Loudenback Fertilizer Co. v. Tenn. Phosphate Co. - 121 F. 298 (6th Cir. 1903)

Rule:

The party who commits the first breach of the contract cannot maintain an action against the other for a subsequent failure to perform.

Facts:

The parties, plaintiff buyer Loudenback Fertilizer Co. and defendant seller Tennessee Phosphate Co., entered into a requirements contract, whereby plaintiff agreed to purchase its requirements for phosphate rock from defendant. For two years, plaintiff purchased no rock from defendant. In the third year, it demanded the maximum quantity allowable. Plaintiff buyer asserted that it did not purchase any rock from defendant in the first two years because it was more profitable for them to stop making acid phosphate altogether and to buy his supply of that product. Thereafter, plaintiff filed suit against defendant for breach of contract when it refused to meet plaintiff’s demand for phosphate rock in the third year of the contract. The district court dismissed the action for breach of contract against defendant, from this judgment, plaintiff appealed. 

Issue:

Was the dismissal of the action for breach of contract proper?

Answer:

Yes.

Conclusion:

The court affirmed the trial court's judgment, which dismissed the plaintiff buyer's claim for breach of contract against defendant seller. The court held that it was the plaintiff who committed the first breach of the contract and could not maintain an action against the defendant seller for a subsequent failure to perform. The court further held that plaintiff did not keep the contract and showed no excuse for its breach. The court also found that plaintiff did not show any performance on its own part that would have entitled it to demand that the defendant perform or pay damages for refusing to recognize the contract as in force.