Opinion
No. 136.
December 3, 1945.
Appeal from the District Court of the United States for the Southern District of New York.
Action by Philip Ritter and others, co-partners in the trade, doing business under the firm name and style of Ritter Sussman, against Nathan Erlich for breach of warranty in the sale of eggs and cartons. From a judgment for plaintiffs, defendant appeals.
Reversed and remanded.
On June 15, 1943, in New York City, defendant contracted to sell to plaintiffs 495 cartons of frozen eggs. Plaintiffs, as defendant knew, were engaged, in New York City, in the business of buying such eggs in such cartons and selling them, so packed, to bakers at wholesale. At the time of contracting, the 495 cartons were in transit to a warehouse in Brooklyn as part of a shipment of 1,514 cartons. By the terms of the sale, each carton was to be forty pounds; the price was 32½¢ a pound, or a total price of $6,435, which the plaintiffs paid on June 17, 1943. Each of such cartons is made of fiber and is about two feet in length. Inside the carton is a tinfoil bag which contains a solid frozen block of mixed eggs. On arrival of the 1,514 cartons at the warehouse on June 17, 1943, the warehouseman found that 29 were broken, 119 had covers missing and 496 were "defrosted to liquid." The warehouse reported these facts to defendant who notified the New York City Board of Health which "embargoed" the entire lot. The Food and Drug Division of the United States Department of Agriculture was also notified. Agents of these two agencies inspected all the cartons. In doing so, they drilled the "icy substance comprising the eggs," for a depth of eight inches with a drill of a half-inch diameter. At the trial, none of the inspectors could remember whether or that any of the cartons lacked covers. Of the 1,514 cartons, 185 being found unfit for human consumption, were destroyed and the balance were released by the inspectors as fit. The manager of the warehouse testified that until October 13, 1943, when the embargo on all the cartons was lifted, he could not issue a warehouse receipt to plaintiffs, but that on that date he did issue them a receipt for 495 cartons, dating it back to June 15. He testified that "some" of the 495 cartons were then broken, but he did not state how many.
The bill sent plaintiffs by defendant read:
"(Car URT 81714)
495/40# Ctns Whole 19800# at .32½ $6,435.00 _________ _________ $6,435.00
"Buyer assumes all charges from date of entry.
"Stored Hall Street Cold Storage, B'klyn, N.Y."
Plaintiffs withdrew the 495 cartons as follows:
December 20, 1943 ............... 10 cartons February 14, 1944 ............... 100 " February 29, 1944 ............... 130 " March 21, 1944 ............... 130 " April 25, 1944 ............... 125 "
At the time of each withdrawal, plaintiffs gave the warehouse a receipt which stated, "Received in good order." On the arrival at their place of business of the ten cartons withdrawn on December 20, 1943, plaintiffs saw they were in bad condition, being "dirty, with the covers off." The same occurred when the other withdrawn cartons were received.
The plaintiffs sold 236 cartons for $8.00 each, and 259 for $6.40 each, or a total of $3,545.60, or $2,989.40 less than the contract price. One of the plaintiffs testified that that was "the best price" obtainable, "as much value * * * as the market called for." In addition, he testified that plaintiffs paid the warehouseman $298.56 for storage.
At the trial, the court denied defendant's motions to strike out all evidence of damages and for a directed verdict. The jury returned a verdict for plaintiffs in the amount of $2,392.47. Defendant appeals from a judgment entered on the verdict.
Samuel Shapiro, of New York City, for appellant.
Max Rockmore, of New York City, for appellees.
Before L. HAND, SWAN, and FRANK, Circuit Judges.
There was an implied warranty of quality, which included the condition of the cartons, since both parties knew that the eggs were to be resold in cartons by plaintiffs. The warranty was that they would be merchantable when delivered to the buyer. This occurred on October 13, 1943, when the warehouseman first separated the eggs allocated to plaintiffs by issuing a warehouse receipt to them. New York Personal Property Law, § 100, Rule 4, clause 1, Consol.Laws N.Y. c. 41.
The measure of damages is "the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty." Ibid, § 150, clause 7. Absent contrary proof, the contract price may be taken as proof of the value of the goods had they thus conformed. Schlossman Sons, Inc. v. Gotte, Sup., 13 N.Y.S.2d 413; Hopkins Co. v. Silverman, 234 App. Div. 224, 254 N.Y.S. 724. We assume, arguendo, that there was no available market for the eggs in the condition in which they were at the time of delivery, and that therefore such value could have been proved by proof of the best prices then, or within a reasonable time thereafter, obtainable through diligent efforts. But the only evidence as to such efforts was here insufficient. For plaintiffs show only that they withdrew the eggs in installments, the first withdrawal (of ten cartons) occurring on December 20, 1943, more than sixty days after delivery, the other withdrawals occurring much later. This left the record void of adequate proof of more than nominal damages. Moreover, there is only vague proof of the condition of the cartons on October 13, 1943, the only proof being the testimony of the warehouse manager that "some" of the 495 cartons were then broken. We must therefore reverse and remand for a new trial.
On a new trial, plaintiffs, in order to recover, should show (1) the value of the eggs as delivered on October 13, 1943, or (2) that such evidence is not available, and in that event, the best prices obtainable through diligent efforts made within a reasonable time thereafter. Plaintiffs must also show the condition of the cartons on October 13, 1943, and not merely that "some" were then broken. The storage charges should not be included in the damages.
Reversed and remanded.