l. Where a buyer, in violation of an executory contract of sale,
refuses to accept the commodity sold, the seller may recover the
difference between the contract price and the market value at the
time when and at the place where deliveries should have been made.
P.
273 U. S.
340.
2. The application of this rule is not affected by the fact that
the seller relied on or intended procuring the commodity sold
through contracts with third persons under which he would have been
obliged to pay more than the market price existing when his
purchaser refused to accept deliveries. P.
273 U. S.
340.
60 Ct.Cls. 294 affirmed.
Appeal by the United States from a judgment of the Court of
Claims allowing damages for breach of a contract to accept and pay
for coal.
Page 273 U. S. 338
MR. JUSTICE BUTLER delivered the opinion of the Court.
The judgment is for damages for breach of contract by the United
States to accept and pay for coal purchased from appellee for use
at army posts in the Chicago district. The only question presented
for our consideration is whether the Court of Claims applied the
right measure. It gave the difference between contract price and
market value at the times and places specified for deliveries.
Appellant maintains that, upon the facts of the case, that rule is
not applicable, and that appellee is limited to recovery of the
amount of profits it would have realized if appellant had accepted
and paid for all the coal covered by the contract.
The facts on which appellant's contention is based follow:
appellant and appellee made a contract as of September 10, 1920, by
which the former agreed to take and pay for, and the latter agreed
to furnish and deliver, 150,000 tons of coal at $6.75 per ton. The
contract contemplated the production of the coal at mines in
southern Illinois: 40,000 tons at the White Ash mine of the Johnson
City Washed Coal Company, 50,000 tons at the Paradise mine of the
Forester Coal & Coke Company, and 60,000 tons at the Freeman
mine of the Freeman Coal Mining Company. But it was agreed that
appellee might furnish coal from other mines if, for any reason for
which it was not responsible, it should be unable at any time to
furnish coal in sufficient quantities from the mines mentioned.
Appellant agreed to furnish cars and give shipping directions.
Appellee agreed to make deliveries on cars at each of the mines in
specified quantities per week.
Page 273 U. S. 339
Appellee is a selling company, and did not own or operate any of
the mines named, and did not have any interest in any of the
companies owning or operating them. It had arrangements with the
mining companies named, under which it, in its own name and under
contracts between it and purchasers, sold coal produced from the
mines. The president of appellee was also the president and
principal owner of the company operating the White Ash mine. It was
customary for selling companies to assist in financing mining
companies. Appellee advanced the companies operating the White Ash
and Paradise mines funds to meet their payrolls. The Freeman mine
was similarly financed by another selling company. Mines in
southern Illinois have no facilities for storing coal. The general
practice is to load the coal, as it comes from the mines, directly
into cars. Appellee delivered the coal to appellant in that way
and, under the contract, 53,146 tons were accepted and paid for.
Appellee was ready to deliver the balance, but appellant refused to
take or pay for any more. The difference between the contract price
and market value at the times and places specified for deliveries
was $4.60 per ton, and this, applied to the 96,854 tons that
appellant refused to take, produces $445,528.40. Judgment was given
for that amount. Under the agreements appellee had with the
companies operating the mines, its profits on the tonnage refused
would have been $46,065.97.
In support of its contention that recovery must be limited to
that amount, the United States emphasizes that appellee had no mine
or coal at the time of the breach; that the coal refused had not
been mined; that it was not shown that appellee was bound to take
or pay for any of that coal or that it suffered any loss because of
the termination of the mining and deliveries under the agreements
between it and the mining companies, and that appellee made no
claim for damages suffered by such companies,
Page 273 U. S. 340
and appellant insists that the judgment is erroneous because it
puts appellee in a better position than if the contract had been
performed.
United States v. Smith, 94 U. S.
214,
94 U. S.
218-219, and
United States v. Wyckoff Pipe &
Creosoting Co., 271 U. S. 263, are
cited and relied on by appellant. They do not apply. Each arose out
of a contract covering construction work for the United States.
Performance by the contractor was delayed by the interference or
default of the United States, and the action was for the resulting
damages. The Court held that the measure of damages for delay was
the actual loss sustained by the contractor. Here, the appellant,
by its refusal to accept the coal, prevented appellee from
completing its part of the contract. The coal had a market value,
and it was less than the contract price. The applicable measure of
damages is fixed by the rule of law that, where a buyer in
violation of an executory contract of sale refuses to accept the
commodity sold, the seller may recover the difference between the
contract price and the market value at the times when and the
places where deliveries should have been made. 2 Williston on
Sales, ยง 582. The facts brought forward by appellant do not take
the case out of the general rule. Appellee was bound to deliver the
quantity of coal covered by the contract. Failure of the sources
referred to in the contract would not excuse it. In contemplation
of law, it could have obtained the coal at market prices prevailing
at the times when deliveries were required under the contract. The
contract was not for production or mining, but for sale and
delivery, of coal. Appellant and appellee were the only parties to
it. There was no contract relation between appellant and any of the
mining companies. Their default would not make them liable to
appellant or relieve appellee from the obligation to deliver the
coal to appellant. Appellant's liability is not measured by
appellee's losses or gains, if any, under its agreements with the
mining companies. Appellee is not entitled to have the full
contract
Page 273 U. S. 341
price of the coal not delivered, but is chargeable only with its
market value. The difference between that value and the contract
price is the amount of damage deemed by the law directly and
naturally to result in the ordinary course of events from the
appellant's breach of contract. The cost to appellee of securing
the coal and the amount of its profits are immaterial.
Garfield
& Proctor Coal Co. v. N.Y. N.H. & H. Railroad, 248
Mass. 502, 506;
Kadish v. Young, 108 Ill. 170, 176, 186.
Cf. Jamal v. Dawood [1916], 1 A.C. 175. The judgment
leaves appellant in as good position as if it had accepted and paid
for the coal in accordance with its contract.
Judgment affirmed.