particular price. If, however, though he knows of the fact of the resale, he does not know the price, he could not be held liable upon the basis of the particular price if it were unusual or extravagant. He must, nevertheless, be held to contemplate that the resale is to be at a fair and reasonable profit at least, and, if he knows that the article is not one which has a market price, he may be held liable upon the basis of the contract price, if that is not such as to yield an unreasonable or unfair profit.1 1 See Trigg v. Clay (1891), 88 Va. 330, 13 S. E. R. 434, 29 Am. St. R. 723, Mechem's Cases on Damages, 239. Compare Booth v. Rolling Mill Co. (1875), 60 N. Y. 487, Mechem's Cases, 132. In Elbinger Actien-Gesellschafft v. Armstrong (1874), L. R. 9 Q. B. 473, the defendant, in January, 1872, agreed to furnish plaintiff with six hundred and sixty-six sets of wheels and axles according to tracings, one hundred of which were to be delivered at stated intervals in the months of February, March and April free on board at Hull; guarantee three years and three months from time of shipments. The plaintiffs were under a contract with a Russian railway company to deliver them one thousand wagons, five hundred on the 1st of May, 1872, and five hundred on the 31st of May, 1873; and they were bound to pay two roubles per wagon for each day's delay in delivery. In the course of the negotiations between plaintiffs and defendant, defendant was informed of this contract, but neither the precise day for the delivery nor the amount of the penalties was mentioned. Delay occurred in the delivery of the one hundred sets of wheels; and the plaintiffs in consequence had to pay certain penalties, but the Russian company consented to take one rouble a day, amounting in the whole to 100%. The plaintiffs, having brought an action against the defendant for the delay, sought to recover as damages the 100l. Held, that the plaintiffs were not entitled to damages, as matter of right, to the amount of penalties; but that the jury might reasonably have assessed the damages at that amount. In Grébert-Borgnis v. Nugent (1885), 15 Q. B. Div. 85, the defendants contracted with the plaintiff to de liver goods to him of a particular shape and description at certain prices and by instalments at different times. When the contract was made the defendants knew that, except as to price, it corresponded with and was substantially the same as a contract which the plaintiff had entered into with a French customer of his, and that it was made in order to enable the plaintiff to fulfill such last-mentioned contract. The defendants broke their contract, and, there being no market for the goods of the description contracted for, the plaintiff's customer recovered dam ages against him in the French court to the amount of 281. Held, in an action against the defendants for their breach of contract, that the plaintiff was not only entitled to recover as damages the amount of & 1767. Ordinarily, it is said, the price to be received upon the resale "would, presumptively, be held to be a reasonable price; but if the facts in any given case are such as to show such price to yield an extravagant or extraordinary profit," the seller will not be bound in absence of knowledge of it; "and, in order to assess the damages, the court must be put in possession of sufficient evidence to enable it to arrive at a conclusion in respect to what would amount to a reasonable profit on the transaction."1 § 1768. Cost of procuring substitute.-It not infrequently happens that the buyer, who has made a subcontract, will endeavor, in order to diminish his own liability to his subvendee, to obtain and supply something in lieu of that which his vendor has failed to furnish as agreed. Such an endeavor is to be commended, and if the buyer, acting in good faith and profit he would have made had he been able to fulfill his contract with his customer, but also damages in respect of his liability to such customer, and that in estimating such last-mentioned damages the 28 which the French court had given might be treated as not an unreasonable one at which such damages might be assessed. The case of Elbinger Actien-Gesellschafft v. Armstrong (L. R. 9 Q. B. 473) was approved. In Booth v. Spuyten Duyvill Rolling Mill Co. (1875), 60 N. Y. 487, Mechem's Cases on Damages (2d ed.), 132, plaintiff having contracted to sell and deliver to the N. Y. C. R. R. Co. four hundred tons of rails, made of iron with steel caps, contracted with defendant to furnish the caps, the latter being informed for what purposes they were wanted. In consequence of defendant's failure to perform, plaintiff was unable to perform his contract. In an action for the breach, held, that in the absence of proof that the price plaintiff was to receive was extravagant or of an unusual or exceptional character, he was entitled to recover as damages the profits he would have realized; and that the fact that the price was not communicated to defendant (it appearing that the rails were a new article, not having a market value) did not change the rule of damages. In Guetzkow v. Andrews (1896), 92 Wis. 214, 66 N. W. R. 119, it is held that where a vendor is informed that his vendee is buying for resale under an existing contract, and delivers goods not as agreed, which have no market value, and which the vendee delivers to his vendee without being able to obtain the stipulated price therefor, the vendor is bound by the price his vendee was to receive, whether he knew it or not, unless it is so great as to yield an extraordinary profit. 1 Guetzkow v. Andrews, supra. 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.2 § 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), L. R. 10 Q. B. 265, there had been a contract by defendant to supply plaintiff with a quantity of cloth for which the plaintiff had a subcontract to resell. Defendant failed to supply the cloth and plaintiff procured the nearest substitute he could find in the market. For this he paid a higher price, but supplied it to his vendee at the contract price. It was held that he could recover the difference between what he was to pay the defendant and what he was thus compelled to pay. To like effect is Forsyth v. Mann (1896), 68 Vt. 116, 34 Atl. R. 481, 32 L. R. A. 788. Here a contractor failed to perform a contract to furnish a monument by a certain time; the vendee bought granite and had the monument cut, and recovered as damages from the contractor the difference between the contract price and the actual cost, notwithstanding the cutting was done in the winter, when it cost more. 2 Agius v. Great Western Colliery Co., [1899] 1 Q. B. 413, following Hammond v. Bussey (1887), 20 Q. B. Div. 79, and questioning Baxendale v. London, etc. Ry. Co. (1874), L. R. 10 Ex. 35. See also post, § 1798. 3 Citing Hammond v. Bussey, 20 Q. B. D. 79. And knowledge gained by parol is sufficient, where the written contract of sale is silent as to the subcontract. Sawdon v. Andrew, 30 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 (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; 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." 3 "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. 2 Citing Hinde v. Liddell, L. R. 10 Q. B. 265. 3 Citing Grébert-Borgnis v. Nugent, 15 Q. B. D. 85, C. A.; Borries v. Hutchinson, 18 C. B. (N. S.) 445; Elbinger Co. v. Armstrong, L. R. 9 Q. B. 473; Hydraulic Engineering Co. v. McHaffie, 4 Q. B. D. 670, C. A. 4 Citing Elbinger Co. v. Armstrong, Nugent, 15 Q. B. D. 85, C. A. 5" See opinion of Willes, J., in British Columbia Saw Mills Co. v. Nettleship, L. R. 3 C. P. 499, and in Horne v. Midland Ry. Co., 7 id. 583, and see Sedgwick on Damages, vol. I, p. 223, ed. 1880, and the case of Booth v. Spuyten Duyvil Rolling Mills Co., 60 N. Y. 487, in the Court of Appeals 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.* 1 Citing Williams v. Reynolds, 6 B. & S. 495; Thol v. Henderson, 8 Q. B. D. 457. 2" Per Brett, M. R., in GrébertBorgnis v. Nugent, 15 Q. B. D. 89; Stroud v. Austin, 1 Cab. & E. 119." Citing Dunkirk Colliery Co. v. Lever, 9 Ch. D. 20, 41 L. J. (N. S.) 633, 4 Cory v. Thames, etc. Co. (1868), L. R. 3 Q. B. 181. |
