Utter v. Chapman

Rhodes, J., delivered the opinion of the Court: It is apparent from the contract, though it is not drawn according to the most approved forms, that both parties are bound—the defendant to furnish five hundred tons of wheat, and pay $2 per ton for its transportation; and the plaintiffs to transport the wheat from Paradise City to Stockton. It is also clear from the evidence that the defendant failed to furnish the wheat. Such failure amounted to a breach of the contract, for which the defendant is responsible in damages, and the important question in the case relates to the measure of damages.

The plaintiffs insist on the rule that the contract furnished the measure of damages; and the defendant on the rule that compensation will only be given for actual loss. In the discussion of the question of the measure of damages in contracts relating to personal property and services, Sedgwick says that “the two cardinal principles which will be found to pervade and regulate this branch of the subject are: First—That the plaintiff must show himself to have sustained damages, or, in other words, that actual compensation will only be given for actual loss; and, Secondly—That the contract itself furnishes the measure of damages.” (Sedg. Meas, of Dam. 200.)

In actions for money had and received, for goods sold and delivered, for work, labor and services performed, and many other cases, there is no difficulty in making the application [663]of those rules, and laying down the correct measure of damages ; for, leaving out of view matters merely incidental to the cause of action, such as interest and the like, the measure of damages furnished by the contract is the actual loss sustained by the plaintiff. The two rules precisely coincide. But there are other classes of actions, such as actions upon contracts for the sale of goods, when the goods have been tendered but not delivered; or for personal services, in which the services have been tendered but not accepted, and other cases of the like character, in which the contract does not furnish the measure of damages, as the contract price may greatly exceed the actual loss sustained by the plaintiff. When the case is clear of fraud on the part of the defendant, it is always the aim of the Court to give damages, and such damages only as will compensate the plaintiff for his loss; and the rule that the contract furnishes the measure of damages is never permitted to override the other rule, except when the parties have stipulated as to the amount of damages in case of a breach. The author just cited remarks upon this point: “But when it is said that the contract furnishes the measure of damages, it is not thereby meant that the party ready to perform his contract will be able to recover of the party in default the entire price named in the agreement. On the contrary, it has been held in many cases that in actions for breach of contract, the measure of damages is not the price stipulated to be paid on full performance, but the actual injury sustained in consequence of the defendant’s default. For the rule that the contract furnished the measure of damages is subject to the other rule already stated, that compensation is only to be given for actual loss.” (Id. p. 210.) The proposition that the contract price is prima facie the measure of damages, may be laid down as generally true; but that it amounts to no more than the prima facie measure of damages is evident, because the plaintiff may, on the one hand, increase the damages beyond the contract price, and on the other, the defendant may reduce the damages below the contract price. The purchaser, in an action for a failure to deliver the goods purchased, may not only recover the price paid, but, also,