Pabst Brewing Co. v. E. Clemens Horst Co.

• Decision Date: 21 February 1916
• Docket Number: 2639.
• Citation: 229 F. 913
• Parties: PABST BREWING CO. v. E. CLEMENS HORST CO. [1]
• Court: U.S. Court of Appeals — Ninth Circuit

229 F. 913

PABST BREWING CO. v. E. CLEMENS HORST CO. ^[1]

No. 2639.

United States Court of Appeals, Ninth Circuit.

February 21, 1916

In Error to the District Court of the United States for the Second Division of the Northern District of California William C. Van Fleet, Judge.

Action by the E. Clemens Horst Company against the Pabst Brewing Company. Judgment for plaintiff, and defendant brings error. Reversed and remanded.

Heller Powers & Ehrman, of San Francisco, Cal. (Thomas J. Geary, of Santa Rosa, Cal., and James L. Robison, of San Francisco Cal., of counsel), for plaintiff in error.

Devlin & Devlin, of Sacramento, Cal., W. H. Carlin, of Marysville, Cal., and Maurice E. Harrison, of San Francisco, Cal., for defendant in error.

Before GILBERT and ROSS, Circuit Judges, and RUDKIN, District Judge.

RUDKIN District Judge.

This was an action to recover damages for the breach of a contract for the sale of hops. The E. Clemens Horst Company is a corporation organized and existing under the laws of the state of New Jersey, and for a number of years last past has been extensively engaged in the business of growing, buying, and selling hops. The Pabst Brewing Company is a corporation organized and existing under the laws of the state of Wisconsin, and is engaged in the manufacture of beer. For convenience of reference the parties will be hereafter referred to as the Horst Company and the Brewing Company. The Horst Company is the owner of a hop ranch of about 400 acres in the Consumnes river district in Sacramento county, Cal., upon which it grows and cures hops for market. The entire Consumnes district consists of about 800 or 900 acres. The hops produced by the Horst Company in this district are known as air-dried, as contradistinguished from kiln-dried. Kiln-dried hops are cured or dried by heat produced by a stove or furnace within the building, while the air-dried hops are cured or dried by hot air forced or blown into the building from without. The difference between the quality of the air-dried and kiln-dried hops is that the former retain the oils and resins better than the latter, and this is supposed to be an advantage. At least, such is the view of the Horst Company. No air-dried hops were produced in the year 1912 in the Consumnes district, except by the Horst Company.

In the month of August, 1911, the Horst Company entered into a contract by wire with the Brewing Company for the sale of 2,000 bales of choice, air-dried, Consumnes hops of the year 1912, at 20 cents per pound, plus freight, delivered at Milwaukee, Wis. On the 28th day of September, 1912, the Horst Company, at the instance of the Brewing Company, mailed to the latter 20 samples of Consumnes air-dried hops of the crop of 1912. On the 4th day of October, 1912, the Brewing Company notified the Horst Company that it would not accept hops of the quality shown by these samples, for the reason that they were not choice as called for by the contract of sale. On the 10th day of October, 1912, the Brewing Company mailed to the Horst Company 4 samples of Consumnes hops of a quality such as it would be willing to accept. On the 29th day of October, 1912, 14 additional samples were forwarded to the Brewing Company by the Horst Company. On the 4th day of November, 1912, the contract was canceled by the Brewing Company on the ground that the hops tendered were not of the quality agreed upon, and thereafter the present action was instituted to recover damages for breach of the contract of sale.

The complaint alleges in general terms the incorporation of the parties, the execution of the contract for the sale of the hops, the tender of the hops in performance of the contract, the refusal of the defendant to accept the tender, and the resulting damages in the sum of $32,000. Trial was had before the court and a jury, and the present writ of error was sued out to reverse a judgment entered on a verdict in favor of the Horst Company.

The record contains 148 assignments of error and objections and exceptions almost without number. Before taking up these several assignments, it might be well to refer briefly to the familiar rules of law applicable to actions of this kind. Upon the breach of a contract of sale by the purchaser, the seller is at liberty to fully perform on his part, and when he has done all that is necessary to effect a delivery of the property, so as to pass title to the purchaser, he may store or retain it for the purchaser, or he may resell it as agent for the purchaser. If he pursues the former course, he is entitled to maintain an action for the contract price of the goods. If he pursues the latter, his recovery will be the difference between the contract price and the net proceeds of the sale. But it is not obligatory upon him to adopt either of these courses, and if he does not care to do so he is entitled to recover the difference between the contract price and the market price or value of the property at the time and place of delivery fixed by the contract.

Every seller, however, may not pursue all three of these remedies. He cannot, for instance, pursue the first or second, unless the subject-matter of the sale is identified or in some manner appropriated to the contract, because in the one case he holds the property as agent for the purchaser, and in the other he sells it as agent for the purchaser, and unless the property is identified, or in some way appropriated to the contract, it can neither be held nor sold. As said by the court in Cherry Valley Iron Works v. Florence Iron River Co., 64 F. 569, 575, 12 C.C.A. 306, 312: 'If the subject-matter is identified when the contract is made, the title passes to the vendee, in the absence of controlling stipulations. When the subject-matter is subsequently identified by its appropriation to the contract, the title passes at the time of such appropriation. But when there has at no time been identification of the subject, the title remains in the vendor. In those cases where the title has passed before the contract is broken, and the rights of the parties have been converted into claims for damages arising from the breach, the nature and kind of remedies to which the vendor may resort are the subject of much controversy in the opinions of the courts. There is high authority for the proposition that the vendor, in such a case, may, among other remedies, by virtue of a species of lien for the purchase price, sell the goods as those of the vendee, and hold the latter for the difference between the price obtained and the contract price. This was the remedy resorted to here. It is not necessary for us to decide whether the vendor has this remedy in the class of cases just mentioned. It is clear that this case does not belong to that class. Here the title never passed, and the goods at all times remained the property of the vendor, subject to any disposition it might be pleased to make of them, until it finally sold them on the market to other parties. The implied authority of the vendor to segregate the goods and appropriate them to the contract had long previously expired. In such cases the rule is general, if not universal, that the measure of the damages which the vendor may recover is the difference between the contract price and the market price at the time fixed by the contract for delivery.'

In this case the measure of damages was the difference between the contract price and the...