Friedman Iron & Supply Co. v. J. B. Beaird Co. - 222 La. 627, 63 So. 2d 144 (1952)

Rule:

The primary aim or principle of the law of damages for a breach of contract is to place the plaintiff in the same position he would be in if the contract had been fulfilled, or to place the plaintiff in the position he would have occupied had the breach of the contract not occurred. When this is accomplished, the primary aim or principle of the law of damages has been fulfilled.

Facts:

During the month of February, 1949, plaintiff Friedman Iron & Supply Co. and defendant J.B. Beaird Co. entered into a binding contract by which Friedman Iron was to sell to defendant 500 tons of scrap steel at a price of $ 41 per gross ton, to be delivered on various dates as specified by J.B. Beaird in its acceptance of Friedman Iron’s offer to sell. On March 7, 1949, J.B. Beaird notified Friedman Iron not to ship any of the scrap steel until requested in writing so to do, and, according to J.B. Beaird, on March 8 it cancelled in writing its order for the purchase of this scrap steel in its entirety. On March 12 Friedman Iron requested J.B. Beaird to accept the scrap steel which it had purchased, assembled, stockpiled, and allocated for sale to J.B. Beaird. J.B. Beaird refused to accept the steel and pay the purchase price. Thus, Friedman iron instituted this suit, praying that J.B. Beaird be judicially ordered and condemned to accept delivery of 500 tons of scrap steel at $ 41 per ton and to pay the sum of $ 20,500, and praying in the alternative for damages against the defendant for breach of the contract to purchase the steel. Friedman Iron’s suit for specific performance was dismissed on exception of no cause of action and has now been abandoned. In due course, after trial on the merits, the lower court rendered judgment denying Friedman Iron’s alternative plea for damages and dismissing its suit, holding that an actual resale made by Friedman Iron was a condition precedent to an action for damages in a case such as this.

Issue:

Did the trial court err in dismissing the plea for damages?

Answer:

No.

Conclusion:

Friedman Iron contends that it is entitled to recover for the breach of contract the difference between the contract price and the market price on the date of breach, which it alleges to be an amount between, approximately, $ 8000 and $ 14,000, the exact amount depending on the prevailing market price on the date which this court should determine as the date on which the contract was breached. The difference between the contract price and the prevailing market price on the date of breach is recognized as one means of measuring the amount of damages, but that rule will not correctly measure the damages in the instant case because, under the particular facts here, Friedman Iron has not sustained any damages whatsoever, and that the trial judge was correct in dismissing its suit.

In the instant case the contract was entered into in February of 1949 and provided for 500 tons of scrap steel at $ 41 per ton. The breach of this contract occurred during March or April of the same year, the exact date being immaterial under the conclusion which we have reached. Suit was instituted on July 1, 1949, and trial was actually begun on June 27, 1950, more than a year after the time of breach. At that time, according to Friedman Iron, it had stockpiled and segregated the steel and had it on its yard awaiting delivery to J.B. Beaird. According to Friedman Iron’s own witness, Mr. Joseph A. Creevy, field representative for Youngstown Sheet and Tube Company, the market price for scrap steel of the kind which was the subject of the contract was from $ 47 to $ 47.50 per ton at the time of the trial, or an amount from $ 6 to $ 6.50 more than the price called for in the contract. Under these circumstances, for the district court to have permitted Friedman Iron to recover damages in any amount (much less the sum of from $ 8000 to $ 14,000 for which it prayed) would have placed it in a much better position than it would have been in if the contract had been fulfilled, because Friedman Iron still had the scrap steel which was the object of the contract, for which there was a market at a greater price than the defendant had promised to pay. An award of damages here, rather than placing Friedman Iron in the same position it would have been in if the contract had been fulfilled, which is the primary purpose or principle of the law of damages, would enrich Friedman Iron because of the breach of the contract, and, further, would award Friedman Iron as damages an amount in excess of that reasonably supposed to have been contemplated by the parties at the time of the contract. This, as pointed out by the foregoing authorities, is not the purpose of awarding damages.