VULCAN IRON WORKS CO. v. ROQUEMORE, 175 F. 11

SHELBY, Circuit Judge (after stating the facts as above).

The contract of sale contains an important provision for the benefit of the seller which limits the right of the buyer to reject the second shovel because it does not conform to the contract: “If during said trial test, any part of said Utile Giant Special Steam Shovel shall prove defective, or any change necessary to be made, we are to have a reasonable time to replace such parts or to make such changes as we find necessary.” This sentence secures to the seller the right not only to repair or to remove defects, but to “make any change necessary to be made” and "to replace such parts” as are found to be defective or such parís as fail to comply with the contract.

The seller is to have a reasonable time to do this. In sustaining the demurrers to the sixth and eighth pleas, we are of opinion that the court unduly limited the effect and meaning of this provision of the contract. The buyer cannot recover for a breach of the contract if he refused to let the seller perform it. If the facts stated in the pleas are true, he did so refuse. And the charge of the court is subject to the same objection.

The court said: “Suppose you find that the contract was made for a 54-inch boiler, as specified, and the machine sent down here had a 48-inch boiler, then that contract to try it don’t apply lo that sort of a machine. It applied only to the one that conformed to the stipulations of the plaintiff’s contract.” We are of opinion that the seller would have had the right within “a reasonable time” to replace the boiler, when if was found during the trial test to be too small, with a larger one, as required by the contract.

These conclusions are applicable to other rulings upon demurrers to other pleas, and, also, to other alleged defects in the machine furnished. The following excerpts from the charge of the trial court will indicate the directions given the jury as to tlie measure of damages: “Now, the plaintiff (Roquemore) didn’t pay anything- on this conlract. The $1,500 he didn’t pay.

The machine that was to make the balance of the pay-meat, lie didn’t deliver; lie lias still got it Tou take tlie $1,500 and tlie value of that machine and deduct that from the $0,250, and that -would be the measure of recovery. * * * “The measure of damages, I repeat it, the $1,500 he has not paid, yon take that out, and he has kept the machine, you take that out.

Now the value of that and the $1,500 is the amount to be deducted from the $6,250, with interest from the end of that trial test, and the freight.” Evidence was received tending to show that the first shovel, which was agreed to he received as part payment for the second shovel, was not worth the value put on it by the parties in the written contract sued on. Some of the evidence tended to show that it was not worth more than $1,500. Exceptions were reserved by the plaintiff in error to the admission of this evidence, and also to the charges quoted as to the measure of damages.

The two exceptions will be considered together. For the breach of the seller’s agreement to sell, the measure of the buyer’s damages, if he has not paid any part of the price, is the difference between the agreed price and the market value of the goods or

article sold at the time and place of delivery. This is unquestionably the general rule. 2 Mechem on Sales, § 1736. If the machine delivered is defective, the measure of the buyer’s damages is the actual cost of supplying the deficiency. Marsh v. McPherson, 105 U. S. 709, 26 L. Ed. 1139. AVhere the thing sold is of a kind that has no market value, as is sometimes the case, then the actual value must be determined by the best evidence available; but the measure of damages would be the same—the difference between the contract price and the value of the thing at the time and place of delivery.

The value in such cases is sometimes ascertained by proof of what it would cost the purchaser, acting in good faith and with diligence, to procure, in the condition required by the contract and delivered at the place named for delivery, the kind of

article or goods contracted for. Grand Tower Co. v. Phillips, 23 Wall. 471, 479, 23 L. Ed. 71. It may be that there is no sufficient evidence in the record as to the market value of the second shovel, but it does not appear that the plaintiff could not have offered such evidence. It is indicated by the record, however, that there were other manufacturers of shovels besides the seller, and there seems to be no reason why the buyer could not have shown what it would reasonably have cost him to procure a shovel like the one contracted for.

The buyer, in his letter of March 30, 1906, refers to “other manufacturers of steam shovels” who have “not made any advance in their price over what they were a year ago. * * * ” This indicates that, if it were impracticable to make the usual proof of market value, proof could have been adduced to show what it would have cost the bfiyer to procure a shovel from other manufacturers like the one he had contracted for.

