J.A. Laporte Corp. v. Pennsylvania-Dixie Cement Corp.

• Decision Date: 21 March 1933
• Docket Number: 24.
• Citation: J.A. Laporte Corp. v. Pennsylvania-Dixie Cement Corp., 164 Md. 642, 165 A. 195 (Md. 1933)
• Parties: J. A. LAPORTE CORPORATION v. PENNSYLVANIA-DIXIE CEMENT CORPORATION.
• Court: Maryland Supreme Court

165 A. 195

164 Md. 642

J. A. LAPORTE CORPORATION v. PENNSYLVANIA-DIXIE CEMENT CORPORATION.

No. 24.

Court of Appeals of Maryland

March 21, 1933

Appeal from Superior Court of Baltimore City; Eugene O'Dunne Judge.

Action by the Pennsylvania-Dixie Cement Corporation against J. A Laporte Corporation. From judgment for plaintiff, defendant appeals.

Affirmed.

Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, PARKE and SLOAN, JJ.

Walter L. Clark and Roszel C. Thomsen, both of Baltimore, for appellant.

John Philip Hill and Richard F. Cleveland, both of Baltimore (Charles Carroll, Jr., Semmes, Bowen & Semmes, and Hill, Ross & Hill, all of Baltimore, on the brief), for appellee.

BOND Chief Judge.

A buyer of cement from a manufacturer repudiated its contract before any of the cement had been delivered or called for, and the seller, treating the whole contract as broken, recovered judgment for damages from the breach measured by the difference between the cost of production and the contract price, in so far as it was found feasible to estimate damages; and on the buyer's appeal the question chiefly argued is whether this was the correct measure of damages under the facts shown.

The Laporte Corporation, having a contract for the construction of a dam on Gunpowder river and Pretty-Boy creek in Baltimore county, to impound water for part of the water supply of Baltimore city, entered into a written contract on March 24, 1931, with the Pennsylvania-Dixie Corporation, a manufacturer of cement, for all the Portland cement required for the work, estimated at 200,000 barrels, to be delivered at Parkton, Md., prior to December 31, 1931. The price stated in the contract was $2.25 a barrel, in cloth sacks; and it was stipulated that the seller should reduce the price to meet any subsequent reductions by it in market price. Testimony on behalf of both parties, however, established the fact that the price actually agreed upon was less than $2.25 a barrel; that, in order to offset a disadvantage of longer transportation for deliveries from this seller than would be necessary for a competitor nearer the work, 15 cents a barrel should be deducted from that price. Whether the agreement went further, and required that the same deduction should be made from any subsequently reduced market price, was a question in dispute. The agreement on the actual price was not reduced to writing.

The seller is a large manufacturer and seller of cement, having in all, about the country, eight factories, with a total production capacity of 12,200,000 barrels a year; and its nearest factories numbered 4 and 6, from which cement for this contract would have been shipped, had a total capacity of 3,700,000 barrels. The total production capacity of the seller, according to its testimony, was of a larger amount than could be marketed at any price, however low, and the amount that could be marketed depended largely on the extent of the success or failure of efforts of its salesmen in competition with salesmen of other sellers. Under the conditions existing in 1931, the plants worked to only 48 per cent. of their full capacity. On March 31, 1931, a week after the making of the present contract, the seller had on hand, at its plants numbered 4 and 6, 577,000 barrels of cement made up, and had commitments or orders amounting to 1,037,000 barrels excluding this order. On December 31, 1931, the date specified for concluding deliveries on the contract, it had on hand 404,000 barrels, and commitments for 1,190,000 barrels. During the year 1931 its total production at those two plants amounted to 2,613,350 barrels, and its total shipments, filling orders, amounted to 2,595,000 barrels. From a third plant in the same nearby region, and from which shipments on this contract might have been made, it shipped on other orders 75,000 barrels, but produced none during that year.

Within a short time after entering into the contract, the buyer gave notice that it would not consider it binding, and made a contract with another seller and manufacturer; and it is not denied that in doing so it was guilty of a breach of its contract with the appellee.

The buyer raises on appeal a question whether the contract, lacking as it does a writing of the essential element of the price actually agreed upon, is unenforceable under the statute of frauds as embodied in the Code, art. 83, § 25. Browne, Statute of Frauds (5th Ed.) § 376; Woods, Statute of Frauds, § 351; 1 Williston, Sales, § 103; Goodman v. Griffiths, 1 Hurl. & N. 574; 1 Uniform Laws Annot. 64. This is a question which does not appear to have been raised below, and for that reason seems foreclosed as possible ground of reversal on appeal. Code, art. 5, § 10. There was testimony that a writing on the actual price was lacking, but in no place does it appear to have been suggested that this affected the enforceability of the contract. The defendant prayed generally that a verdict be rendered in its favor because there was no evidence legally sufficient to entitle the plaintiff to recover, and a ruling on the question could, perhaps, have been made on that prayer, but it has long since been decided that a prayer sufficiently general in terms to afford ground for ruling on a defense raised does not meet the requirement that the defense must plainly appear to have been raised. Tyson v. Shueey, 5 Md. 540, 552. A reading of the record indicates rather clearly that it was not raised in this instance.

The rules for measuring damages from a buyer's anticipatory breach of a contract of sale, embodied in the Sales Act, Code, art. 83, § 85, are broadly stated, for they were intended to leave latitude for adaptation to the circumstances of particular cases in pursuing the effort to restore to the seller all that he might lose by loss of the sale. See Amer. Law Inst. Restatement, Contracts, § 329, Comment; Dimmick v. Hendley, 117 Md. 464, 470, 84 A. 171; Kahn v. Carl Schoen Silk Corp., 147 Md. 516, 128 A. 359, 44 A. L. R. 285; Maryland Fert. & Mfg. Co. v. Lorentz, 44 Md. 218, 235; Ontario Co. v. Hamilton Co., 27 Ont. App. 346, 351. No one measure is fixed upon as the ordinary or preferred measure. The comprehensive principle is stated in subsection 2: "The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events, from the buyer's breach of contract;" and the ensuing subsections, providing for more particular applications of that principle, are broad and elastic in form. The precedents in decided cases which have applied one measure and another to similar contracts are in great abundance; and not in agreement. Opposite conclusions have been reached on hardly distinguishable facts. See review in 44 A. L. R. 258.

The question which finally tests the appropriateness of a given measure in a case of a breach of contract of sale of goods by a manufacturer seems to be not merely whether the contract in a particular case was one for manufacture as well as for sale; the inquiry goes closer to the effect of breach on the seller, and to the position in which it has left him. If he should be left with goods on hand for the sale, and so with their market value in his possession and available on a market, his loss would be only the further amount of the difference between the market value and the contract price; and that difference would be the appropriate measure of damages. If, on the other hand, that further margin should not be his only loss from the breach, if there should be no market value of goods still available to him, either because he has no goods left on hand, or there is no market for any he has, then his loss would be, generally speaking, and disregarding adjustments of minor items, the difference between his cost and the contract price. In each situation the result to him would be the same in theory, the difference being that upon application of the one measure his total loss would be recovered in part from the...