Ingram-Day Lumber Co. v. McLouth
Headline: Court reverses lower rulings and awards a lumber seller full breach-of-contract damages, rejecting a claimed government-driven cancellation and ordering $42,789.96 in compensation.
Holding:
- Allows sellers to recover full expected-contract profits when no valid cancellation is shown.
- Prevents contractors from avoiding contract liability without factual proof of government cancellation.
- Reverses lower rulings and increases recoveries in similar private contract breaches.
Summary
Background
A lumber seller sued the estate of a contractor in federal court in Michigan for breach of a contract to sell lumber. The contractor had been cutting lumber to build ocean-going tugboats. The contractor also had separate contracts with the United States Shipping Board Emergency Fleet Corporation. In 1919 the Fleet Corporation canceled its tug contracts and the contractor stopped lumber deliveries and told the seller to stop. The case was tried to the judge without a jury, and the judge found the seller knew the lumber was for tugs but did not know the contractor’s Fleet contract; there was no finding that the seller’s contract had been canceled by the Fleet.
Reasoning
The central question argued was whether the Fleet Corporation had power to cancel the seller’s contract. The Court found no factual finding or evidence that the seller’s contract had been modified, suspended, canceled, or requisitioned by the Fleet. Because the parties waived a jury, the Court could only review the special findings. Those findings showed the seller’s contract stood on its own and entitled the seller to loss-of-bargain damages. The Supreme Court therefore reversed the lower courts and awarded the seller $42,789.96, the full measure of expected-contract damages, plus costs.
Real world impact
The decision makes clear that a private seller can recover full expected profits when there is no factual showing that a government or its agent validly canceled the private contract. It protects commercial suppliers and contractors who deal with parties that also have government contracts, ensuring private contracts are not automatically defeated without proof.
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