Bush v. Canfield
2 Conn. 485 (1818)
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Rule of Law:
Where a seller breaches a contract for the sale of goods after the buyer has made a partial advance payment, the buyer is entitled to recover the full advanced payment plus interest as damages. The seller may not reduce the damages by arguing that the buyer would have suffered a loss on the contract due to a fall in market price.
Facts:
- On February 20, 1812, Norton & Bush (plaintiffs) entered into a contract with the defendant to purchase 2,000 barrels of superfine flour.
- The contract stipulated a price of $7 per barrel, for a total of $14,000.
- The defendant agreed to deliver the flour to Norton & Bush in New Orleans on or before May 1, 1812.
- Norton & Bush made an advance payment of $5,000 to the defendant towards the purchase.
- The defendant failed to deliver any of the flour by the May 1, 1812 deadline.
- On the date and at the place designated for delivery, the market price of superfine flour had fallen to $5.50 per barrel.
Procedural Posture:
- The plaintiffs sued the defendant in a Connecticut trial court for breach of an express contract.
- The case was tried before a jury.
- The trial judge instructed the jury that if they found for the plaintiffs, the measure of damages was the $5,000 advance payment plus interest from the time it was advanced.
- The jury returned a verdict in favor of the plaintiffs, awarding damages of $6,771.
- The defendant moved for a new trial, arguing that the trial court gave an improper instruction to the jury on the measure of damages.
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Issue:
In a breach of contract action, is a buyer who made a partial payment for goods entitled to recover the full advance amount plus interest when the seller fails to deliver, even if the market price of the goods has fallen below the contract price at the time of delivery?
Opinions:
Majority - Swift, Ch. J.
Yes. When a seller breaches after receiving a partial payment, the just and reasonable rule is to return the money advanced with interest. The general rule of damages being the market value at the time of delivery applies when full payment has been made or no payment has been made, but this case presents a different scenario. The defendant has violated his contract and holds the plaintiffs' money without consideration. It is not for the defendant to argue that the plaintiffs would have sustained a loss had the contract been fulfilled; such remote consequences are not considered. The contract was for an entire quantity of flour and cannot be apportioned to allow the defendant to retain a portion of the advance. The most just outcome is to refund the money advanced.
Concurring - Trumbull, J.
Yes. The plaintiffs are entitled to recover the sum they advanced. The plaintiffs fulfilled their contractual obligation prior to the breach by paying the $5,000. The defendant, in contrast, wholly failed to perform his part of the agreement. The $5,000 represents the actual loss the plaintiffs sustained as a direct result of the breach. Therefore, allowing the plaintiffs to recover this amount constitutes complete justice.
Concurring - Peters, J.
Yes. The trial court's ruling achieved substantial justice and a new trial should not be granted on a mere technicality. The rule of damages is not inflexible and should be applied to achieve a just outcome, not to gratify litigious passions. The defendant should not be permitted to profit from his own breach of faith by pocketing the plaintiffs' money. Where substantial justice has been done, the court should not order a new trial on a technical legal objection, especially when the plaintiffs could recover the same amount in a different form of action.
Dissenting - Hosmer, J.
No. Damages should be calculated based on the loss sustained from the breach, not the amount of the consideration paid. The action is for breach of an open contract, so the damages must be the value of the thing when the covenant was broken. The jury should have calculated damages based on the market price of flour at the time of delivery ($5.50 per barrel). The majority's rule improperly rescues the plaintiffs from their own unfortunate speculation and punishes the defendant, effectively creating a warranty against market price drops that was never part of the contract. Courts must enforce the contracts the parties made, not create new ones to reverse their gains and losses.
Analysis:
This case establishes a significant exception to the standard rule of expectation damages in contract law. By prioritizing restitution (returning the down payment) over expectation (placing the non-breaching party where they would have been), the court protects a non-breaching buyer from losing their deposit on a bad deal that the seller failed to perform. This decision emphasizes principles of unjust enrichment, preventing a breaching party from retaining a benefit conferred by the non-breaching party. The ruling shows a judicial willingness to adapt damage rules to prevent an inequitable outcome where a strict application of the market-contract differential would allow a wrongdoer to profit from their own breach.
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