This is an action for $2,814.36 damages, on account of damage alleged to have been sustained by the plaintiff, as a result of the breach by the defendant of a certain contract for the sale by it of certain *Page 441 patterns for dresses and other feminine wear to the defendant. The contract is in writing, and will be incorporated in the report of the case.
Two elements of damage are alleged in the complaint: (1) The purchase price of the goods delivered prior to the alleged breach of contract, but not paid for; and (2) the loss of the profits which the plaintiff would have made upon the goods contracted for, and which would have been delivered between the time of the alleged breach and the expiration of the contract.
The facts are these: The plaintiff McCall Company is a manufacturer of patterns in the city of New York, for sale to retail dry goods merchants; the defendant Hobbs-Henderson Company is engaged in that business in the city of Spartanburg. On September 16, 1922, the plaintiff and the defendant entered into the contract in question, the substance of which is as follows: Hobbs-Henderson Company was appointed special agent of McCall Company at Spartanburg. For convenience I shall refer to the plaintiff as the seller, and the defendant as the buyer. The seller agreed to deliver to the carrier for the buyer a stock of McCall patterns, including the current issue, amounting to $1,200, at 50 per cent. of labeled retail prices, at the price of $1,200, payable $600 in 30 days and the balance $600 to remain as a "standing credit," really a standing debt against the buyer, during the operation of the contract, upon which the buyer agreed to pay interest at the rate of 5 per cent. per annum. The seller also agreed to ship to the buyer $60 worth of new monthly patterns per month, of the buyer's selection, at the same price, with fashion sheets and other advertising matter. As such patterns were, by the mandate of fashion, constantly changing, the seller agreed that the buyer might return to it, during the months of January and February, and July and August, all patterns which the seller, during January and July, should report to the buyer as "discarded" patterns, *Page 442 and that the buyer should have credit thereof at 90 per cent. of the regular wholesale prices. The contract also provided that the buyer might liquidate the "standing credit" (debit?)"Within 30 days after fulfillment of that agreement," by delivering to the seller in New York, live (that is, not discarded) patterns at 100 per cent. of the regular wholesale prices. The agreement was to remain in force 5 years from date, with certain provisions as to renewal. "All goods bought, except the original stock of patterns, to be paid for on or before the 10th of the month succeeding date of shipment. All prices quoted are net, and we (buyers) will pay transportation charges on all goods received from you (sellers) or returned by us."
The plaintiff contended by testimony that it had shipped to the defendant patterns to the amount of $2,591.51, and that the defendant was entitled to credit for $891.53, leaving a balance of $1,699.98; the defendant contended that the amount should be $2,314.18, subject to credit for $1,450, leaving a balance of $864.18, which would be more than exhausted by a return of the live patterns on hand.
Although the defendant had agreed to pay the $600 upon the original shipment within 30 days, and the monthly shipments by the 10th of the succeeding month, the only payments for which it claims credit are:
March 6, 1923 .................................... $350.00
April 10, 1923 ................................... 300.00
April 26, 1923 ................................... 200.00
________
$850.00
And, although the statement from the defendant's books do not agree with the books of the plaintiff, as to the amount of goods shipped, the defendant admits that goods were received after it had thrown up the contract, which were placed in warehouse and not entered upon the books. *Page 443
On May 30, 1923, the defendant wrote the plaintiff, expressing surprise that its next door neighbor was selling McCall patterns, and closed with this statement:
"If it is your intention to have them on sale next door, we will ask you to take up what we have on hand and give us credit for them."
Mr. Hobbs testified that, after that he refused to accept any more deliveries, and that the plaintiff ceased shipping; he admits that he told the plaintiff's salesman, "we had discontinued the line because they had placed an agency next door to us." He had no right to terminate the contract on this ground or to demand that the plaintiff give him credit for the patterns on hand. The Circuit Judge stated in his charge:
"Now, the defendant denies all the allegations of the complaint simply and solely, and nothing more is said. They contend, in effect — but it has nothing to do with this case, because the contract says nothing about it, and they plead it not in the answer — that this agreement on the part of McCall was that Hobbs-Henderson should be the sole agent for their patterns in Spartanburg. I do not so construe the contract. It doesn't say so, and, in addition to that, the defendants do not plead that by way of a set-off or a breach of the contract."
The defendant's letter of May 30th was followed by an extensive correspondence, in which the plaintiff insisted upon his right to appoint another special agent at Spartanburg, and the defendant insisted upon his right to terminate the agreement and force the plaintiff to take back all of the patterns on hand and give him 100 per cent. credit therefor. Finally, to end the controversy, the plaintiff made an offer to accept $1,072 in full settlement, which was declined, or to give the defendant credit for $600 and accept 50 per cent. of the patterns on hand, which was also declined. The defendant then invited the plaintiff into the "arena of justice." *Page 444
At the close of all of the testimony the plaintiff moved for a directed verdict (1) for the whole amount of damages claimed, including the amount due for goods delivered and for loss of profits; (2) for at least the amount due for goods delivered. The motion was refused.
As to the matter of loss of profits, I think that the motion was properly refused, for the reason that that was an issue for the jury; but the ground upon which the refusal was based is clearly erroneous. The Circuit Judge held and charged the jury:
"I hold, gentlemen, that both parties seem to have consented that the contract be considered at an end, * * * and I instruct you that there can be no recovery for damages for any alleged breach of contract. * * * It is my duty, gentlement, to instruct you that this contract was at an end when both parties agreed by their correspondence tacitly that the contract should be at an end and should not run for five years."
I do not see the slightest foundation in the testimony for this conclusion. The defendant was insisting upon a termination of the contract upon a ground that the Circuit Judge himself held was untenable. The plaintiff was insisting upon his right under the contract, and gave no evidence, so far as I can see, of an intention to relieve the defendant from its obligations. The fact that various efforts at compromise were made is no indication of a consent that the contract be considered ended. So far as the complaint is based upon the loss of profits on account of the defendant's admitted breach of the contract is concerned, I think the case should be remanded for a new trial upon this issue.
As to the matter of payment for the goods actually delivered: The obligation of the plaintiff under the contract was to deliver the goods to the carrier; it was shown by undisputed evidence that goods to the amount of $2,591.51 were actually delivered, and that the defendant was entitled to a credit of $891.53, leaving a balance of $1,699.98. *Page 445 The defendant made no denial of these facts, and admitted that, while its books showed acceptance by it of goods to the amount only of $2,314.18, various invoices were actually received by it after refusal to take any more. I think under the evidence that the plaintiff was entitled to a directed verdict for the amount so delivered $1,699.98.
The defendant can get no credit for discarded patterns, for it admits that it had notice of discards in January, 1923, and enters no claim for any credit other than it has received upon this account. Nor is it entitled to credit upon the $600 standing debit for the patterns on hand; for the contract specifically states that this credit is not allowable until 30 days after the fulfillment of the contract. It has not been fulfilled but unwarrantably breached by the defendant.
I think, therefore, that the judgment of the Circuit Court should be reversed, and the case remanded to that Court, with direction to enter judgment in favor of the plaintiff for $1,699.98, with interest from May 30, 1923, and for a new trial upon the issue of loss of profits.