There is nothing therefore in the case presented by the record now before us to require a departure from the settled rules as to the measure of damages, unless it can be found in the terms of the written contract of sale. There is nothing unusual in the contract of sale that can be cited as bearing specially on the question of the measure of damages, unless it is that the buyer was permitted to pay part of the price by the delivery to the .seller of a named

article at a fixed value. The contract snerl on is a sale of the second shovel for $6,250, to be paid as follows: $1,500 in cash, and the balance, $4,150, by the delivery to the seller of the first shovel. It should be kept in mind that the price of the thing sold is fixed in money, $6,250; part to be paid in cash, and the remainder, $4,750, a fixed sum, to be paid by the delivery by the buyer to the seller of a named article. For the purposes of this suit, as bearing on the question now considered, is the moneyed value placed on the first shovel binding on the parties?

This is a suit by the buyer for breach of contract. First, look at the question in a suit by the seller against the buyer for the purchase money. If the Vulcan Company were suing Roquemore on the contract for the purchase money, he having accepted the second shovel, but not having paid the cash payment nor delivered the first shovel according to agreement, can any one doubt that the Vulcan Company would be entitled to judgment for the agreed price, $6,250?

Roquemore could not, in that case, hold the first shovel, and yet say that it veas almost worthless, and obtain an abatement of the agreed price to be paid for the second shovel. If he did not pay the $4,750 by the delivery of the first shovel, he would have to pay it in money. Whether or not the seller has the right to decline to take money and require the delivery of the

article as agreed is a question not involved in this case. The effect of the contract was to permit the buyer to pay a certain amount of the purchase money by the delivery to the seller of the first shovel; if he failed to so pay it, he must pay it in money if the seller requires it. Heywood v. Heywood, 42 Me. 229, 66 Am. Dec. 277; Smith v. Coolidge, 68 Vt. 516, 35 Atl. 432, 54 Am. St. Rep. 902; Dunman v. Strother, 1 Tex. 89, 46 Am. Dec. 97; New York News Publishing Co. v. National Steamship Co., 148 N. Y. 39, 42 N. E. 514. An agreement to receive a certain

article in payment or in part payment is presumed to be in the interest of the buyer who is to make the payment. The money value is fixed for the purpose of removing uncertainty and to avoid controversy. Nor could the seller, in a suit against the buyer for breach of the agreement to pay, get a larger judgment than the agreed price by proving that the first shovel was worth more than the sum for which it was to be received.

In a suit therefore by the Vulcan Company against Roquemore for breach of the contract in failing to pay the agreed price, the sum agreed on, for which the first shovel was to be received as part payment on the contract price of the second shovel, would be binding on both parties. We see no reason why the agreed value of the first shovel is not equally binding on both parties in a suit for breach of the contract by the buyer, Roquemore, against the seller, the Vulcan Company.

For the purpose of payment, it was agreed that it should he delivered and received for a fixed sum, and this agreement was reduced to writing. There is no ambiguity or uncertainty as to this part of the agreement. In an action by either party for breach of the contract, the first shot-el should stand for the agreed amount, no more and no less. The agreement plainly says it was to be received in payment of the balance due for the second shovel after the cash payment of $1,500 was made.

To permit proof that it ivas agreed that something else, some supposed damage which Roquemore had suffered, was to be also regarded as a part of the proposed payment, would be to change the written contract. ' The first shovel was to be used in paying the entire balance, $4,750, by the terms of the writing. To permit proof that the balance was to be paid in

part in a totally different way, thereby changing the agreed value of the first shovel as a means of payment, would be to change the written contract by parol evidence. In Brady v.

Oastler, 3 H. & C. 112, the action was for breach of contract to deliver certain goods within the time fixed by a written contract, and the plaintiff offered parol evidence to prove, as an element for the consideration of the jury in estimating the damages, that the price fixed in the contract was above the market price, and that he agreed to pay this extra price because of the short time allowed for delivery; but.the evidence was rejected. The reasoning of Pollock, C. B. (page 128) is very persuasive of the correctness of the rule announced.

He concludes with the observation: “The buyer of goods under a general contract for the sale of them, with or without reference to a particular time of delivery, is entitled to damages with reference to the market price of the goods at the time the contract is broken, and I think he is not entitled to more or to less on account of the manner in which the parties agreed about the price, unless that is disclosed in the contract and made a part of it.” In Brooks v. Hubbard, 3 Conn. 58, 8 Am.

