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with reasonable prudence, should be compelled to pay a higher price for the substitute procured, he may recover as damages the difference between what he was to pay for the original article and what he is thus compelled to pay for the substitute.'
$ 1769. -Costs of defending action brought by subvendee.- So where the sub-vendee brought action against the original buyer to recover damages for failure of the latter to supply the goods, which failure was caused by the failure of the original seller to supply them as agreed, and the original buyer gave notice of the action to his vendor and requested him to defend it, which he declined to do, it was held that the original seller was also liable for the costs reasonably incurred in defending the action.? § 1770,
Summary of English cases. In recapitulating a review of the English cases upon this question of damages for the loss of a resale, the English editors of Mr. Benjamin's book have given the following summary:
“ If, at the time of making the contract, the seller knows that the buyer buys the goods with the intention and for the purpose of reselling them, although he may or may not know
1 Thus in Hinde v. Liddell (1875), certain time; the vendee bought L. R. 10 Q. B. 265, there had been granite and had the monument cut, a contract by defendant to supply and recovered as damages from the plaintiff with a quantity of cloth for contractor the difference between the which the plaintiff had a subcon- contract price and the actual cost, tract to resell. Defendant failed to notwithstanding the cutting was supply the cloth and plaintiff pro done in the winter, when it cost more. cured the nearest substitute he could 2 Agius v. Great Western Colliery find in the market. For this he paid Co.,  1 Q. B. 413, following Ham. a higher price, but supplied it to his mond v. Bussey (1887), 20 Q. B. Div. vendee at the contract price. It was 79, and questioning Baxendale v. held that he could recover the differ- London, etc. Ry. Co. (1874), L. R. 10 ence between what he was to pay Ex. 35. See also post, $ 1798. the defendant and what he was thus 3 Citing Hammond v. Bussey, 20 compelled to pay. To like effect is Q. B. D. 79. And knowledge gained Forsyth v. Mann (1896), 68 Vt. 116, 34 by parol is sufficient, where the writ. Atl. R. 481, 32 L. R. A. 788.
ten contract of sale is silent as to the contractor failed to perform a con- subcontract. Sawdon v. Andrew, 30 tract to furnish a monument by a L. T. (N. S.) 23.
of any particular subcontract existing or contemplated,' the inference is that the seller contracts to be liable for the increased damages which will flow from a breach of the contract under the special circumstances, and, applying the second part of the rule laid down in Hadley v. Baxendale, those damages may reasonably be supposed to be within the contemplation of the parties. On the seller's breach of contract to deliver, the buyer may adopt one of two courses: (1) He may elect to fulfill his subcontract, and for that purpose go into the market and purchase the best substitute obtainable, charging the seller with the difference between the contract price of the goods and the price of the goods substituted.? (2) He may elect to abandon his subcontract, and is entitled to recover as damages from the seller his loss of profit on the sale, and further to be indemnified by him in respect of any damage (including costs reasonably incurred) or penalties which he has been compelled to pay for breach of his subcontract;3 but unless the amount of the particular damages or penalties has been made known to the seller, the buyer is not entitled to recover their amount as a matter of right, though, if reasonable, the jury may assess the indemnity at that amount.*
“It is further submitted that, in order to entitle the buyer to claim exceptional profits arising from a subsale, express notice of the amount of such profits must have been given to the seller at the time when the contract was made, under circumstances implying that he accepted the contract with the special condition attached to it." 5
1 Citing Hamilton v. Magill, 12 L. R. L. R. 9 Q. B. 473; Grébert-Borgnis v. Ir. 186.
Nugent, 15 Q. B. D. 85, C. A. 2 Citing Hinde v. Liddell, L. R. 10 5 " See opinion of Willes, J., in Q. B. 265.
British Columbia Saw Mills Co. v. 3 Citing Grébert-Borgnis v. Nugent, Nettleship, L. R. 3 C. P. 499, and in 15 Q. B. D. 85, C. A.; Borries v. Hutch- Horne v. Midland Ry. Co., 7 id. 583, inson, 18 C. B. (N. S.) 445; Elbinger and see Sedgwick on Damages, vol. I, Co. v. Armstrong, L. R. 9 Q. B. 473; p. 223, ed. 1880, and the case of Booth Hydraulic Engineering Co. v. Mc- v. Spuyten Duyvil Rolling Mills Co., Haffie, 4 Q. B. D. 670, C. A.
60 N. Y. 487, in the Court of Appeals 4 Citing Elbinger Co. v. Armstrong, of the State of New York,”
“II. If at the time of the sale neither the subcontract nor the intention to resell is made known to the seller, notice of the subcontract given to him subsequently will not render him liable for the buyer's loss of profits on such subcontract; the buyer may either procure the best substitute for the goods as before and fulfill his subcontract, charging the seller with the difference in price, or abandon the subcontract and bring his action for damages, when the ordinary rule will apply, and the jury must estimate, as well as they can, the difference between the contract price and the market value of the goods, although there is no market price in the sense that there is no place where the buyer can readily procure the goods contracted for. But the subcontract, although not brought to the knowledge of the seller, may be put in evidence to show the real value of the goods.” 2
“III. In every case the buyer, to entitle him to recover the full amount of damages, must have acted throughout as a reasonable man of business, and done all in his power to mitigate the loss." 3
§ 1771, Damages where goods intended for a particular use. — The same general principles apply where the goods were purchased to be applied to a particular use. If that use were not known to the seller, a recovery of damages must be based upon the value of the goods for the usual and ordinary use, i. e., the market or actual value. But if, though the buyer contemplated a particular use which he did not disclose, the seller contemplated another and more obvious use, damages based upon the value for the latter use may be recovered, and the seller cannot escape altogether because he and the buyer did not contemplate the same use.*
Citing Williams v. Reynolds, 6 B. Lever, 9 Ch. D. 20, 41 L. J. (N. S.) 633, & S. 495; Thol v. Henderson, 8 Q. B. C. A.; 43 L, T. (N. S.) 706, in the House D. 457.
