R. G. McClung Cotton Co. v. Cotton Concentration Co.

• Decision Date: 24 February 1972
• Docket Number: No. 17748,17748
• Citation: 479 S.W.2d 733
• Parties: R. G. McCLUNG COTTON COMPANY, Inc., Appellant, v. COTTON CONCENTRATION COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 733

479 S.W.2d 733

R. G. McCLUNG COTTON COMPANY, Inc., Appellant, v. COTTON CONCENTRATION COMPANY et al., Appellees.

No. 17748.

Court of Civil Appeals of Texas Dallas.

Feb. 24, 1972.

Rehearing Denied April 6, 1972.

Second Motion for Rehearing Denied May 4, 1972.

David M. Kendall, Jr., Woodruff, Kendall & Smith, W. Newton, Barnes, Dallas, for appellant.

Frank C. Brooks, O. D. Montgomery, Brooks, Montgomery & Matthews, Dallas, for appellees.

GUITTARD, Justice.

This suit was brought by plaintiff R. G. McClung Cotton Company, Inc. against defendant Cotton Concentration Company to recover as damages the amount of decline in market value of 8,485 bales of cotton during the period of delay by defendant in weighing and sampling the cotton, which was stored in defendant's warehouse, together with interest and storage charges for the period of the delay. The jury found that defendant failed to weigh and sample the cotton within a reasonable time after plaintiff requested it to do so, that the difference in market value for the period of the delay was $106,062, and that because of such delay plaintiff was required to pay out $7,356 as storage charges and $6,365 as interest charges. Defendant moved for judgment Non obstante veredicto and the trial court sustained this motion in part, denying recovery for difference in market value but rendering judgment on the verdict for the storage and interest charges. Both parties have appealed.

1. Plaintiff's Appeal

a. Proof of Damages

Plaintiff's eighth point asserts that the trial court erred in disregarding the finding of difference in market value because there was sufficient evidence of probative force to support this finding. We sustain this point.

The principal question is whether the owner of goods intended for sale, which are unreasonably delayed in processing, may recover damages measured by decline in market value of the goods during the period of delay without proof of the amount actually received from sale of the goods. We hold that proof of the actual sale price is not required.

Since we have found no cases directly on this point, we have reviewed the authorities concerning measure of damages for breach of contract and particularly those in analogous cases of delay by carriers in transportation of goods. The general principle of damages is compensation to plaintiff for his actual loss resulting from defendant's wrong. Chicago, M. & St. P. Ry. v. McCaull-Dinsmore Co., 253 U.S. 97, 40 S.Ct. 504, 64 L.Ed. 801 (1920); Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484 (1952). In applying this principle to claims for delay by carriers in shipment of goods intended for sale, the courts have established the measure of damages to be the difference between the market value at the time and place of delivery required by the contract and the market value at the place and time of actual delivery. Chicago, M. & St. P. Ry. v. McCaull-Dinsmore Co., supra; San Antonio & A.P. Ry. v. Pratt, 89 Tex. 310, 34 S.W. 445 (1896); Texas P. Ry. v. Nicholson, 61 Tex. 491 (1884); Texas & N.O.R.R. v. H. Rouw Co., 271 S.W.2d 666 (Tex.Civ.App ., San Antonio 1954, writ dism'd); Chicago, R.I. & Pac. Ry. v. C. C. Mill Elevator & Light Co., 87 S.W. 753 (Tex.Civ.App., San Antonio 1905, no writ). However, this rule is not applied where evidence shows that the actual loss was less than the difference in market value. Missouri Pac. R.R. v. H. Rouw Co., 258 F.2d 445 (5th Cir. 1958); Missouri, K. & T. Ry. v. Witherspoon, 18 Tex.Civ.App. 615, 45 S.W. 424 (Fort Worth 1898, no writ).

In the present case defendant insists that it is not governed by the rules concerning common carriers because a warehouseman is not held to as high a responsibility as a common carrier, and also, since defendant was guilty of no delay in delivering the cotton, but only in filling orders to take certain cotton from storage, reweigh and resample it, and return it to storage, defendant is not responsible for any decline in market value for the period of the delay. ¹

We cannot distinguish the common-carrier cases on this ground. None of the authorities above cited, or any others we have examined, take the carrier's strict liability as the basis of the market value rule of damages. That rule is rather an application of the general principle of contract damages, which is to give the plaintiff the benefit of his bargain by awarding him an amount that would put him in as good a position as if defendant had performed. Chicago, M. & St. P. Ry. v. McCaull-Dinsmore Co., supra. In Texas P. Ry. v. Nicholson, 61 Tex. 491, 497 (1884), the Supreme Court said that this measure of damages in suits against common carriers for delay, 'does not proceed from the extraordinary care required of them by the common law, or any other stringent rules applied to them, but is equally binding upon any party who undertakes to do for another a specific thing within a specified time.' The same measure of damages applies to a claim by a buyer against a seller for delay in delivery of goods sold. Richard v. American Union Bank, 253 N.Y. 166, 170 N.E. 532, 69 A.L.R. 667 (1930).

