Bercut v. Park, Benziger & Co.

• Decision Date: 29 August 1945
• Docket Number: No. 10823.,10823.
• Citation: 150 F.2d 731
• Parties: BERCUT et al. v. PARK, BENZIGER & CO., Inc. PARK, BENZIGER & CO., Inc. v. BERCUT et al.
• Court: U.S. Court of Appeals — Ninth Circuit

150 F.2d 731 (1945)

BERCUT et al. v. PARK, BENZIGER & CO., Inc. PARK, BENZIGER & CO., Inc. v. BERCUT et al.

No. 10823.

Circuit Court of Appeals, Ninth Circuit.

July 18, 1945.

Rehearing Denied August 29, 1945.

Alfred F. Breslauer, M. Mitchell Bourquin, and George Olshausen, all of San Francisco, Cal., and Thelma S. Herzig, of Los Angeles, Cal., for plaintiff.

George M. Naus and Louis H. Brownstone, both of San Francisco, Cal., for defendants.

Before DENMAN, HEALY, and BONE, Circuit Judges.

HEALY, Circuit Judge.

In January 1943 Pierre and Jean Bercut (appellants) contracted to sell to one Serge Hermann 60,000 cases of wine, deliveries to be made at monthly intervals over a period of three years. The contract was made and was to be performed in California. Hermann assigned the contract to appellee Park, Benziger & Company, herein for brevity sometimes called the buyer. In April 1943, before deliveries commenced, the Bercuts announced that they would make no deliveries. The buyer, electing to treat the announcement as an anticipatory breach, brought suit and was awarded damages in the sum of $72,687.51.¹ Both parties have appealed; but it will be unnecessary to consider the buyer's appeal since its submission was conditioned on our failure to affirm the judgment.

1. The evidence was that other wines of the type contracted for were not available on the market. The court submitted the case to the jury on the principle that the buyer was entitled to recover prospective net profits which it would have made in the ordinary course of business had not the sellers breached the contract.² The Bercuts claim that prospective profits are not recoverable unless it is shown that at the time the contract was made the seller knew the goods were unobtainable elsewhere.³ They moved for a directed verdict on the ground that there was no showing of knowledge, and they unavailingly requested an instruction embodying their theory that such profits constitute special damages.

Subdivision (2) of § 1787 of the California Civil Code, Uniform Sales Act § 67 (2), provides that the measure of damages in case of wrongful refusal to deliver goods "is the loss directly and naturally resulting in the ordinary course of events, from the seller's breach of contract."⁴ There is support for the view that this subdivision furnishes the applicable rule where there is no market from which the buyer can supply himself. See 1 U.L.A. p. 376, annotation b. A late California decision dealing with the measure of recovery in such situation is Coates v. Lake View Oil & Refining Co., 20 Cal.App.2d 113, 66 P.2d 463, where lost net profits were held recoverable. The court quoted and approved the rule of McKay v. Riley, 65 Cal. 623, 4 P. 667, 668, to the following effect: "Ordinarily, the rule of damages, in actions like the present, is the difference between the price agreed to be paid and the market value, because the vendee can obtain the article contracted for at the market price. When, however, the circumstances are such that the vendee cannot thus supply himself, the rule does not apply, for the reason for it ceases. * * * In such case the true measure of damages is the actual loss sustained by the vendee by reason of his not receiving an advance or profit through agreements which he himself has made in reliance upon the fulfillment of his vendor's contract."⁵

In these California decisions the buyer's loss of profits appears to be regarded as the direct and natural consequence following in the ordinary course of events from the seller's failure to deliver. None of the cited cases intimates that unavailability of the goods on the market is a special circumstance of which the seller must be shown to have had knowledge. The New York Court of Appeals has expressly held that such damages are not special, but are general damages, Orester v. Dayton Rubber Mfg. Co., 228 N.Y. 134, 126 N.E. 510; and there are a number of other respectable authorities, which, without discussion of the point, proceed on the same assumption.⁶

We conclude that on this phase of the case the court was not in error.

2. Damages will not be awarded for loss of profits unless there is a satisfactory basis for estimating what the probable earnings would have been had there been no tort or breach of contract. Natural Soda Products Co. v. City of Los Angeles, 23 Cal.2d 193, 143 P.2d 12. Anticipated profits need not, however, be established with certainty; it is enough that the loss be shown as a reasonable probability. Hacker Pipe & Supply Co. v. Chapman Valve Mfg. Co., 17 Cal.App.2d 265, 267, 61 P.2d 944.

We think the evidence on the part of the buyer satisfied these requirements; and we disagree with appellants' contention that the proof was of gross instead of net profits.⁷ Competent evidence was introduced of the prices at which the buyer would have been able to sell the wines had they been delivered. There was evidence of general overhead costs, cost of freight, insurance and warehousing. There was, in short, sufficient proof of the buyer's probable gross profits, and of the expenses which would have been incurred. From the data given, the jury was in position fairly to determine the buyer's damage. In answering objections similar to those urged by appellants the court in Natural Soda Products Co. v. Los Angeles, supra, 23 Cal.2d at page 200, 143 P.2d at page 17, observed: "Since defendant made it impossible for plaintiff to realize any profits, it cannot complain if the probable profits are of necessity estimated."

3. It is claimed that the court erred in failing to instruct the jury as a matter of law that under OPA price ceilings the maximum markup permitted the buyer was 25%. The argument, as we understand it, is that loss of profits may not be considered as an element of damage where the profits could not legally have been earned.

There are several reasons why the specification of error is unavailing, one of which would normally halt inquiry at the threshold. There was no timely request for an instruction of the character discussed nor timely objection to the court's omission so to advise the jury. Under Rule 51 of the Federal Rules, 28 U.S.C.A. following section 723c, a party may not assign as error the failure to give an instruction unless he specifically calls the court's attention thereto before the jury retires. Appellants can plead no valid excuse for their neglect timely to raise the point. As already noted, the case was twice tried. Counsel for appellants had knowledge of the regulation and they were from the outset abundantly familiar with the evidence in support of the buyer's claim of loss.

The effective date of the regulation in question (MPR 445, § 5.10) was August 31, 1943. On the evidence it was not a pure question of law, but a contested question of fact, whether the buyer was within its terms. Moreover, appellants had insisted, and the court appears to have agreed with them, that damages must be proved exclusively from data available as of the date of the breach, namely April 27, 1943, all subsequent events or developments being excluded as irrelevant. Having insisted upon a trial on this theory appellants are hardly in position to complain of the court's neglect of the regulation.

Finally, the breach occurred four months prior...