Precision Development Co. v. Fast Bearing Co.

Capper, J., delivered the opinion of the Court. In this case the Fast Bearing Company, a Maryland corporation, the appellee, brought suit against the Precision Development Company, a Maryland corporation, appellant, in the Circuit Court for Wicomico County, Maryland. The declaration was based solely upon the common counts, but upon demand by the appellant, appellee filed a bill of particulars setting forth a list of machinery, machine tools, motors, etc., referred to in invoices Nos. 1 to 66, inclusive, and set prices opposite each item. The bill of particulars also included an itemized statement of various kinds and quantities of steel with prices opposite thereto.

These invoices amounted to a total claim of One Hundred Twenty-nine Thousand Two Hundred Twenty-three Dollars and Eighty-one Cents with interest thereon. Appellant pleaded the general issue pleas and by a third plea set up the existence of a contract dated March 23, 1942, between the parties for the sale and delivery of all of the property. Appellee by its replication to the said third plea denied that any part of the contract was now in existence or provided any defense to this action, and issue was joined thereon. Upon trial of the case before a jury, a verdict was rendered for appellee in the sum of Ninety-eight Thousand Four Hundred Thirty-nine Dollars and Forty-one Cents, and judgment was entered for this amount.

Appellant appeals therefrom. This appeal involves twenty-three exceptions, twenty-two of which were made to the rulings of the Court upon the evidence as presented and the twenty-third to the rulings upon the prayers. ⁴⁰² The appellee offered in evidence the agreement of sale. It provided, in brief, for the sale and delivery of the machinery, machine tools, electric motors, the manufacturing, testing and research equipment and other articles listed in Schedule “A” attached thereto free of liens etc., appellant to accept delivery at Salisbury, Maryland, of such of the same as were adaptable to its manufacturing methods; that adequate insurance coverage approved by appellee should be paid for by appellant. It further provided that appellant agreed to pay Ten Thousand Dollars within thirty days of the date of the agreement.

The price was to be determined by deducting from the original capital cost to appellee at the time of acquisition, the allowable amortization thereon at the rate of six and one-half per cent (6V%%) from the date of acquisition to the date of delivery. Sub-paragraph B of paragraph three provided that the balance of the purchase price “shall be paid in equal annual installments on the first day of December of each calendar year,” the amount of each installment .to be fixed as provided in the agreement, which appellant claims resulted in five equal installment payments. There was also a provision that appellant should execute and deliver to appellee its note or notes secured by á chattel mortgage or otherwise, to evidence the amount and secure the payment of the installments of the balance of the value of -the property. Paragraph five of the agreement provided for the sale and delivery of the raw materials listed in Schedule “B” attached to the contract to be delivered and accepted not later than thirty days from the date thereof and that appellant pay appellee the far market value of said materials at the time of delivery and issue purchase orders therefor at the time of delivery, payable ten days net.

The sixth and last paragraph provided that if appellant elected to surrender an exclusive license agreement entered into on the same date with appellee within thirty days from the date of said agreement, it should have ⁴⁰³ the right likewise to cancel the agreement of sale and terminate all obligations and liabilities between the parties. Gustav Fast testified on behalf of the appellee concerning the sale of the machinery, tools, and steel covered by the contract. He testified specifically about invoice No. B-62, which included a lot of special small tools, slitting saws, high speed form cutters and many other tools and machinery, part of which were manufactured by appellee and which will hereafter be discussed in connection with the rulings of the trial court. He said that the machinery and equipment sold was for the purpose of manufacturing Fast Bearings and Couplings and the steel was especially adapted for this purpose.

His testimony showed that he had many years’ experience in the engineering and manufacturing of Fast Bearings and Couplings. It also disclosed that appellant had accepted delivery of all of the items of machinery and equipment, tools, etc., refererd to in the contract, upon which only Ten Thousand Dollars of the purchase price had been paid in May, 1942. He further stated that some of the machinery had been sold by appellant to certain machinery concerns, but no part of the proceeds of these sales had been paid appellee; also that appellee had never received any notes or any chattel mortgage from appellant in accordance with the contract, and that the contract was never cancelled as provided in paragraph six thereof. He further testified that appellee had not failed or neglected in any respect to comply with every term of the contract.

Witness showed that he was familiar with the fair market prices of the steel during the year 1942, and gave testimony concerning the same. Other witnesses testified for appellant and appellee concerning the original capital cost of the items listed in Schedule “A” and the fair market value of the raw materials set out in Schedule “B.” There is no dispute between the parties as to delivery of all of the property and no dispute about the prices for the property men- ⁴⁰⁴ t-ioned in Schedule “A” excepting Invoice B-82. A controversy concerning Invoice B-38 was abandoned by appellant. It is also shown that no insurance was provided in accordance with the contract, that the first payment of Ten Thousand Dollars was not made in accordance therewith, and that appellant sold a considerable amount of the property and did not give its note or notes secured by a chattel mortgage to secure the payment of the purchase price of the items set forth in Schedule “A.” The twenty-third exception involves the rulings of the lower court upon the prayers.

