Contracts II, Pages 1053–1056

Sackett v. Spindler

California Court of Appeal, 1967

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Facts:

Plaintiff agreed to buy a majority of the shares of defendant's newspaper for $85,000. He made the first payment for $6,000 on time, the second for $20,000 a week late and $200 short, and the third payment of $59,000's check bounced. Defendant sold the stock for $20,680.

Procedural History:

Trial court determined that defendant take $34,575.74 on his cross-complaint by subtracting all of plaintiff's payments of $29,744.26 and the subsequent sale's proceeds of $20,680 from the contract's agreed price.

Issues:

Did the trial court use the correct measure of damages?
Should the increase in liabilities be taken into consideration in computing damages?

Cross-Defendant's Arguments:

The damages should have been calculated between the agreed price and its value at the time of the breach, not the agreed price and what it actually sold for.
Plaintiff also agreed to assume all costs of the newspaper in the contract, which were $201,849.33 at the time of the contract, and increased by ~$18,000 before defendant sold the stock. This increase in liabilities constituted income for defendant and should have been deducted.

Rule:

Page 1054–1055
It is the general rule, both under the Uniform Sales Act and apart from it, that where the title to goods has not passed to the buyer and the seller has the property in his possession or under his control, the measure of damages upon the buyer's refusal to accept and pay for goods for which there is an available market is, in the absence of special circumstances, the difference between the contract price and the market or current price or value at the time and the place where the goods ought to have been delivered and accepted, or, if no time is fixed for acceptance, then at the time of the refusal to accept.

Exceptions:

Page 1055, Paragraph 2
[I]n the absence of an available market, it has been held that the measure of damages may be the difference between the contract price and the value of the goods as best as can be ascertained, or the difference between the contract price and the best offer that can be obtained for the goods, or the difference between the contract price and the price obtained on a resale, or the actual damages naturally and directly resulting from the buyer's breach.
Page 1055, Paragraph 2, Bottom
"The general rule that the measure of damages is the difference between the contract price and the market value is not a hard-and-fast rule, but may be varied if circumstances require it; and it will not be followed where a better method of measuring loss or damages is available under the circumstances."

Reasoning:

There was evidence presented that there was no market for the stock at the time of the breach. Therefore, the trial court was correct in using the resale price in determining defendant's damages.
Both sales involved a fixed amount of money. The newspaper's liabilities affected the purchase prices, and therefore they were already accounted for indirectly.

Holding:

The trial court calculated damages correctly and already indirectly considered the newspaper's liabilities. Affirmed.