American Cotton Co. v. Herring

• Decision Date: 06 June 1904
• Citation: 84 Miss. 693,37 So. 117
• Court: Mississippi Supreme Court
• Parties: AMERICAN COTTON COMPANY v. LEANDER W. HERRING

37 So. 117

84 Miss. 693

AMERICAN COTTON COMPANY v. LEANDER W. HERRING

Supreme Court of Mississippi

June 6, 1904

FROM the chancery court of Grenada county, HON. JULIAN C. WILSON Chancellor.

Herring the appellee, was complainant, and the American Cotton Company, appellant, defendant in the court below. From a decree partly in complainant's favor the defendant appealed to the supreme court, and complainant prosecuted a cross-appeal. The facts are stated in the opinion of the court.

Reversed.

W. A Percy, for appellant and cross-appellee.

So far as the cross-appeal is concerned, the chancellor, of course was correct, as will be seen from the record. Herring himself offered to sell the five hundred bales of cotton at 9 cents, and the company paid 9 cents for it. There was no duress or waiving of any rights, nor any complaint, and a settlement was had after the account sales were received, and after going over the accounts carefully the final balance as found due was paid, and that is an end of that.

It must be conceded that the theory upon which the original bill in this cause was filed--to wit, a sale and passage of title on December 5, 1900--cannot be sustained. Whether the American Cotton Company broke its contract with Herring or not in not purchasing on that day at the dosing quotations, the fact remains that the title remained in Herring and that his cotton remained liable for storage and insurance charges, and he was liable for interest on the money advanced him on the cotton; so that in any view of the case the chancellor was wrong in rendering judgment for these items against the American Cotton Company. But the complainant's whole case turns upon the liability which the defendant incurred in refusing to take up the cotton according to contract; and while he sues upon the theory of an actual sale, which is not sustained by the proof, no doubt under his prayer for general relief he would be entitled to recover any damages occasioned him by the breach of the contract upon the part of the American Cotton Company unless the breach had been waived. So that the sole question for the court to determine is as to whether or not the right of action lies in favor of Herring for the refusal of the cotton company to pay him 9 13-16 cents for his cotton and offering him 9 9-16 cents, and if so, what is the measure of damages?

When the telegram of December 5th was received the cotton had not been delivered, at least only fifty-eight bales had been delivered, to the American Cotton Company, and immediately the American Cotton Company wired back that the cotton could not be accepted at closing quotations, but could only be accepted at 9 9-16.

The court below very properly stated that the delivery by the executory vendor of the cotton to the carrier, under such circumstances, was no delivery to the vendee. Meacham on Sales, sec. 1092.

In view of the relationship between the parties, it is perfectly clear that after the receipt of the telegram from the American Cotton Company on December 5th, the 242 bales, when afterwards shipped, were therefore held by the American Cotton Company, as warehousemen, just as the 58 bales shipped in October were held; so that it was only a breach of an executory contract to sell, with the vendor retaining possession and control of the property. The extent of this breach was the difference between 9-16 and 13-16, the price to be paid. When the contract was thus broken, Herring had the right to treat the contract as at an end and bring his action for the breach of it, and in such action he would have been entitled to recover such damages as then arose from the non-performance of the contract, subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his loss.

The measure of damages in such a case is the difference between the contract price and the market price at the time of the delivery. In the case under consideration the time of the breach and the time of the delivery were practically the same, and the measure of damages was the difference between the contract price and the true market price; but 9 13-16 was the market price, and, therefore, under the ordinary principles of law, it is a case of damnum absque injuria. But it is correctly maintained that there was no market price for this particular kind of cotton. In such a case the measure of damages is the difference between the contract price and the highest price obtainable, or, as it is stated in Meacham on Sales, par. 743, the actual value.

And this is the rule where the price is controlled by the trusts. Id., par. 208. The highest price obtainable on the day of the breach was the offer of the American Cotton Company of 9 9-16, and it was the duty of the vendor to have sold the property at the highest price obtainable, and to have held the American Cotton Company for the difference.