These rulings will first be considered, inasmuch as a decision upon them will make unnecessary a long discussion of the exceptions to the evidence. The granting of the first prayer of appellee cannot be seriously questioned. It recited the sale and delivery of the raw material or steel referred to in Schedule “B” of the Agreement upon which no part of the purchase price had been paid. . There was no question that the steel had been delivered and accepted by the appellant and this prayer instructed the jury that appellee was entitled to recover the fair market value of said raw materials or steel at the time of delivery, together with interest in the discretion of the jury.

There was no dispute about any of the facts detailed in this prayer excepting the question of the fair market value and this was properly left to the jury for its decision. Appellee’s second prayer related to the machinery and equipment described in Schedule “A” of the agreement. It instructed the jury that if they found appellant had breached the agreement of sale, it was no longer entitled to pay the installments provided in said Agreement and as there was no dispute about the sale and delivery of the property, appellee was entitled to recover in a lump sum whatever purchase price of said machinery and equipment the jury shall believe from the evidence represented the original capital cost to appellee of the same at the time of its acquisition thereof, less amortization ⁴⁰⁵ at the rate of six and one-half per centum from the date of such acquisition to the date of delivery, less such amount as the evidence showed had been paid thereon, together with such interest as the jury might see fit to allow. The objection of the appellant to this prayer is that it permits a recovery of the entire amount due upon Schedule “A” in a lump sum instead of installments.

Section 81 (1) Article 83 of the Annotated Code of Maryland, 1939, entitled “Sales and Notices,” provides as follows: “Where, under a contract to sell or a sale, the property in the goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract or the sale, the seller may maintain an action against him for the price of the goods.” The controversy between the parties as to the original capital cost of the items listed in Schedule “A” and also the fair market value of the steel in Schedule “B” is relied upon by appellant for its failure to comply with the contract. This, however, did not in any manner prevent the prompt payment of the Ten Thousand Dollars heretofore referred to, and would not justify the appellant in any long delay in making a bona fide effort to arrive at these values and tender or pay same according to the contract. There was no effort made to insure the property or provide the notes and chattel mortgage thereon. Portions of the property were disposed of by appellant.

The sale of this property made the obligation of appellant to give a chattel mortgage thereon impossible. This constituted a distinct repudiation of the contract. These things, we think, furnished ample evidence upon which the jury could find that the contract had been breached by appellant. The appellee had delivered all of the property and had done everything it could do to complete the contract.

The failure of appellant to give the mortgage deprived appellee of its only right to be secured in the payment of the purchase price. ⁴⁰⁶ Where a contract has been breached in such manner as this, it has been held by many courts that the breach authorized a recovery of the entire unpaid balance of the purchase price. Gibson v. Miller, 215 Iowa 631 , 246 N. W. 606 ; Cook v. Stevenson, 30 Mich. 242 ; Foster v. Adams, 60 Vt. 392 , 15 A. 169 ; Wheeler v. Harrah, 14 Or. 325 , 12 P. 500 ; Smith v. Aldrich, 180 Mass. 367 , 62 N. E. 381 ; Rumsey v. Livers, 112 Md. 546 , 77 A. 295 ; Kahn v. Schleisner, 165 Md. 106 , 166 A. 435 ; Williston on Contracts (1937 Ed.), Sec. 1411, at page 3933; Crooker v. Holmes, 65 Me. 195 , 20 Am. Rep. 687 . In the case of Gibson v. Miller, supra, the Supreme Court of Iowa held in a suit for the purchase price of a tombstone, where the contract provided one-half of the same was due on delivery and the balance within six months, the action for the full amount was not premature where the tombstone was furnished and tendered to buyer and refused.

We do not understand that this rule of law is questioned by appellant, but it contends that appellee cannot recover the lump sum upon the common counts. No Maryland cases are cited to support this principle of law, but some cases from other jurisdictions recognize it. There is no doubt about the right of appellee to bring suit in this case upon the common counts alone/because it had fully performed all its obligations under the contract and nothing remained to be done except the payment of the purchase price. The appellant claims that the contract must govern so far as installment payments are concerned.

We think in a suit of this kind upon the common counts that the contract is introduced in evidence only for the purpose of fixing the amount of compensation. That amount was provided in the contract as payable in installments and the contract having been breached and repudiated by appellee as aforesaid, the entire amount was due. The lower court confined appellee in its recovery to the amount of compensation as ascertained by the jury in the manner provided in the contract, and in this we ⁴⁰⁷ agree. We think the Maryland Statute, above quoted, and the authorities hereinafter referred to,