RICE v. SCHMID ET AL

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District Court of Appeal, Second District, Division 2, California.

RICE v. SCHMID ET AL.

Civ. 14218.

Decided: February 11, 1944

H. M. Lineman, Mab Copland Lineman and Benjamin Lewis, all of Los Angeles, for plaintiff and appellant. W. W. Wallace and Michael LaVelle, both of Los Angeles, for defendants and respondents.

It is the contention of plaintiff that the trial court refused to follow the directions given by the Supreme Court upon the former appeal (Rice v. Schmid, 18 Cal.2d 382, 115 P.2d 498, 499, 138 A.L.R. 589) and that consequently the judgment entered is unauthorized and void.

Plaintiff, a flour merchant, entered into a contract with John Schmid, proprietor of the Eagle Bakery, on July 16, 1937, whereby he agreed to sell to Schmid 6000 barrels of flour, consisting of: 2,000 barrels of “Ravalli” brand at $7.10 per barrel; 2,750 barrels of “Gold Cross” brand at $7.65 per barrel; and 1,250 barrels of “Isis” brand at $7.15 per barrel. According to the contract, shipment was to be made upon instructions from the buyer within ninety days from the date of the contract and the contract was to be automatically extended if, because of the fault of the buyer, not all of the flour was shipped within the ninety–day period unless the seller chose to terminate the contract upon that ground. After a portion of the flour had been delivered Schmid sold the Eagle Bakery to defendants Marik, Dull and Osterman, who assumed the obligations of Schmid's contract. Deliveries of the flour continued to Eagle Bakery under the contract until a total of 3,245 barrels had been delivered. Thereafter defendants refused to furnish any further instructions for deliveries and on December 2, 1938, plaintiff notified the new proprietors of the bakery of his election to terminate the contract and to hold them liable in damages for the breach thereof.

John Schmid died after the commencement of the action and Augusta Schmid has been substituted as administratrix of his estate.

The contract contained a provision for liquidated damages and in one of several counts of the complaint plaintiff sought to recover damages under this provision. In a separate count he sought recovery for the actual damages suffered. The trial court held that the liquidated damages provision was invalid, fixed actual damages in the sum of $712.45 and entered judgment accordingly. In arriving at this sum the trial court awarded to plaintiff the difference between the price he had agreed to pay to a milling company for the flour and the price defendants had agreed to pay to him for the purchase of the flour.

Plaintiff appealed from the judgment in his favor for $712.45. The Supreme Court ruled that the finding of the trial court that it was not impracticable or extremely difficult to fix the actual damage was supported by the evidence and consequently sustained the ruling of the trial court that the provision for liquidated damages should not govern. The Supreme Court also ruled that the judgment should be reversed because an improper measure of damages had been applied. We quote from the opinion of the court: “On December 2, 1938, plaintiff notified the new proprietors of the Eagle Bakery of his election to terminate the contract and to hold him liable in damages for breach of the contract. * * * The contract by its terms was automatically extended despite the defendants' failure to give further shipping instructions, and since there was no repudiation of the contract by them, their obligation to accept the goods continued until the plaintiff exercised his option to terminate the contract. Therefore, the damages should be the difference between the contract price and the market price on the date of final termination of the contract. * * * Here plaintiff's only obligation was to procure flour of the specified brands, whether from the miller or on the market, for delivery in accordance with shipping instructions to be furnished him by the defendants. He was free to enter into a contract with a manufacturer to protect himself or to speculate upon a decline in the market before delivery would be required. * * * The possibility that the plaintiff may make a large profit is a result of the decline in the market price and is not a sufficient reason for allowing the defendants to escape the obligations of their contract. * * * The judgment is reversed with directions to the trial court to determine the damages in accordance with the rules herein set forth and thereafter to enter judgment in favor of plaintiff.”

Upon the going down of the remittitur, plaintiff filed a motion with the trial court asking that the damages be determined in accordance with the ruling of the Supreme Court and that judgment be entered accordingly for the plaintiff. The court denied this motion and set the matter for hearing at a later date for the purpose of receiving additional evidence. Thereafter the court received additional evidence on points upon which evidence had been received before the first appeal was taken and made and filed a number of new findings in which the court found, in effect, that defendants did not breach the contract at any time; and that on the ninety–first day after July 16, 1937, plaintiff did not have in his possession more than 200 barrels of flour for delivery to defendants. The court further found that on the ninety–first day after the execution of the contract the difference between the market price of the flour and the contract price was $.95 per barrel and: “That on the date that plaintiff should have delivered all of said flour, he had only said 200 barrels for delivery, and that the difference between the market price and the contract price for said 200 barrels on said date was the sum of $190.” Judgment was entered in favor of plaintiff in the sum of $190 against all of the defendants except defendant Schmid. No judgment whatever was entered against defendant Schmid.

The opinion of the Supreme Court is clear and unambiguous. It is specifically set forth therein that plaintiff elected to terminate the contract on December 2, 1938, and it is specifically stated that the obligation of defendants to accept the flour “continued until the plaintiff exercised his option to terminate the contract.” It is also clearly stated that the damages should be the difference between the contract price and the market price “on the date of the final termination of the contract.” The trial court was directed to determine the damages in accordance with the rules set forth in the opinion and under these rules no course was open to the trial court other than to calculate the difference between the contract price and the market price of the undelivered flour on December 2, 1938, and thereafter to enter judgment against all the defendants for the sum shown to be due by the calculation. No discretion was reposed in the trial court, whose duty it was to specifically carry out the directions of the reviewing court. Any material departure from these explicit directions is unauthorized and void. English v. Olympic Auditorium, Inc., 10 Cal.App.2d 196, 201, 52 P.2d 267.

The record shows without conflict that on December 2, 1938, the number of barrels undelivered and the market price of the flour which defendants agreed to purchase from plaintiff were as follows: 688 barrels “Ravalli” brand, $3 per barrel; 1593 barrels “Gold Cross” brand, $3.55 per barrel; and 474 barrels “Isis” brand, $3 per barrel. From these figures it is easy to determine that the damages suffered by plaintiff total the sum of $11,319.20. Indeed defendants do not dispute these figures.

Plaintiff is entitled to interest on the amount due him. In section 3287 of the Civil Code it is provided: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day * * *.” Damages which are fixed by the difference between two market values or the difference between the market value and a sum specified as the selling price of merchandise are “capable of being [ascertained] by calculation.” Brandenstein v. Jackling, 99 Cal.App. 438, 449, 278 P. 880, 885; Olcovich v. Grand Trunk R. Co., 179 Cal. 332, 336, 176 P. 459.

The judgment is reversed with directions to the trial court to enter judgment in favor of plaintiff against all of the defendants in the sum of $11,319.20, together with interest thereon from December 2, 1938, at the rate of seven per cent per annum.

W. J. WOOD, Justice.

MOORE, P. J., and McCOMB, J., concur.