Nelson v. Spence

FOX, P. J.

In August 1956 plaintiff, who was engaged in the business of packaging and selling fertilizer, entered into a contract with defendants for the purchase of their peat moss business. This agreement provided,

inter alia:

“Sellers [defendants] agree that they will not engage in the business of selling peat, nor sell to any other person or enterprise any peat, during the term of this agreement, and it is agreed that Buyer shall have the right to sell said peat exclusively in any area of the United States. Sellers hereby expressly warrant to Buyer that they have the contractual right to all of the peat produced by said Peter Gambretta

[sie

Gambetta], subject to one minor exception, that they can deliver said peat to Buyer as specified herein, that no other person has any right to sell said peat, and that all of the facts herein stated are true. ’ ’

In February 1957 plaintiff began selling peat in large quantities to Coast Fertilizer Company. It developed that defendants did not have the exclusive right to sell Gambetta’s peat. Relying on this breach of warranty, plaintiff did not make any of the weekly payments called for by the contract except one in January 1957. It also appears that difficulties later arose between plaintiff and his customer, Coast Fertilizer, with respect to asserted adulteration of the peat; the manner of packaging it; and as to how it should be delivered, i.e., whether in bulk or in bags. Because of these difficulties, the defendants stepped into the situation and proceeded to supply Coast Fertilizer with peat, notifying plaintiff that they were supplying Coast Fertilizer peat in bulk and that they would credit plaintiff with his profit on such sales. Thereafter Coast Fertilizer ceased to purchase peat from defendants and bought it directly from Gambetta.

Plaintiff brought an action against defendants for damages for (1) the amount of profits plaintiff lost by reason of defendants’ sale of peat to Coast Fertilizer; and (2) for breach

[795]

of defendants’ warranty that they had the exclusive right to sell Gambetta’s peat. The court rendered judgment for $3,053.37 against defendants for the profit that plaintiff would have made on the peat that defendants sold to Coast Fertilizer. It rendered judgment in favor of defendants on plaintiff’s cause of action for damages for breach of warranty. Plaintiff appealed from this judgment. The case was decided by this court and is reported in 182 Cal.App.2d 493 [6 CaLRptr. 312], We held that defendants were not entitled to interest on the amount ($3,117.44) awarded to them on their counterclaim