Dolph contracted to sell to the plaintiff in error standard
Dolph washers at $110 a machine, and the company contracted to take
at least 50 machines a year at that price, the contract to last for
five years. There was a further clause by which Dolph was to have
the option of manufacturing for the company any other machines sold
by him at such price as might be bid for them in open competition.
The company at the expiration of a year threw up the contract and
repudiated its obligations, and Dolph sued to enforce them.
Held that the principal object of the contract was the
sale and purchase of the Dolph machines; that the sale and purchase
of the other machines were subordinate to it, and that the court
should have instructed the jury that, as to the latter, there could
be none other than a recovery of nominal damages.
In 1882, the parties hereto entered into the following
contract:
"This agreement made this third day of January, 1882, between A.
M. Dolph, of Cincinnati, O., of the first part, and the Troy
Laundry Machinery Company, Limited, of Troy, N.Y., party of the
second part, witnesseth:"
"1st. That the said A. M. Dolph, party of the first part, in
consideration of the covenants hereinafter named, made, and to be
kept, shall furnish, crated or packed for shipment, delivered at
depot in Cincinnati, O., to the order of said Troy Laundry Machine
Company, Limited, and within a reasonable time after such order is
received, certain washing machines of standard size of the style
heretofore manufactured by the said A. M. Dolph as the hydraulic
washer, and known and designated as the Standard Dolph washer at
the price of one hundred and ten dollars (110) each, which shall be
designated as the manufacturer's price for said Standard Dolph
washer."
"2d. That the said Troy Laundry Machine, Limited, party of the
second part, in consideration of the covenants herein made and to
be kept, agree to pay to the said A. M.
Page 138 U. S. 618
Dolph the sum of one hundred and ten dollars ($110.00) each for
said Standard Dolph washer delivered as before mentioned, and to
bind themselves herein and agree to take at least fifty (50) of
said Standard Dolph washers each year."
"3d. That the said A. M. Dolph shall have the refusal or option
of manufacturing any and all washing machines sold by the said A.
M. Dolph and said Troy Laundry Machinery Company, Limited, or for
them through their agents at the price of one hundred and ten
dollars ($110.00) each for the said Standard Dolph washer and at
such price for other washing machines as may be bid for them in
open competition for equal quality of goods by any responsible
manufacturers other than said Dolph, and these prices shall
constitute and be designated as the manufacturer's prices for these
machines."
"4th. That the selling price of the said Standard Dolph washer
is hereby fixed at two hundred dollars ($200.00) each, and that the
selling price of washing machines that may be sold by either party
hereunto other than the Standard Dolph washer shall be fixed at a
price the same in proportion to the designated manufacturer's price
thereof as the selling price of the Standard Dolph washer is to its
manufacturer's price, provided that the selling price of any of the
aforesaid washing machines may be changed by the mutual consent of
the parties hereto."
"5th. That the said A. M. Dolph and the said Troy Laundry
Machinery Company, Limited, do hereby agree together to equally
divide between them, the said parties, the entire profits arising
from the combined sales made by both parties or for them through
their agents of any and all washing machines, and this profit shall
be in all cases the entire margin between the designated
manufacturer's price and the fixed selling price at the time the
sale is made, provided that a discount or commission of twenty
percent of the selling price may be allowed by either party to
their regular published agents other than a paid employee on sales
actually made by said agent, which discount may be deducted from
the profits before a division of the same is made."
"6th. Each party to this agreement shall furnish to the
Page 138 U. S. 619
other party annually a sworn statement of the number of each
hind of washing machines sold by them; also the profits made above
manufacturer's price on sales of washing machines other than the
Standard Dolph washer, and the number of each kind of washing
machine sold by their agents."
"7th. That the party of the second part agrees to pay to the
party of the first part for all the goods ordered and delivered
according to articles one and two to this agreement within four
months after the delivery of said goods."
"8th. That at the close of each year, a division of profits
shall be made according to articles five and six of this agreement,
and any balance found to be due to either party shall be paid to
that party within the first two months of the year following."
"9th. That on all washing machines furnished to the said Troy
Laundry Machinery Company, Limited, shall be fixed a plate
inscribed with the name and place of business of the said
company."
"10th. This agreement shall be in force for the term of five
years next ensuing."
"In witness whereof the parties hereunto have set their hand and
seal the day and year first herein written."
"A. M. DOLPH [SEAL]"
"DELAVAN PECK,
Pres't"
"CHARLES ANGUS,
Sec'y"
"[Corporate Seal of the Company]"
In February, 1884, Dolph, the defendant in error, commenced his
action in the Circuit Court of the United States for the Northern
District of New York, alleging breach of this contract by the
defendant, now the plaintiff in error, and claiming damages in the
sum of thirty thousand dollars. Trial being had, resulted in a
verdict, March 26, 1886, in favor of plaintiff, for sixteen
thousand dollars. That verdict having been set aside, 28 F. 553, a
new trial was had, which resulted in a verdict, March 26, 1887, in
favor of plaintiff, for the sum of seven thousand two hundred and
eight dollars. Judgment was entered on that verdict, of which the
defendant
Page 138 U. S. 620
complains in this Court by proper proceedings in error, and asks
a reversal.
MR. JUSTICE BREWER, after stating the facts as above, delivered
the 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
Page 138 U. S. 621
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 subject from 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.
Page 138 U. S. 622
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 a while, 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 fifty 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 definite
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
Page 138 U. S. 623
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.