Dec. 154, where the writing sued on provided that payment of a fixed sum was to be made in certain cloth at 30 cents a yard, the court held that evidence was inadmissible to prove that the cloth named was not in fact worth 30 cents a yard, and that the sum specified in the note as furnishing the measure of damages was binding on the parties. In Richardson v. Hardwick, 106 U. S. 252, 254, 1 Sup. Ct. 213, 27 L. Ed. 145, in rejecting evidence that tended to vary the terms of a written contract as to the mode of payment, the court said: “But evidence to establish this understanding is clearly inadmissible.

In respect to this matter the contract is free from ambiguity. Its plain meaning is that Richardson was to make payment directly to Hardwick, in money, of one-half the amount paid by the latter on the lands. It is therefore not competent to show by parol that payment was to be made in some other way than that specified in the written instrument.” There are other cases pointing towards the same conclusion. Baum v. Lynn, 72 Miss. 932, 18 South. 428, 30 L. R. A. 441; Hubbard v. Marshall, 50 Wis. 322, 6 N. W. 497; Johnson v. St. Louis, I. M. & S. Railway, 141 U. S. 602, 611, 612, 12 Sup. Ct. 124, 35 L. Ed. 875.

We do not think the concluding lines of the contract should change our conclusion. There is ambiguity or incompleteness in the sentence with which the contract ends: “Upon your acceptance of this proposition it is to be and constitute a mutual cancellation of all obligations between said parties to this date.” But it throws no doubt on the agreement as to the purchase price of the second shovel, nor as to the mode of its payment; nor does it make it in any way doubtful that it has been agreed that the first shovel shall be received as part payment at a fixed price.

If this were a suit involving one or more of the mutual obligations referred to, it is possible that parol evidence might be received. The lines merely show that “mutual obligations” or controversies or claims existing prior to and at the time of the making of the contract are annulled. The contract, in its plain unambiguous terms, remains unchanged. Whatever claims one party to the contract may have had against the other are released and canceled in consideration of the making of the contract.

To make the release of any one of such claims, if they exist, form a part of the payment of the price of the second shovel, would he to contradict the agreement, which plainly says how such payment is to be made and excludes the idea that the “mutual obligations” referred to are to constitute part of the payment. It was not attempted in the trial below to vary or change the price of $6,250 placed by the contract on the- second shovel.

On the contrary, that price was used as a basis on which to estimate the damages ; and yet that price is made up, for the purpose of its payment, by the $1,500 cash payment and the agreement to take the first shovel for the balance, $4,750. It is plain that, if the agreed value of the first shovel be reduced to $.1,500, it would reduce the price of the second shovel to $3,000, for its price was to he $1,500 in cash and the delivery to the sellers of the first shovel. The rule for estimating the damages contended for by the defendant in error would lead to results that show it to be erroneous.

Under the general rule that the measure of damages is the difference between the agreed price and the market value, the plaintiff gets more damages if his contract is a good one— one advantageous to him —for a breach of it than he would get if the contract was not a good one for him. If, for example, a contract was worth $1,000 in profit to the plaintiff, he having bought that much below the market price, he could recover that sum; if, on the other hand, it was worth only $500, he having bought only that much below the market price, he could only recover that much.

The better the contract for the plaintiff, the more he would recover for its breach. Under the rule to which exception has been taken, the worse the contract made is for the plaintiff—that is, the larger price he has agreed to pay for the property bought—the greater his damages would become for the breach of it. He agreed to pay $6,250 for the property. That sum is made the basis of his damages for the breach.

Deducting the $1,500 he was to pay in cash, hut did not pay, and the proved value of the first shovel which was to be part of the payment, and which he did not deliver to the seller, he is allowed to recover the balance of the agreed price, $6,250, as damages. If, according to this rule, he had agreed to pay $62,500 for the second shovel—a sum probably ten times its market value—his damages would have been ten times as large, if the rule asserted is sound.

This cannot be true, as matter of fact, for, if he agreed to pay a sum greatly in excess of the value, he loses nothing by the breach and abandonment of the contract. For the errors indicated, the judgment must be reversed, and the cause remanded for a new trial. For other cases see same topic & § number in Deo. & Am. Digs. 1907 to date, & Rep’r Indexe*