Acme Mills & Elevator Co. v. Johnson

Court of Appeals of Kentucky · 1911 · Contracts

Contractscontractsdamagesmarket-price measurebreach of sales contractpersonal propertydelivery from thresherestoppel

Facts

Johnson agreed to sell Acme Mills 2,000 bushels of No. 2 merchantable wheat at $1.03 per bushel, to be delivered from the thresher in 1909 at Hopkinsville, with payment on delivery. He admitted executing and breaching the contract, but evidence showed he did not finish threshing until about July 29, 1909, when wheat of the contracted kind was worth no more than about $1.00 per bushel. Before then, around July 14 or 15, he sold his wheat to another mill for $1.16 per bushel. Acme sought damages based on the breach and argued Johnson should be estopped from relying on the later threshing date and lower market price.

Issue

When a seller breaches a contract to deliver personal property at a fixed time and place, are the buyer's damages measured by the market price at the time and place delivery was due, even if the seller had earlier sold his own wheat to another at a higher price? Also, did the seller's earlier sale create an estoppel preventing him from relying on the later delivery date and lower market price?

Rule

In contracts for the delivery of personal property at a fixed time and designated place, the buyer's damages for the seller's nonperformance are the difference between the contract price and the market price of the property at the place and time fixed for delivery. Estoppel applies only where a party, by his conduct, has led another to act to his prejudice.

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In Wichita, Kansas, Lena Ortiz agreed to sell 5,000 pounds of feeder-grade oats to Prairie Lantern Feedworks for $0.42 per pound, delivery at Prairie Lantern's warehouse on September 10, payment on delivery. Lena did not deliver. On September 10, oats of the contracted quality were selling in Wichita for $0.49 per pound.

What is Prairie Lantern's proper measure of damages for Lena's breach?

Explanation. For a seller's failure to deliver personal property at a fixed time and designated place, the buyer's damages are measured by the difference between the contract price and the market price at the place and time fixed for delivery. The seller's other opportunities or the highest price during the month do not control, and breach alone does not entitle the buyer to the full contract price. (Derived from Acme Mills & Elevator Co. v. Johnson (1911).)