Laredo Hides Co., Inc. v. H & H Meat Products Co., Inc.

NAME:
Laredo Hides Co., Inc. (π) v. H & H Meat Products Co., Inc. (Δ), 513 S.W.2d 210 (1974) [J. Bissett]

PROCEDURE:

π, buyer, sued Δ, seller to recover damages for breach of a written contract for the sale of cattle hides. Trial was to the court w/o a jury. A take nothing judgment in favor of Δ was rendered. π appealed.

FACTS:

Δ is a meat processing and packing corporation that sells cattle hides as a by-product of its business. π purchases cattle hides from various meat packers in the U.S. and ships them to tanneries in Mexico. π entered into a contract with Δ on 2/29/1972 for the purchase of Δ’s entire cattle hide production between 3/72 and 12/72.

After two deliveries, a $9,000 check was sent to Δ for payment of the second shipment, but was delayed in the mail. Before the check arrived, Δ gave the π an ultimatum demanding payment w/in a few hours. The demand was not met and Δ notified π that this constituted a breach justifying cancellation of the contract and that it would deliver no more hides.

π had contracted with a Mexican tannery for the sale of all the hides it expected to purchase from the Δ. As a result of the cancellation of the contract by Δ, π was forced to purchase hides on the open market in substitution for the hides which were to have been delivered to it under the contract. The total additional amount for the substitute hides was $142,254.48 and additional costs of $3,448.95.

ISSUE:

Does the record support the findings of fact made by the trial judge and provide legal justification for the conclusion of law reached by the court?

HOLDING:

NO. Judgment of the trial court is reversed, and judgment is rendered for π in the amount of $152,960.04 along with interest at the rate of 6% per annum from 8/6/73 until paid.

RULE:

1. Texas Business and Commerce Code
a. When there is a repudiation of the K by the seller or a failure to make delivery of the goods under K, the buyer may cover under §2.711
b. He may have damages under § 2.712 “by making good faith and w/o unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller,” and “may recover from the seller as damages the difference between the cost of cover and the K price together with any incidental or consequential damages” provided by the chapter
c. Or, under § 2.713 have damages measured by “the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages
2. It is not necessary under § 2.712 that the buyer establish market price
3. Where the buyer complies w/ the requirements of § 2.712, his purchase is presumed proper and the burden of proof is on the seller to show that “cover” was not properly obtained.

REASONING:

1. No evidence was offered by Δ that π, in any manner, endeavored to increase its damages sustained when Δ refused to deliver any more hides to it.
2. π, in purchasing the hides in substitution of the hides which should have been delivered under the K, acted promptly and in a reasonable manner.