US SUPREME COURT DECISIONS

After a careful review of all the cases, American and English, relating to anticipatory breaches of an executory contract by a refusal on the part of one party to it to perform it, the Court holds that the rule laid down in Hochster v. De la Tour, 2 El. & Bl. 678, is a reasonable and proper rule to be applied in this case.

That rule is that, after the renunciation of a continuing agreement by one party, the other party is at liberty to consider himself absolved from any future performance of it, retaining his right to sue for any damages he has suffered from the breach of it; but that an option should be allowed to the injured party either to sue immediately or to wait till the time when the act was to be done, still holding it as prospectively binding for the exercise of this option.

The parties to a contract which is wholly executory have a right to the maintenance of the contractual relationships up to the time for performance, as well as to a performance of the contract when due.

As to the question of damages, when the action is not premature, the plaintiff is entitled to compensation based as far as possible on the ascertainment of what he would have suffered by the continued breach of the other party down to the time of complete performance, less any abatement by reason of circumstances of which he ought reasonably to have availed himself.

This was an action for breach of four certain contracts, brought chanrobles.com-red

Page 178 U. S. 2

by Paul R. G. Horst and others against John Roehm in the Circuit Court of the United States for the Eastern District of Pennsylvania in January, 1897, and was tried under a stipulation, waiving a jury, before Dallas, Circuit Judge, who made a special finding of facts and, on the facts so found, gave judgment for plaintiffs. 84 F.5d 5. The case was carried by defendant to the Circuit Court of Appeals for the Third Circuit, and the judgment of the circuit court was affirmed. 91 F.3d 5. Thereupon Roehm applied to this Court for a writ of certiorari, which was granted, and the cause subsequently heard here.

The circuit court found that --

"On August 25th, 1893, the firm of Horst Brothers, composed of Paul R. G. Horst, E. Clemens Horst, and Louis A. Horst, the legal plaintiffs, entered into four written contracts with John Roehm, the defendant, of which the following are copies:"

"Hop Contract"

" Memorandum of agreement made and entered into by and between Horst Brothers, doing business in the City of New York, parties of the first part, and John Roehm, party of the second part."

" Witnesseth: That the said parties of the first part agree to sell and deliver to the party of the second part, and that the party of the second part agrees to purchase, pay for, and receive from the party of the first part, one hundred (100) bales, prime Pacific Coast hops of the crop of 1896. Three and one-half pounds tare to be deducted on each bale. Said hops to be delivered ex dock or store, New York City, and to be paid for in net cash ten days from date of arrival at the rate of twenty-two (22) cents per pound."

" Time of shipment, 20 bales each month, October, November, December, January, and February, except as hereafter provided."

" If at any time a difference of opinion shall exist regarding the quality or condition of any hops submitted or tendered under this agreement, each party shall select an arbitrator, to whom the question of the quality and condition shall be submitted,

Page 178 U. S. 3

and, in case of their disagreement, a third arbitrator shall be selected by the two thus chosen, and the decision of a majority of the three shall be final, and in case the decision shall be that the hops tendered are not equal to the quality above called for, the parties of the first part shall, within thirty days after receipt of written notice of such decision, submit samples or tender delivery to the party of the second part, other hops, in fulfillment of this agreement, and party of the second part agrees to receive same."

" In witness whereof the said parties have hereunto set their hands, Philadelphia, this 25th day of August, 1893."

" Horst Bros."

" John Roehm"

"[Here followed a second, third, and fourth contract, of same tenor and under same date, the second for 100 bales of the crop of 1896, to be shipped 20 bales each month, in the months of March, April, May, June, and July; the third for 100 bales of the crop of 1897, to be shipped 20 bales each month, in the months of October, November, December, January, and February, and the fourth for 100 bales of the crop of 1897, to be shipped 20 bales each month, in the months of March, April, May, June, and July.]"

"The months named in each of these contracts, respectively, as 'time of shipment' must, under the custom of the trade, be understood as meaning the months so named, which would follow next after the summer months of the year of the crop referred to in the particular contract."

"On June 23d 1896, the firm of Horst Brothers was dissolved, and Paul R. G. Horst assigned to his copartners, E. Clemens Horst and Louis A. Horst, the use plaintiffs, all the interest of him, the said Paul R. G. Horst, in the said contracts."

"Upon June 23d, 1896, a notice, of which the following is a copy, was addressed to and received by the defendant:"

" June 23, 1896"

" Dear Sir: We beg to inform you that the partnership of Horst Brothers has been this day dissolved."

" Respectfully yours,"

" Horst Brothers "

Page 178 U. S. 4

"To this, under date of June 27th, 1896, the defendant replied, saying: . . ."

"I suppose that your reason for giving me the notice is on account of the contracts which I had with your late firm, . . . which, of course, you cannot fulfill. I therefore consider the contracts annulled, and will make other arrangements for the purchase of the hops I may need, and you may consider this as release from liability on your part to comply with the contracts."

