Obrecht v. Crawford

Offutt, J., delivered the opinion of the Court. G. Fred Obrecht, the appellant, trading as P. Fred Obrecht and Son, herein called the buyer, conducts a feed business in Baltimore, Maryland. Frank E. Crawford, Fred F. Keen and Alfred G. Mulcahy, trading as Crawford, Keen & Co., the appellees, called in this opinion the seller, are engaged in the business of exporting food stuffs and milling products to and from the Argentine Republic, and have their principal office in Buenos Aires and an American office in New York. As a consequence of correspondence’ begun in July, 1933, Obrecht agreed to buy from the appellees five hundred tons of Argentine Feed Flour to contain one per cent fibre at twenty-six dollars per ton of 2,240 pounds c. i. f.

Baltimore, for shipment on the S. S. West Selene or substitute scheduled to sail on or about December 14th, ³⁹⁰ 1933, on irrevocable sight letter of credit to be opened in Buenos Aires. The buyer later agreed that the seller might divide the shipment, shipping part on the S. S. West Selene and part on the S. S. Tercero, to arrive about January 19th or 20th, about a week later than the West Selene. The seller had the entire shipment in store at the time of delivery, and was ready, able, and willing to perform its undertaking, but the buyer, in violation of his contract, failed to open a letter of credit. The flour in that climate and at that time was perishable, and the seller then resold it in London for the account of Obrecht in six instalments over a period extending from December 18th, 1933, to February 23rd, 1934.

The proceeds of the resale were $3,348.38 less than the net sales price stipulated in the contract with Obrecht, and the seller then brought this action to recover that loss. The trial resulted in a verdict for the plaintiff, and from the judgment on that verdict the defendant took this appeal. As the case comes to this court it may be assumed: that the appellees were entitled to recover, so that the only questions to be considered here are whether the jury was properly instructed as to the recoverable damages, and whether the court erred in ruling on objections to evidence affecting that question. Evidence in the case tended to prove the facts stated in the following narrative.

Argentine Feed Flour is a low grade wheat flour classified in the Argentine as “y% 0” or “one-half zero,” having a lower fibre content than American Second Clear Spring Wheat Flour, a similar product, and is ordinarily used as food for cattle, poultry and dogs, either in its original state-or mixed with other material in the form of prepared foods. Its low fibre content makes its classification as a food for human beings possible. If classified as unfit for human food it would be subject to a tariff of ten per cent, but if classified as fit for human food it would be subject to a much higher tax. In order to bring it within the lower classification it is necessary to build up its fibre content ³⁹¹ so that it will be not less than one per cent of the total content of the product.

At the time of the sale Argentine Feed Flour was not generally sold in the United States, although Obrecht knew that it had been used on Long Island in New York for feeding ducks. Ordinarily in the United States Second Clear Spring Wheat Flour, a by-product of milling spring wheat, was used for purposes for which Argentine feed flour was suitable. The evidence fails to show that there was any general market in the United States for the Argentine product, and from permissible inferences it may be assumed that there was no such market. Obrecht knew of no such market at the time of the sale and, to quote from the testimony of Frank E. Crawford, apparently in charge of appellees’ New York office, so far as he knew, “there was no market in the United States in 1933 or 1934 for Argentine flour covered by the contract.

Argentine flour had never been shipped before, to witness’ knowledge. Now there is a very good market for it. The product is ‘low grade feed flour,’ or ‘feed flour,’ and witness’ firm had not sold any of the flour in this country nor had any inquiries for it. Witness did not know of any market for Argentine low grade feed flour in this country.

Witness kept in constant touch with the various markets in the United States for produce of the character of feed flour. There was no recognized market in this country on which Argentine feed flour was traded. Plaintiffs had been shipping most of this low grade Argentine feed flour to England and some to the Continent.” W. Guy Hartsock, a salesman for the Bay State Milling Company, who had been employed by the WashburnCrosby Company for ten years, at one time as a salesman, at other times as office manager and supervisor in charge of wholesale and retail sales in the Baltimore area, said that he had no knowledge of any sales in this country of Argentine feed flour, that he knew nothing of Argentine feed flour for market use, and had never ³⁹² heard of any competition from millers in the Argentine on that class of flour. The Argentine feed flour, while similar to American Second Clear Spring Wheat Flour, is not the same thing.

In its original state the Argentine flour is not unfit for use as food for human beings while the American product is, arid that difference was important, for upon it depended the classification of the Argentine flour for tariff purposes. There was evidence that both products were suitable for use as food for stock and for the manufacture of prepared animal foods, but the commodity described in the contract in issue here was neither American Second Clear Spring Wheat Flour nor Argentine Feed Flour, but rather Argentine Feed Flour so treated as to bring it within the classification of food unfit for human consumption, for tariff purposes. As stated above, the Argentine Feed Flour is perishable, and in respect to that Alfredo G. Mulcahy, a partner, residing in Buenos Aires, testified that “when letter of credit was not opened, ‘the flour was shipped to England for the account of Obrecht, endeavoring to sell it at the best price, and even utilizing for this purpose previous contracts we had pending, at a price considerably over the market price, at the time of shipment.’ This flour is of a perishable nature, and keeping it in store during the summer months would increase the risk of deterioration. We deemed it necessary to resell this flour for the account of Obrecht within a.week .after the original specified time by which we had to ship it to Obrecht, under the contract.