But before any damages could accrue from the breach two things were incumbent upon the executory vendor: First, to use due diligence in selling the property at its market value; second, to notify the vendee that such sale would be made. It has been held that "where after a buyer in a contract for the sale of seeds had refused to accept them, and the seller received and refused a bona fide responsible offer for the seeds at a higher price than that finally obtained, the sale was not made with due diligence." Gell v. Milwaukee Produce Co., 93 N.W. (Wis.), 26.

Nothing is better settled, even where there is a sale of the property, instead of an executory sale, than that notice of the seller's purpose to resell must in some way be given. Meacham on Sales, par. 1634, and cases cited.

In the case at bar, immediately upon the refusal to pay the market price as fixed by the closing quotations, a right of action accrued to Herring for damages arising from the breach, but he did not thus terminate the contract, which was an election to keep the contract open and pass over the breach. Roth v. Tayson, 8 Ash., 120 (73 Law T. [N. S.], 628); Ridgely v. Mooney, 16 Ind.App. 362; Indiana Canning Co. v. Priest, Id., 445; Browning v. Simon, 17 Ind.App. 45; Lawrence, Etc., v. Mercantile Co., 58 Kan. 77; Diamond State, Etc., v. R. R., 11 Tex. Civ., 587.

William C. McLean, for appellee and cross-appellant.

The failure of the appellant to pay for the cotton at its then actual bona fide market value--to wit, 9 13-16 cents per pound--was a breach of the contract, and thereupon it became liable to appellee for the difference in value between what it subse: quently paid for the cotton--to wit, 9 cents--and its then actual value--to wit, 9 13-16 cents per pound. It is unnecessary to multiply authorities or to argue this question, for the rule seems to be well settled by almost all of the authorities that "the vendor of personal property when the vendee has declined to take the property, and pay for it, ordinarily has the choice of any of three methods to indemnify himself against loss: First--He may store or retain the property for the vendee and sue him for the entire purchase price. Second--He may sell the property and recover the difference between the contract price and the price obtained upon a resale. Third--He may keep the property as his own and recover the difference between the market value at the time and place of delivery and the contract price." Moore v. Potter, 155 N.Y. 481 (S. C., 63 Am. St. Rep., 693, 694, and authorities cited and notes, pp. 697, 698, and authorities cited); Grist v. Williams, 111 N.C. 53 (S. C., 32 Am. St. Rep., 782, and notes).

This court held in Planters Oil Mill Company v. Falls, 29 So. 786, that as between seller and purchaser there is delivery when the goods are delivered to the carrier for transportation to the purchaser.

We contend that the sale of the cotton was completed and executed when the 242 bales were delivered to the Transportation Company at Vaiden, and the appellant was notified of this intention, and instructions were given by telegram that the cotton was that day sold, and we therefore contend that appellant was compelled to pay the actual bona fide market value, which was 9 13-16 cents per pound; in other words, the appellee fully complied with his part of the agreement, and the courts should make the appellant comply with its part of the agreement by making it pay the difference between what it actually paid and what it ought to have paid under the contract for the cotton. We call the court's special attention to the fact that the appellant was the only person to whom cotton put up into round bales could be sold; the appellant was the only person in the market for this class of cotton. The bill makes this allegation, and it is not denied in the answer; and in addition Herring testifies to this fact, and he is nowhere contradicted.

This is a very different case from where there is an executory contract of sale and where before the time fixed for delivery and before the vendor has appropriated any of the property on the contract the vendee countermands the order and thereby repudiates the contract. In which case quite a number of authorities hold that action for special damages for refusal to receive the property when the delivery was tendered is the proper action, and that the vendor must notify the vendee that he would sell the property for his account and hold him responsible for the difference between the contract price and the market value. But in this case the proof is clear that there was no market value at all for cotton put up in round bales (this is alleged in the bill and is not denied in the answer and is proved), there was no person except the defendant who would buy this cotton; the complainant was completely at the mercy of the defendant. He had...