$1708. Contract kept alive for benefit of both parties. If, however, the seller elects to treat the contract as pellees sold the barley upon the market and brought this action on the contract, claiming as their measure of damages the difference between the contract price and the value of the barley in the market on the day when it was to have been delivered by the terms of the contract. It was claimed on the part of the appellants that in case of such a contract of sale for future delivery, where, before the time of delivery, the buyer gives the seller notice that he will not receive the property and comply with the terms of the contract, this, whether the seller assents thereto or not, creates a breach of the contract, or, at all events, imposes the legal duty on the seller to thereafter take such steps with reference to the subject of the contract as shall most effectually mitigate the damages to be paid by the buyer in consequence of the breach, without imposing loss upon the seller. But the court held that a buyer cannot thus create a breach, before the time for performance arrives, upon which the seller is bound to act, and if the buyer's dec. laration is ineffectual to create a breach it follows that the seller is under no obligation to regard it for any purpose. "Nothing would seem to be plainer," say the court, "than that, while the contract is still subsisting and unbroken, the parties can only be compelled to do that which its terms require. This contract imposed no duty upon appellees to make other contracts for January delivery, or to sell barley in December, to protect appellants from loss. It did not even contemplate that appellees should have the barley ready for delivery until such time in January as they should elect. If appellees had then the barley on hand, and had acted upon appellants' notice, and accepted and treated the contract as then broken, it would. doubtless, then have been their duty to have resold the barley upon the market, precisely as they did in January, and have given appellants credit for the proceeds of the sale; but it is obviously absurd to assume that it could have been appellees' duty to have sold barley in December to other parties which it was their duty to deliver to appellants, and which appellants had a legal right to accept in January." In Roebling's Sons Co. v. Lock Stitch Fence Co. (1889), 130 Ill. 660, 22 N. E. R. 518, supra, a contract was made between appellant and appellee, by the terms of which the former agreed to sell to the latter five hundred tons of fence-wire, and to deliver the wire so sold between March 7, 1885, and July 1, 1885. On April 29th the appellee definitely repudiated the contract by telegraphing appellant that no more wire would be taken even if it were shipped. The appellant, however, refused to relinquish the contract, and proceeded with the manufacture and tender of the residue of the wire. The court held that the appellant had a right to do so, and to hold the appellee responsible for refusal to accept tender. "Where one party to a contract," said the court, "gives notice, before the time of performance arrives, that he does not intend to perform, the other party may treat such notice as a breach and still in force, he will do so, as has been seen,1 for the benefit of the buyer as well. The latter will, in general, be entitled to bring his action; or he may decline to accept such notice as a breach, and may insist that the contract shall continue in force up to the time fixed for its final performance, holding the party refusing to perform responsible for the consequences of such refusal. One party to a contract cannot, by simply refusing to carry out his part of it, compel the other party to rescind it." should not be increased by the plaintiffs' neglect. In Zuck v. McClure (1881), 98 Pa. St. 541, the plaintiff had made two contracts with the defendants, the first an executed contract and the second a contract for future delivery. Suit was brought on the first, for the price of coke sold and delivered, and the defendants set up a breach of the second as a counter-claim. The second contract called for the delivery by the plaintiff to the defendants of all coke burned in the plaintiff's furnaces during a certain time. The plaintiff informed the defendants that he would not fulfill his contract, but the defendants refused to consider the contract broken and notified the plaintiff that they were prepared to receive the coke under the contract. The action on the first contract, to which this alleged breach of the second is interposed as a counter-claim, was commenced on November 29th, the refusal of plaintiff to perform the second contract was given on November 19th, and the defendants' insistence upon compliance was made on December 4th. The court held that on November 29th, when this action was commenced, there was no breach of the second contract, since the defendants had not accepted the plaintiff's notice of breach, such notice being a mere matter of intention and subject to withdrawal until accepted by the other party as a present breach. In Roth & Co. v. Taysen & Co. (1896) [Q. B. Div.], 73 Law Times Reports, 628, the plaintiffs had contracted to sell to defendants a cargo of maize, to be shipped from South America according to certain specifications. It was expected to arrive, and actually did so, on September 5th. On the 28th of May preceding, there being a declining market, the buyers telegraphed the sellers repudiating the contract. An unsuccessful attempt was made to arbitrate, and on the 24th of July the plaintiffs brought this action. The court held that damages were to be estimated on the basis of the market value of the maize on July 24th, and not in accordance with the market value on September 5th, when the goods were actually resold. The sellers had treated the repudiation as a wrongful ending of the contract by bringing their action, and the buyers were entitled to have their loss mitigated by any reasonable means that a prudent man ought to have adopted. Since the market value was still falling, an In Marks v. Van Elghen (1898, immediate resale should have been U. S. App.), 85 Fed. R. 853, 30 C. C. A. made, and the defendants' loss 208, a contract had been made 1 See ante, § 1090. renounce his repudiation,' and have the goods upon payment of the price. He will also be entitled to the benefit of changes in the market value at the time of ascertaining the damages.3 $1709. Measure of damages if seller does treat it as a present breach.