of Lords; Hinde v. Liddell, L R. 10 2 “ Per Brett, M. R., in Grébert- Q. B. 265; Warren v. Stoddart, 105 Borgnis v. Nugent, 15 Q. B. D. 89; U. S. 224. Stroud v. Austin, 1 Cab. & E. 119." 4 Cory v. Thames, etc. Co (1868), 3 Citing Dunkirk Colliery Co. v. L R. 3 Q. B. 181.
§ 1772, — Where, however, the seller knew of the use to which the goods were to be applied, then damages may be recovered for losses sustained for a failure to supply the goods to be so applied, subject only to the condition that the losses complained of are such as result naturally from the breach and are not remote or speculative.
$ 1773. Thus, where the contemplated use was known to the seller at the time he made the contract, it was held that for a failure to furnish a threshing machine as agreed, the buyer, who had not been able to procure another elsewhere, might recover for expense in caring for his grain and for losses caused by its exposure to the weather while he was waiting for the machine upon the seller's promise to supply it forthwith. So, one who had agreed to supply a dealer with the ice he needed for his ice chest in which he kept fresh meat for sale was held liable for a loss of the meat caused by his failure to supply the ice, which the buyer could not procure elsewhere. And where there was a contract to supply water for use in a boiler to make steam for heating a greenhouse, the seller who had failed to supply the water was held liable for a loss to plants therein caused by freezing :
- So, one who has failed to supply a hotel with the necessary furniture as agreed, is liable for the loss caused by inability to rent the rooms until the furniture could be obtained. And one who had agreed to supply machines which could not be procured in the market was held liable for losses caused by the consequent impossibility of launching the business in which the machines were to be used. And so it has been
1 Smeed v. Foord (1859), 1 El. & El. Mass. 404, 37 N. E. R. 204, following 602, 102 Eng. Com. L. 600. But he Stock v. Boston (1889), 149 Mass. 410, was held not entitled to damages for 21 N. E. R. 871, 14 Am. St. R. 430. a fall in the market price of wheat 4 Berkey & Gay Furniture Co. v. in the meantime.
Hascall (1890), 123 Ind. 502, 24 N. E. 2 Hammer v. Schoenfelder (1879), R. 336, 8 L. R. A. 65, Mechem's Cases -47 Wis. 455, 2 N. W. R. 1129.
on Damages (2d ed.), 252. 3 Watson v. Needham (1894), 161 5 Abbott v. Hapgood (1889), 150
held that one who, with knowledge of the contemplated use, has agreed to supply fertilizer for a crop of cotton,' or poison to kill the worms which infest it, is liable, upon default, for a consequent failure or destruction of the crop.
$ 1775. — So where the contract was to supply goods known to be intended for use in the performance of a contract between the vendee and the State for the erection of a public building, the enhanced cost of getting other material and the direct losses caused by the necessary suspension of work in the interval may be made the basis of recovery
1776. So where a sewing machine manufacturing company had encouraged parties to establish agencies for the
Mass. 248, 22 N. E. R. 907, 15 Am. St. on the road with the goods, where R. 193, Mechem's Cases on Damages the seller knew when the salesman (2d ed.), 136.
was to go on the road, though he did 1 Bell v. Reynolds (1885), 78 Ala. not know that the salesman would 511, 56 Am. R. 52.
be idle if the goods were not deliv. 2 Jones v. George (1884), 61 Tex. ered. Blumenthal v. Stable (1896), 98 345, 48 Am. R. 280. In an action for Iowa, 722, 68 N. W. R. 447. breach of contract to deliver tobacco- Where a seller of drugs fails to de flues for curing plaintiff's crop, held, liver, and the buyer loses time in that the seller must be presumed to waiting for and preparing for the know the proper season for curing goods, and is at the expense of hiring tobacco, and the loss that will re- a doctor in preparation therefor, sult from lack of flues, and he is these losses are not too remote to be liable for the whole loss sustained recovered in damages. Moffett-West by plaintiff owing to his non-deliv- Drug Co. v. Byrd (1898), Ind. Ter. ery. Neal v. Hardware Co. (1898), 43 S. W. R. 864. 122 N. C. 104, 29 S. E. R. 96.
Where both parties understand Where plaintiff was compelled to that the transportation of cattle sold sell cattle at a sacrifice by reason of will have to be specially provided defendant's breach of a contract to for, and the buyer pays a railroad furnish distillery slop to fatten them, for holding cars in readiness for cathe may recover the reasonable profits tle that the vendor fails to deliver, he would have made if the contract he may recover this amount as damhad been carried out. New Market ages. Hockersmith v. Hanley (1896), Co. v. Embry (1899), Ky. ---, 48 29 Oreg. 27, 44 Pac. R. 497. S. W. R. 980.
3 Vickery v. McCormick (1888), 117 A purchaser of goods may recover Ind. 594 [citing Louisville, etc. R. Co. from the seller who fails to deliver v. Hollerbach, 105 Ind. 137; Penn. according to contract for loss of sylvania R. Co. v. Titusville, etc Co., time of his salesman who was to go 71 Pa. St. 350).