Troy Laundry Machinery Company v. Dolph/Opinion of the Court

The defendant kept this contract for a year, and then repudiated its obligations. The excuse made in its correspondence and alleged in its answer was that the parol agreement between the parties, an agreement authorized by the directors of the defendant company, was a three years' contract; that the contract prepared by plaintiff was for five years; and that through inadvertence and mistake the contract thus prepared was signed by the officers of the defendant company. A change in the written agreement from five years to three was demanded and refused. As no testimony was offered to support this contention, it must, for the purposes of this suit, be taken as a mere pretense. The defendant, having made a five years' contract, at the end of one year repudiated it. The contract was not against public policy; simply a contract between a manufacturer and a dealer, with reference to the manufacture and sale of washing-machines. Many errors are alleged in the trial of the case. We notice but one, for we are constrained to hold that the court erred in its ruling in that respect. It will be observed that the contract had two phases,-one for the manufacture and sale of the Dolph washer; the other, in paragraph 3, in reference to the manufacture and sale of other washing-machines. In reference to that, the contract provided that Dolph should have the option to manufacture for defendant any other machines, at such price 'as may be bid for them in open competition, for equal quality of goods, by any responsible manufacturers other than said Dolph.' In reference to this branch of the case the learned judge, charging the jury, said: 'Regarding the machines other than the Dolph machines, it is well-nigh impossible to lay down any satisfactory rule of damages. In attempting to do so difficulties and perplexities are encountered at every turn. At first I was inclined to withdraw this branch of the subjectfro m your consideration entirely, for the reason that the evidence was so uncertain that no damage could properly and certainly be based upon the breach of the contract in this regard; but subsequent reflection has induced me to submit the facts for your consideration, with such instructions as will induce you, if you award anything, to give only such actual damages as you believe the plaintiff has suffered.' And further on, quoting also from the opinion given on the motion for a new trial: 'No option was given him the first year, and, as there is no way of ascertaining whether, if the option had been given thereafter, it would have been accepted, it is by no means easy to state what his rights in this respect are. The decision of the court before referred to says upon this branch of the case: 'As to the damages recoverable for the breach of that provision of the contract by which the plaintiff was to have the privilege of supplying the defendant with other washing-machines at the lowest price bid by other manufacturers for supplying defendant with the same, it is not clear that the plaintiff could establish any loss of profits, unless it could be shown that there is some usual or average percentage of profit customarily realized by manufacturers of analogous articles, or some established manufacturer's price. The plaintiff might have been unwilling to act upon the option at prices which other manufacturers would have offered, and the extent of his prospective loss, if any, is largely a matter of speculation. The defendant may have been so situated that it could better afford to employ its own men and facilities, even although by doing so its machines would cost it more than to buy them of others, and in this view the difference between the actual cost of the machines to the defendant and the sum it would have cost the plaintiff to make and furnish them might not be the correct rule of damages." Obviously he appreciated the difficulty, but felt that the misconduct of defendant compelled an open door to some substantial recovery, even in respect to this branch of the contract.

No option was given to plaintiff, and none claimed by him, nor was there anything that could be fairly called open competition. True, the defendant made a contract with a neighbor to manufacture these machines. After awhile it abandoned that contract, and manufactured them itself. The plaintiff never exercised or sought the option conferred by this clause of the contract. The circumstances under which the contract was made with the neighboring manufacturer are not disclosed. It does not appear that his offer was made in thought of any competition. If the idea of open competition, as named in the contract, had been presented, who can say that he might not have been willing to have contracted for the machines at a less figure, and how can it be said, with this uncertainty, that the plaintiff would have exercised his option? The opinion of the circuit judge, in sustaining the motion for a new trial, evidently was that, in the uncertainty surrounding the facts, recourse might be had to some usual or average percentage of profits customarily realized by manufacturers of analogous articles. His idea seemed to be that, when contract provisions fail, supposed equivalents may be resorted to. Possibly in some cases such ruling as that may be adopted; but we think it inapplicable here. Specific provisions as to the Dolph machines, which was obviously the real subject-matter of the contract, were inserted, and the defendant agreed to take at least 50 of them each year. Other machines were subordinate, and the stipulations in respect to them were incidental rather than principal, and apparently more for supporting and giving force to the principal matter of the contract, the Dolph machines; hence, whatever of uncertainty attends those provisions. On breach of such a contract, the principal matter in respect to which provision was made is the one to be mainly regarded. If subordinate provisions are clear and defnit e, and damages for disregard thereof determinable by plain and obvious rules, of course such damages may be recovered; but if because they are subordinate the provisions in respect thereto are indefinite, then the court may not, with the idea of preventing injustice, attempt to substitute equivalents therefor. The main purpose of the contract must be regarded, and its specific provisions in connection therewith enforced, and proper damages given for the breach thereof. A lack of certainty as to terms of contract obligations of either party, or measure of damages for breach, is simply the misfortune of him who seeks to recover in case of a breach thereof. The case practically is one of those in which, however reprehensible the conduct of the defendant may be in repudiating its contract obligations, the parties having reference to one portion of the subject matter of the contract, made certain stipulations which determine the measure of damages in the case of breach; and on the breach the injured party has failed to bring himself within those stipulations. Such failure is his loss. The court should have charged the jury that, in reference to the machines other than the Dolph machines, there could be none other than a recovery of nominal damages. Jackson v. Allen. 120 Mass. 64-80. For this error the judgment is reversed, and the case remanded, with instructions to grant a new trial.