Defendant contends that the market value rule only fixes a limit to damages in cases of delay and does not relieve plaintiff of showing actual loss on ultimate disposition of the goods. It points to evidence that plaintiff did not dispose of the cotton in question immediately on receipt of the weights and samples, but sold and shipped it out of the warehouse over a period of several months at prices not shown by the evidence. Defendant argues that the difference in market value was only a 'paper loss'.

We conclude that there is evidence of actual loss. Testimony shows that the cotton market is seasonal in that most of the trading takes place in the months following the harvest in late summer and fall, and that after textile mills and other users of cotton arrange for their year's supply, cotton remaining on hand is difficult to sell. In the early months of this particular season of 1967--68, users of cotton anticipated a scarcity and bought up the cotton they needed at high prices, but the crop turned out to be larger than forecast, so that there was a decided drop in the price after the first of January. Because of the abundance of new-crop cotton on the market, it was difficult to dispose of the older cotton at any price in late February and early March, when the reweighing and resampling was done, and also in the months following. Moreover, plaintiff's customers were textile mills, to whom plaintiff supplied cotton of certain specifications in accordance with their particular requirements. Plaintiff could not fill their orders with any of the 8,485 bales in question because accurate information concerning weights and grades was not available without reweighing and resampling. Consequently, plaintiff had to use other cotton to supply these customers, some of which had to be purchased on the market at current prices, and when the weights and samples from the bales in question were finally available in late February and March, other purchasers had to be found. In our opinion this evidence is sufficient to raise a jury issue of actual loss to plaintiff resulting from defendant's unreasonable delay in reweighing and resampling the cotton though the exact prices at which this cotton was sold were not established.

Moreover, evidence of decline in market value during the delay was sufficient to establish actual loss, at least prima facie. A dealer in commodities of fluctuating value is damaged by delay if he loses a favorable market. When the goods are finally available to him, he may sell and take his loss, or he may hold them at his own expense and risk and wait for an upturn in the price. If he decides to wait, any loss from further market decline will fall on him rather than on the wrongdoer who caused the delay, and any gain during such subsequent period should be his also. Jamal v. Dawood (1916), 1 AC 175 (Privy Council); 3 Williston, Sales § 582 at 242 (Rev.Ed.1948). Cf. Gonzalez v. Texas Feed & Grain Co., 328 S.W.2d 923 (Tex.Civ.App., Fort Worth 1959, writ ref'd n.r.e.). The law does not throw on the innocent owner the risk of subsequent loss resulting from market fluctuation and allow the wrongdoer the benefit of a subsequent gain. It awards damages measured by difference in market value during the period of the delay in order to put the owner in as good a position as he would have been if the contract had been performed on time.

Defendant cites Great Atl. & Pac. Tea Co. v. Atchison, T. & S.F. Ry., 333 F.2d 705 (7th Cir. 1964, cert. den. 379 U.S. 967, 85 S.Ct. 661, 13 L.Ed.2d 560), in support of its contention that proof of decline in market value does not establish actual damages. That case was a suit for damages for two days' delay in a shipment of plums from California to New York for sale in A. & P.'s retail stores. The trial was upon a stipulation from which the trial court found that the plums were sold at identical retail prices on Wednesday instead of Monday, and that there was no loss of profits because the court could not assume that A. & P. had no plums to satisfy customer demand on Monday and Tuesday. In affirming judgment for defendant on these findings, the court of appeals acknowledged that the market value rule was the usual measure of damages in such cases and that the burden of proving that it should not apply was on the carrier, but observed that this rule was merely a method to ascertain the actual damages and should not be applied when actual damages could be ascertained by other means. The precise holding is stated in the following language:

'Proof of decline in wholesale price does not establish actual damage since the parties stipulated that A & P's daily price list issued to its retail stores 'did not move up or down in relation to changes in the wholesale market prices during that period."

The A. & P. case would be in point if the evidence...