequently is, flooded with an article produced by only one producer. The 28,000 cases which the plaintiffs contracted for were still for sale. Balfour, Guthrie & Co., the English selling agents of the packers' association, dealt in the same brands, and they maintained an office in San Francisco as well as in London. One of the plaintiffs testified that he did not make any effort to buy through these agents, because he knew he was competing with them on the other side. For all that appears, there was an ample market in which the goods might be purchased in London, or a market price by which plaintiffs' loss might be measured. While technical delivery of the 28,000 cases was to be made in San Francisco, the ultimate place of delivery and sale was Liverpool and London. The plaintiffs did not intend, if they could avoid it, to even break packages at San Francisco or New York, but the goods were to be shipped in bulk direct to the English market. If the plaintiffs' theory of the contract of purchase with the defendant is correct, the defendant knew that the ultimate place of delivery and sale of the entire lot was England. So far as the plaintiffs themselves were concerned, they had no intention of selling them at any other place. I see no reason, therefore, why, if the goods could not be purchased in this country, the market price at the place of ultimate delivery and sale, which was England, was not competent and necessary proof, or, in the alternative, proof of the
In Durst v. Burton, 47 N. Y. 167, 7 Am. Rep. 428, cheese was sold and delivered at Frankfort, N. Y., to be shipped to New York City for sale. Church, C. J., says:
"The place of delivery was Frankfort, but by the terms of the contract New York was the market to which it was to be forwarded and where it was to be sold, and the market price there may be regarded as within the contemplation of the parties."
Harris v. Panama Railroad Company, 58 N. Y. 660, was an action to recover the value of a horse being transported over the defendant's road, and proof of the value of the horse at San Francisco, the place of its ultimate destination, was held to be competent. And the court intimated in Heinemann v. Heard, 50 N. Y. 27, that proof of the market price of silk in New York City, purchased in China, destined for the New York market, was not an improper rule upon which to base damages for nondelivery. In Lyles v. Hasy, 15 Wkly. Dig. 456, it was held that if there be no market at the place of delivery, and the goods are purchased for transportation and sale at another place, the market price of the latter place controls, and it is competent to prove value at the place of sale, with the cost of transportation added. To like effect are Vanstone v. Hopkins, 49 Mo. App. 386; Johnson v. Allen, 78 Ala. 387, 56 Am. Rep. 34; Campbellsville Lumber Co. v. Bradlee, 96 Ky. 494, 29 S. W. 313; Cockburn v. Ashland Lumber Co., 54 Wis. 619, 12 N. W. 49; and Grand Tower Co. v. Phillips, 23 Wall. 471, 23 L. Ed. 71.
It is held in some of the above cases that the fact that the defaulting seller controlled the market did not change the rule. Nor does it change the rule that the defendant claimed that it did not make a contract of sale for resale in England. The whole theory of plaintiff's case is that the defendant did make such contract, and the jury has so found. Notwithstanding the defendant's position, therefore, it stands that the plaintiffs' theory is correct, and that the goods were in fact purchased with technical delivery at San Francisco, but for ultimate delivery and sale in England. I think, under such a state of facts, it was incumbent upon the plaintiffs to prove lack of market in England, and that in the absence of such proof the plaintiffs could not recover profits which they would have made on a resale to their English buyers by way of special damages.
I, therefore, vote for a reversal of the judgment.
KORKEMAS V. MACKSOUD. (Supreme Court, Appellate Division, First Department. April 8, 1909.) BILLS AND NOTES (8 437*) — PAYMENT OF POSSESSION – "HOLDER IN His Own
Where defendant, the maker of a note, on the day it fell due, requested plaintiff, the second indorser, to take it up at the bank, and that defendant would pay plaintiff in a few days, and defendant thereafter in some manner acquired possession of the note without having paid it, he was
not a “holder in his own right," within Negotiable Instruments Law (Laws For other cases see same topic & & NUMBER 10 Dec. & Am. Digs. 1907 to date, & Rep'r Indexes