"In answer to this, Horst Brothers in liquidation addressed a letter to the defendant, which he duly received, in which it was said that he had misconstrued the notice of dissolution sent out to the trade, that its meaning was that no new contracts would be made and no new business undertaken by the firm of Horst Brothers, and in which it was further stated that,"

"so far as the firm or business is concerned, the firm will discharge its obligations and will try to collect its claims. It does not ask for any release or discharge, and will punctually live up to all the contracts which it has made with you."

"This communication was not replied to."

"In October, 1896, the first shipment of twenty bales of hops under the contracts was made, and the invoice and bill of lading covering that shipment were sent to the defendant, who, on October 24, 1896, by telegram and letter, acknowledged receipt of the bill of lading and bill of particulars, but, upon the ground set up in his letter of June 27, 1896, declined to receive the hops."

"At the time of the defendant's refusal to receive the shipment above mentioned, the plaintiffs could have made subcontracts for forward delivery according to the contracts in suit at the price of nine cents per pound for 'prime Pacific coast hops of the crop of 1896,' and of eleven cents per pound for like hops of the crop of 1897, and the differences between the prices fixed by the contracts sued on and those above stated, together with interest on the sum of such differences, from October 24, 1896, to this date, are as follows:"

"[Here followed the computation resulting in the amount for which judgment was rendered.]"

The opinion of the circuit court of appeals stated the case thus chanrobles.com-red

Page 178 U. S. 5

"In August, 1893, Paul R. G. Horst, E. Clemens Horst, and Louis A. Horst, trading as Horst Brothers, entered into a contract with John Roehm, the defendant below, for the sale of one thousand bales of prime Pacific Coast hops, to be delivered at various dates in the future at an uniform price of twenty-two cents per pound. Of the whole quantity, six hundred bales had been delivered, accepted, and paid for at the contract price, so that in July, 1896, there remained undelivered four hundred bales. These were deliverable at the rate of twenty bales per month during each month from October, 1896, to July, 1898, both inclusive, excepting, however, from said period the months of August and September, 1897, when no deliveries were called for. The record shows that this contract was the result of one negotiation, and provided for a supply of hops for five years. Ten separate papers were drawn, each covering a period of five months or one season. They all bear the same date and are similar as regards the quantity of hops to be delivered and the price to be paid. They differ only in the time of delivery and the year's crop from which delivery was to be made. In June, 1896, the firm of Horst Brothers was dissolved by the retirement of Paul R. G. Horst. He assigned his interest in the Roehm contract to the remaining partners, who continued the business under the same firm name. Roehm, the defendant below, was notified of this dissolution of the firm and of the transfer of Paul R. G. Horst's interest in the contract to its successors. He thereupon gave notice to the firm that he considered his contract cancelled thereby. Subsequently the firm of Horst Brothers advised the defendant of their ability and willingness to perform the contract, and under date of September 4, 1896, wrote Roehm, as follows:"

" Dear Sir: Will you please write us whether you wish us to ship the hops under your contract direct to your city? The contract calls for delivery in New York, and as we ship direct from this coast, we can ship to either city at same rate. Consequently there will be a saving to you of freight if we ship to your city direct from here. Awaiting your reply, we are,"

" Very truly,"

" Horst Brothers"

chanrobles.com-red

Page 178 U. S. 6

"To this letter Roehm replied, under date of September 14, 1896:"

" Dear Sirs: In response to your letters dated 3d and 4th inst., state that, before shipping me any hops, always send me samples from which I can select lots, the same as you have been doing in the past."

" Very truly,"

" John Roehm"

"On October 9, 1896, Horst Brothers advised Roehm of the shipment of twenty bales of hops for the October delivery, as called for by the contract, which Roehm, by telegraph, refused to receive, and as supplementary thereto sent the following letter, dated October 24, 1896:"

" Gentlemen: Yours of October 9, enclosing bill of lading and bill of particulars per twenty bales of hops forwarded me under the terms of contract of August 25, 1893, was received, and I have wired you that I decline to receive the same. I notified you under date of June 27, 1896, that, owing to the dissolution of the copartnership with which I originally contracted and the fact that this firm was no longer in existence, I considered my contract at an end, and will make arrangements for purchasing my supplies elsewhere. I am advised that I am under no obligations by that contract to accept supplies from you. If you desire to bill these goods at the current market rate under a new contract, I will accept them if upon inspection they are of the quality desired; otherwise they will remain at the freight station subject to your order."

" Very truly,"

" John Roehm"

"No further efforts were made by Horst Brothers to make delivery under the contract, but in January, 1897, this action was begun by all the original parties thereto, to the use of the firm as at present constituted, to recover damages for its breach. Judgment was rendered in favor of the plaintiffs."

The contention that Roehm was entitled to treat the contract as determined by the retirement of one of the members of the chanrobles.com-red

Page 178 U. S. 7

firm of Horst Brothers, and the assignment of his interest to his copartners, was not renewed in this Court.