November, December and January are summer months in Argentine. We received a request about December 8th, 1933, from our New York Office, to change the terms of shipment of this flour, so as to ship only 100 tons during December, and the balance at a later date. At that time we had made preparations to ship the full 500 tons of flour to Obrecht in Baltimore -and had the whole 500 tons in store. When the letter of credit was not opened we commenced shipping the 500 tons to London for the account of Obrecht at the ³⁹³ best possible price obtainable in that market.” On November 28th, 1933, the seller wrote the buyer that in the past practically all of the Argentine flour had “gone to England,” and Crawford, who kept in “constant touch” with the markets of the United States for similar products, knew of no market here for Argentine Feed Flour, and said that there was no recognized market in the United States “on which Argentine Feed Flour was traded,” but that most of it had been shipped either to England or to the “Continent.” There was an American market for American Second Clear Spring Wheat Flour, and on that market, at the time of the sale, that product brought higher prices than those fixed in the Obrecht contract, and it also appeared that in the Argentine market the price for Argentine Feed Flour had stiffened “as of November 20” for January over December to $27 per ton.

It also appeared that the price on the London market fell from $21.75 on December 18th, 1933, the date of the resale of the first instalment, to $13.50 per ton on February 23rd, 1934, the date of the resale of the last instalment. In the course of his direct testimony, Mulcahy had testified that the seller had sold the five hundred tons to London for the “best possible price obtainable in that market.” Later on he was asked this question: “I understood you to say that the resales of the flour and the shipment thereof to England for the account of Obrecht was made at the best possible price then obtainable?” An objection to that so called question was overruled, and that ruling is the subject of the first exception. In fact the witness had given no such testimony; what he had said was that he had sold in London for the best price obtainable there, not that he had sold for the best price obtainable anywhere. The question improperly assumed a fact and was leading, but no objection was made to it on that specific ground in the trial court, so that objection to it on that ground cannot be considered in this court.

Cronin v. Kimble, 156 Md. 489, 496 , 144 ³⁹⁴ A. 698; McClees v. Cohen, 158 Md. 60 ,, 68, 148 A. 124 . The only other objection urged to the question was that it referred to the best price obtainable in the London market, when appellees had failed to show the state of the market elsewhere. That objection is apparently without point. On any possible theory of the case, the price of the product on the London market was a relevant inquiry.

Assuming, as the appellant contends, that the seller would have sold the flour at the best price obtain-able on the best available market, obviously its price on the London market was both relevant and material for purposes of comparison, if for no other purpose,, since it was undisputed that there was a market for it in London. In so far as anything appears from the second and third exceptions, it is that Mulcahy was asked to describe the “method or manner” of the resales in London. To that inquiry the appellant objected, but the testimony was allowed subject to exception. Later he moved in one motion to strike out “all evidence admitted subject to exception relating to the resales * * * and the damages resulting therefrom” and in another “all evidence, admitted subject to exception, relating to resales * * * in January and February, 1933, and all evidence relating to damages alleged to have resulted therefrom * * *.” For the reason stated in dealing with the first exception the first motion was properly overruled, and for that reason and for the further reason that there was no evidence of any sales in January or February “1933,” the ruling in respect to the second motion was also free from error.

At the close of the whole case the appellees offered four prayers, all of which were granted. The appellant offered six damage prayers, of which two were granted and the others'refused. The appellant excepted to the granting of the appellees’ prayers, and to the refusal of its, D, D-5, D3X and D3Y prayers. By the appellees’ fourth prayer the jury were told that “the measure of damages is the difference between the contract price of the Argentine Feed Flour mentioned in the evidence and the resale price of said Flour, with ³⁹⁵ interest, in their discretion, from the date of resale (provided, however, that the Jury find that the resale was made by the Plaintiffs in good faith), together with such sum, if any, as the Jury shall find the Plaintiffs were assumed to lose as the result of the refusal of the Defendant to purchase said Argentine Feed Flour from the Plaintiffs, through the fluctuation in foreign exchange, with interest in their discretion, from the date such loss was incurred.” But they were told much the same thing by the plaintiffs’ third prayer, the granting of which is not questioned in the appellant’s brief, which concluded in these words “and if the Jury further find that the Plaintiffs, acting in pursuance of such custom or usage, sustained a loss in the sale and subsequent purchase of American dollars as mentioned in the evidence, then the Jury, in estimating the damages, in addition to the difference, if any, the Jury find, between the contract price and the resale price of the flour mentioned in the evidence, shall award the Plaintiffs such sum, if any, as the Jury shall find the Plaintiffs were caused to lose as a result of the refusal of the Defendant to purchase said Argentine Feed Flour from the Plaintiffs, through the fluctuation in foreign exchange mentioned in the evidence, with interest in their discretion from the date such loss was incurred.” So that even if the fourth prayer had been refused, the appellant would have been no better off.

But apart from that consideration, a prayer in that precise form was approved in Kahn v. Karl Schoen Silk Corp., 147 Md. 516, 528 , 128 A. 359, 285 . The prayer approved in that case formulated a rule 'for measuring the damages which a seller might recover from a buyer who had in violation of a sales contract refused to accept delivery of the goods described therein, which is also the very question presented by this appeal. It is true that the words “good faith” as used in the prayer, because of their generality, carry too heavy a burden, but they are not infrequently used by courts and test writers as meaning reasonable care, diligence, and judgment, and were so accepted in the case last ³⁹⁶ cited. 147 Md. 516, 532 , 128 A. 359 . While it may have been better for the sake of clarity to have spelled out the meaning of the phrase, it is highly improbable that the jury co.uld have been misled by it, and in view of the decision in Kahn v. Karl Schoen Silk Corp., supra, no error is found in the ruling on that prayer.

Consideration of defendant’s four damage prayers which were refused requires a statement of the legal principles affecting the rights and the remedies of the seller who is himself without fault against a buyer who wrongfully fails to accept the goods sold to him under a sales contract. The contract in this case was a c. i. f. contract, under which the seller upon payment of the price fixed by the