Reliance Cooperage Corp. v. Treat

• Citation: 195 F.2d 977
• Decision Date: 22 April 1952
• Docket Number: No. 14441.,14441.
• Parties: RELIANCE COOPERAGE CORP. v. TREAT.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

195 F.2d 977 (1952)

RELIANCE COOPERAGE CORP. v. TREAT.

No. 14441.

United States Court of Appeals Eighth Circuit.

April 22, 1952.

Edgar Bernhard, Chicago, Ill. (W. F. Reeves, Marshall, Ark., on the brief), for appellant.

J. Smith Henley, Harrison, Ark. (N. J. Henley, Marshall, Ark., and Ben C. Henley, Harrison, Ark., on the brief), for appellee.

Before SANBORN, JOHNSEN, and COLLET, Circuit Judges.

SANBORN, Circuit Judge.

The question for decision is whether the measure of the general damages recoverable by a purchaser for the nonperformance by a seller of an executory contract for the sale of goods is changed or affected by an unaccepted anticipatory repudiation of the contract by the seller.

The parties to this action entered into a contract which, so far as pertinent, reads as follows:

"This Agreement entered into in St. Louis, Missouri this 12th day of July, 1950 by and between Reliance Cooperage Corporation, an Illinois corporation, Party of the First Part, and A. R. Treat, of Marshall, Arkansas, Party of the Second Part; Witnesseth:

"Party of the First Part hereby agrees to purchase and Party of the Second Part hereby agrees to sell a quantity of staves sufficient to aggregate three hundred thousand (300,000) white oak bourbon staves of four and one-half average width, to be produced by, or purchased by, Second Party in Arkansas, Missouri, or Oklahoma, upon the following terms and conditions:

"1. Said staves when shipped shall be not less than 90% bourbon grade. Production shall commence as soon as possible and shall be completed not later than December 31, 1950. First Party agrees that on each final inspection, not more than 3% of the bourbon staves shall be less than two inches in width and none shall be less than one and one-half inches in width. The price to be paid Second Party by First Party shall be $450.00 per thousand for said bourbon grade staves of four and one-half inch average width, and $40.00 per thousand for oil grade staves of four and one-half inch average width, all f. o. b. freight cars nearest millsite where staves were produced, * * *.

* * * * * *

"4. This agreement shall be governed by the laws of the State of Missouri."

Treat produced and delivered no staves to the Reliance Cooperage Corporation. After the time for performance specified in the contract had expired, the Corporation brought this action against Treat to recover the difference between the contract price of the staves and their market price at the time delivery was due under the contract. This difference was alleged to be $90,000. Treat, the defendant, admitted having entered into the contract, but denied that his nonperformance had caused the plaintiff any damage.

The case was tried to a jury. There was no controversy as to the issue of liability. The sole question in dispute related to damages. The evidence indicated that there had been, between the date of the contract and the date when performance was due, a rise in the market price of staves.

It was admitted that the defendant had on August 12, 1950, sent to Ralph Ettlinger, an officer of the plaintiff, the following letter:

"Marshall, Arkansas August 12, 1950

"Dear Mr. Ralph Ettlinger:

"I have been trying to get a letter to you for some time but they return to me. I went to Harrison yesterday and got Tom Burns Co. adress trying to get in touch with you. We got a mill at Hallaster, Mo. trying to get started. Have a few Bolts will have a time getting any more. I can\'t make these staves up there or any where else at the price I haft to pay for Bolts. Every one else are paying $475.00 to $500.00 per M. You see I can\'t compete with them so if you want those staves I will haft to get around what ever the market is from time to time. You can see your seff that I can get bolts say 70¢ a price when others paying $100.00 per foot. I think the boys can make a lot of staves fast up there if they can pay as much as others are paying if not they will haft to quit. Now you can see where I am at. The other to co. that I am making for with my other 3 mills have raised from $75.00 to $100.00 on the 1000 4½" staves and said they would cancel out as the market raises. So you do just what you want to. I can\'t make them unless I can buy the timber so let me hear at once. I will have a car before long.

"Yours as ever A. R. Treat."