-But while the seller is thus not obliged to treat the repudiation as a present breach, he may do so, and if he does he may proceed to recover his damages as for a total breach of the entire contract. The measure of damages in such a case will be the difference between the contract price and what it would have cost him to produce and deliver the goods according to the contract, in addition, of course, to payment whereby the plaintiffs agreed to sell and the defendant to buy five thousand bags of sugar, at a specified price, to be shipped during the following June or July from Holland to New York or Baltimore. Before the contract had been performed or the time for performance had expired, the defendant stated to the plaintiffs that he did not intend to carry out the contract and would have nothing to do with it, whereupon he was notified by the plaintiffs that they would dispose of the sugar elsewhere and would hold him resposible for any loss. This action was soon after brought. It was held by the circuit court, and affirmed by the circuit court of appeals, that the plaintiffs were justified in treating the unequivocal refusal of defendant to perform as a present breach of the contract, if they chose so to do, and their right of action for damages would not be prejudiced thereby. In the opinion of the court this right to elect whether to treat the contract as terminated or as still existing, with a present right of action in case it is considered terminated, is sup ported by the "overwhelming preponderance" of authority. 1 See ante, § 1090. But he may not do this where the seller, in reliance upon the repudiation, has changed his position, as by reselling the goods to another person. Windmuller v. Pope (1887), 107 N. Y. 674, 14 N. E. R. 436. 2 Stokes v. Mackay (1895), 147 N. Y. 223, 41 N. E. R. 496. 3 See Kadish v. Young, supra. 4 Masterton v. Mayor of Brooklyn (1845), 7 Hill (N. Y.), 61, 42 Am. Dec. 38; Mechem's Cases on Damages, 141; Tahoe Ice Co. v. Union Ice Co. (1895), 109 Cal. 242, 41 Pac. R. 1020; Hale v. Trout (1868), 35 Cal. 229; Philadelphia, etc. R. Co. v. Howard (1851), 54 U. S. (13 How.) 307; Burrell v. New York Salt Co. (1865), 14 Mich. 34; Goodrich v. Hubbard (1883), 51 Mich. 62, 16 N. W. R. 232; Atkinson v. Morse (1886), 63 Mich. 276, 29 N. W. R. 711; Leonard v. Beaudry (1888), 68 Mich. 312, 36 N. W. R. 88; Fell v. Newberry (1895), 106 Mich. 542, 64 N. W. R. 474; Barrett v. Veneer Works (1896), 110 Mich. 6, 67 N. W. R. 976; Industrial Works v. Mitchell (1897), 114 Mich. 29, 72 N. W. R. 25. for what had already been delivered at the time of the repudiation. This loss of profits is regarded as the direct and natural result of the breach of contract, and may be recovered as general damages without resorting to special allegations.1 § 1710. As of what date, however, the damages are to be estimated, the authorities are not agreed. In Masterton v. Mayor of Brooklyn, to which reference has already been made, it was held by the majority of the court that "where the contract, as in this case, is broken before the arrival of the time for full performance, and the opposite party elects to consider it in that light, the market price on the day of the breach is to govern in the assessment of damages. In other words, the damages are to be settled and ascertained according to the existing state of the market at the time the cause of action arose, and not at the time fixed for full performance. The basis upon which to estimate the damages, therefore, is just as fixed and easily ascertained in cases like the present as in actions predicated upon a failure to perform at the day.” Judge Beardsley, on the other hand, was of opinion that the damages should be estimated as nearly as possible as of the dates when performance would have been due. § 1711. In a leading English case it was said by Brett, J., that "although the plaintiff may treat the refusal of the defendant to accept or to deliver the goods before the day for performance as a breach, it by no means follows that the damages are to be the difference between the contract price and the market price on the day of the breach. It appears to me that what is laid down by Cockburn, C. J., in Frost v. Knight involves the very distinction which I am endeavoring 1 Tahoe Ice Co. v. Union Ice Co. supra [citing Burrell v. New York Salt Co., supra; O'Connell v. Hotel Co., 90 Cal. 515; Ennis v. Buckeye Pub. Co., 44 Minn. 105; Shaw v. Hoffman, 21 Mich. 151; Masterton v. Mayor of Brooklyn, supra; Laraway v. Perkins, 10 N. Y. 371]. 27 Hill (N. Y.), 61, 42 Am. Dec. 38; Mechem's Cases on Damages, 141. 3 Roper v. Johnson (1873), L. R. 8 Com. Pl. 167, 4 Moak's Eng. 397. 4 L. R. 7 Ex. 111, 1 Moak's Eng. 218. to lay down, viz., that the election to take advantage of the repudiation of the contract goes only to the question of breach and not to the question of damages; and that, when you come to estimate the damages, it must be by the difference between the contract price and the market price at the day or days appointed for performance, and not at the time of breach." § 1712. The same rule is declared by Mr. Mayne in his work on Damages: "Even when the plaintiff has exercised his option of treating the contract as rescinded [broken ?] before the time for its completion has elapsed, and has commenced his action before that time, the damages will still be calculated with reference to the date at which it should have been carried out. In other words, the contract will be treated as rescinded for the purpose of suing upon it, and as existing for the purpose of calculating the damages." In Sedgwick on Damages it is suggested that this rule is proper where the contract is divisible and the successive breaches have occurred before the action is brought; but where the contract is indivisible, and a present refusal is to be treated as an entire breach, then, "if the periods specified in the contract have not arrived before the trial of the cause, any effort to fix the rights of the parties at those various times must be mere matter of conjecture, and probable expense is neither a precise nor a safe direction for a jury." The English rule seems to be sustained by the greater weight of reason and authority.3 § 1713. Treating contract as rescinded and recovering quantum valebat.-The seller, moreover, instead of treating the buyer's repudiation as a present breach of the contract merely, may regard it as a total rescission of the contract, and recover the reasonable value of what he has already furnished and the buyer has accepted, as though there had been no contract. Thus where there was a contract for the supplying of 16th Eng. ed. 179. 3 See Goodrich v. Hubbard (1883), 51 Mich. 62, 16 N. W. R. 232. Contra, |
