Rawlings v. Duane H. Nash, Inc.

• Court: Maryland Supreme Court
• Writing for the Court: URNER, J.
• Citation: Rawlings v. Duane H. Nash, Inc., 83 A. 646, 117 Md. 393 (Md. 1912)
• Decision Date: 02 February 1912
• Parties: RAWLINGS et al. v. DUANE H. NASH, Inc.

83 A. 646

117 Md. 393

RAWLINGS et al. v. DUANE H. NASH, Inc.

Court of Appeals of Maryland

February 2, 1912

Appeal from Superior Court or Baltimore City; Thos. Ireland Elliott Judge.

Action by Duane H. Nash, Incorporated, against J. S. Rawlings and another, trading as Rawlings Implement Company. Judgment for plaintiff, and defendants appeal. Affirmed.

Rignal W. Baldwin and William S. Bryan, Jr., for appellants. Henry P. Hyason, Jr., and W. Calvin Chestnut, for appellee.

URNER J.

The appellee corporation is engaged in the manufacture of harrows under a patent which it controls, and the appellant partnership deals in agricultural implements. These parties on August 1, 1909, entered into an agreement in writing by which the company appointed the firm as its agents for the sale of the harrows in Maryland and certain other states for the period of one year commencing November 1, 1909. The agreement contained an order from the firm purchasing absolutely 1,500 harrows at prices listed according to the sizes required, which were to be specified on or before October 15, 1910. The prices for extra coulters, or teeth were also stated; but as to these there was no specific order in the contract. There were provisions, among others, to the effect that the goods specified in the agreement should be delivered between the dates indicated, unless deliveries were prevented by designated causes, and that it should be the duty of the firm and its subagents to make a judicious distribution of all printed matter furnished and take every opportunity to advertise the implements, by canvassing or otherwise, and to see that all harrows sold were properly set up and started. There was no option reserved to either of the parties for a renewal of the contract, and the appellee appointed another agency, to succeed the appellants, at the expiration of their term, for the exclusive sale of the harrows in the territory mentioned. In pursuance of the agreement referred to, the appellee company delivered to the appellants the 1,500 harrows as stipulated, and upwards of 17,000 coulters, but declined to sell them any in excess of those quantities. In the present suit by the company to recover an unpaid balance due under the contract, the principle question is whether, and to what extent if at all the defendant firm is entitled to recoup the loss it claims to have suffered in consequence of the plaintiff's refusal to fill additional orders.

The defendants contend that, under the terms of the contract, the plaintiff was bound to deliver all the harrows and coulters ordered by them during the stated period, and they insist that they have a right to recoup in damages the difference between the purchase and customary reselling prices of the goods covered by the orders which the plaintiff rejected. The statement of account upon which the defendants rely agrees with that of the plaintiff in showing an indebtedness of $7,023.56 for implements and extra parts furnished under the contract; but it claims $4,574.50 by way of recoupment for profits on unfilled orders for 820 harrows and about 11,000 coulters. The court below accepted the defendants' theory to the extent of holding that their right of purchase under the agreement, during the prescribed period, was not restricted to the quantity specifically mentioned; but, by its own instruction, it limited the recoupment to such damages, if any, as the jury should find the defendants sustained by reason of the failure of the plaintiff to furnish goods " sold by the defendants and ordered by them from the plaintiff" during the year of the contract, and which the latter failed or refused to supply. It was agreed at the trial that the amount which it might be permissible for the defendants to recoup on account of unfilled orders, under the court's instruction, was $161.50 (which, according to the evidence, was the profit on about 100 harrows sold in anticipation of the orders being filled), and that this amount, deducted from the bill rendered by the plaintiff, would leave a balance of $6,862.16 for which the jury would be warranted in giving a verdict for the plaintiff, with interest in their discretion; the right being reserved to the parties to have reviewed in this court the questions involved in the rulings of the court below. The verdict was for the precise amount stated, and the defendants have thus been awarded by way of recoupment all the damages they claim on account of the rejected orders in so far as they would have supplied sales actually effected. In view of the successful assertion of their claim to this extent, the only question we need consider in this connection is whether their contention as to recoupment for damages on account of prospective sales should be sustained.

There is nothing in the agreement between the parties which, in our opinion, can be properly construed to mean that the defendants had an option for the purchase of as many of the implements as they might choose to order within the year of the contract. If this had been the understanding of the parties, they would doubtless have employed the very simple terms which would have readily and clearly expressed that intention. As the contract does not contain such a provision, and as the agency which it creates, and upon which the defendants rely, is for the resale of the harrows within the prescribed time and area, it is clear that the duty of the plaintiff to sell the implements to the defendants could not be held to extend further than the restricted purposes of such resales required. The defendants therefore were not entitled to purchase from the plaintiff beyond the reasonable needs of their trade existing during the time they were authorized by the agreement to deal in the plaintiff's patented commodity.

If the plaintiff violated the contract by refusing to sell to the defendants a sufficient number of the implements to satisfy the requirements of the business in the localities and for the period specified, the defendants would have an undoubted right to recover for such resulting losses as could be proved with reasonable certainty. In cases like the present, where the contract relates to articles which can be procured only from the party charged with default, and where the purchase is understood to be made for the purposes of resale, the rule is that the vendee is entitled to recover the profits he would have derived from reselling the goods if they had been delivered by the vendor according to the agreement. But this loss must be shown by evidence which does not leave the question open to speculation and conjecture. Note to Guetzkow v. Andrews, 52 L. R. A. 219, 223; 35 Cyc. 645; Liggett Axle Co. v. Michigan Buggy Co., 106 Mich. 445, 64 N.W. 466; Wakeman v. Wheeler & Wilson, 101 N.Y. 209, 4 N.E. 264, 54 Am. Rep. 676.

It is stated generally in Lanahan v. Heaver, 79 Md. 418 29 A. 1037, that: "Wherever it is reasonably certain or apparent that profits would have been realized had the contract been completed according to its terms, and the profits of the bargain are the only thing purchased or contracted for, and are the direct and immediate fruits of the contract, there, though the amount of the...