The defendant testified that by telephone in the latter part of August, 1950, he told Ettlinger positively that he (the defendant) would not make any staves under the contract. The defendant also testified that the fair market value of bourbon staves of the type covered by the contract in suit, delivered as the contract provided, was, during August 1950, $400.00 to $450.00 a thousand; that the price of staves began to advance beyond $450.00 a thousand around the last of August or the first of September; and that he thought he got $625.00 a thousand for staves along the last part of December. The plaintiff had objected to the introduction of evidence of the market value of staves in August 1950 as immaterial, but the court admitted the evidence.

On cross-examination, the defendant stated that he knew of no new contracts for staves having been made in August 1950 for less than $525.00 a thousand; that the price of staves might have started to rise a little in July, but that his prices did not rise. When asked to explain why he referred to a rise in prices for staves in his letter of August 12 to Mr. Ettlinger, the defendant said: "I just wanted them to know that I wasn't aimin' to make the staves."

The plaintiff's evidence on the issue of damages was that the telephone conversation with Ettlinger which the defendant testified took place in August, actually occurred toward the end of September, 1950; that the defendant then told Ettlinger that he could not produce the staves at the contract price; and that Ettlinger explained to him that the plaintiff must have delivery of the staves because Ettlinger had made commitments based upon the price stipulated in the contract. The following letter written by the plaintiff to the defendant, which he admitted having received, was introduced in evidence:

"October 6, 1950 "Mr. A. R. Treat Marshall, Arkansas. Dear Mr. Treat:

"Last week you advised our Mr. Ralph Ettlinger that you would not deliver staves under our agreement with you dated July 12, 1950, until he came down to Marshall and talked to you about revising the price at which the staves are to be sold to us.

"Under date of August 14, 1950, we wrote you requesting that you reconsider your decision, stated in your letter of August 12, 1950, not to deliver staves under our agreement unless we would pay `whatever the market is from time to time.\' We have not had a formal reply to our letter of August 14, 1950, and the substance of your phone conversation with Mr. Ralph Ettlinger certainly does not permit us to feel confident that you will perform in accordance with your agreement.

"We want to make it very clear to you at this point that we are looking forward to your strict compliance with all of the obligations which you have undertaken in your agreement with us. Over two months have elapsed since we met in St. Louis and worked out the terms of our present contract and to this date you have not advised us that you have produced a single stave for delivery to us under this agreement.

"Information reaching us discloses that you are cutting staves in several different locations. There is, therefore, no reason at all why you cannot deliver to us the staves contracted for in accordance with the terms of our agreement. Please let us hear from you at once on the matter of our agreement or we shall be obliged to take some action to protect our rights in the matter.

"Very truly yours "Reliance Cooperage Corp. By Adolf Loeb. "AL:vg"

The evidence as to the market price of staves on December 31, 1950, would have sustained a finding that it was more than the contract price but not in excess of $750.00 a thousand.

At the close of the evidence, the court was requested by the plaintiff to instruct the jury that the plaintiff was entitled to recover the difference between the contract price of the staves the defendant had promised to deliver on or before December 31, 1950, and the market price of similar staves on that date. The court denied the request.

The jury was instructed substantially as follows: That the undisputed facts made a prima facie case of liability against the defendant for damages based upon the difference, if any, between the contract price of $450.00 per thousand staves and the market price as of December 31, 1950. That the defendant contended that he had repudiated the contract prior to that date and that it was the plaintiff's duty to mitigate its damages by purchasing the staves elsewhere. That the burden of proving his contentions was upon the defendant. That the jury was to determine whether the defendant did in fact repudiate his contract prior to December 31, 1950, and, if so, when the repudiation occurred, and whether, after such repudiation, the plaintiff by a reasonable effort could have mitigated its damages by the purchase of the staves on the open market, and whether the damages could have been completely or partially mitigated. That if, on a date prior to December 31, 1950, the defendant definitely and unequivocally advised the plaintiff that he would not deliver any staves under the contract, this would be a breach of the contract by him as of that date; and that if, after the repudiation, the plaintiff, by a reasonable effort and without undue risk or expense, could have purchased the staves on the open market at a price equal to the contract price, it was the plaintiff's duty to do so, and that the plaintiff would, in that event, be entitled to nominal damages only. That if the plaintiff by a reasonable effort and without undue risk or expense, after the repudiation, if any, by the defendant of the contract prior to ...