10.5.8.2 Notes - Clark v. Marsiglia | rauvinj | September 27, 2012

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10.5.8.2 Notes - Clark v. Marsiglia

Original Creator: Kessler, Gilmore & Kronman Current Version: rauvinj
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NOTE

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1. In Rockingham County v. Luten Bridge Co., 35 F.2d 301 (4th Cir. 1929), the facts were that the Bridge Company was under contract to build a bridge for the county. The bridge was to be a connecting link in a new road which the county commissioners proposed to build through a forest. After the bridge had been partially constructed, the commissioners notified the Bridge Company to stop work. This action was taken because the commissioners had decided not to build the road. The Bridge Company disregarded the notification to stop, completed the bridge and brought suit for the contract price. Per Parker, J.:

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In the case at bar, the county decided not to build the road of which the bridge was to be a part, and did not build it. The bridge, built in the midst of the forest, is of no value to the county because of this change of circumstances. When, therefore, the county gave notice to the plaintiff that it would not proceed with the project, plaintiff should have desisted from further work. It had no right then to pile up damages by proceeding with the erection of a useless bridge.

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35 F.2d at 307. The Bridge Company's action in completing the bridge may not have been as unreasonable as it sounds. The political situation within the county was confused. There was a pro-road (and bridge) faction as well as an anti-road (and bridge) faction. At the time the notice to stop work was given the antis were temporarily in control but it was far from clear which faction would ultimately prevail.

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2. There can be no doubt that the rule of Clark v. Marsiglia, which is referred to as the "leading case on the subject" in Judge Parker's opinion in the Luten Bridge case, is the prevailing rule in this country. White and Carter (Councils) Ltd. v. McGregor, [1961] 3 All E.R. 1178, may suggest a different approach in England. An advertising agency had a contract to prepare and display advertising signs for a three year period; the client attempted to cancel the contract before anything had been done under it. The agency nevertheless prepared the signs and displayed them for three years. In the House of Lords, by a 3 to 2 decision, the agency was granted recovery of the contract price.

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Perhaps the English case is distinguishable on the ground that the defendant apparently allowed the signs to remain on display, thus accepting the benefit. Is it not also true, however, that the plaintiff in the White and Carter case also derived some benefit from the display of its signs (the signs being as much an advertisement of the plaintiff's skills as the defendant's product)? Could the loss of this benefit be compensated by money damages? If not, would it have been appropriate to require the advertising company to mitigate its damages by terminating performance upon learning of the defendant's breach? Might not the plaintiff in Clark v. Marsiglia have had a similar interest in enhancing, or at least preserving his reputation (which presumably he could have done only if he were allowed to finish cleaning the paintings)?

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3. Suppose that Clark had in fact stopped work on the defendant's paintings when told to do so. Presumably, under the rule approved by the court, Clark could have recovered damages in an amount equal to his out-of-pocket expenses at the time of breach plus the profit he would have made on the contract if he had been allowed to complete it. Having been relieved of any duty to complete work on Marsiglia's paintings, however, Clark is now free to go to work for someone else and make a second profitable contract. Is it not true that Clark will therefore be better off if Marsiglia breaches and pays him damages than he would have been if everything had gone smoothly? Should Clark's damages be adjusted to insure that he is not overcompensated by the party in breach? Would this problem arise if the contract had been one calling for the performance of services (e.g., housecleaning) for a specified period of time?

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4. In a contract of sale, where the goods are unfinished at the time the buyer repudiates, U.C.C. §2-704(2) states that

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an aggrieved seller may in the exercise of reasonable commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify the goods to the contract or cease manufacture and resell for scrap or salvage value or proceed in any other reasonable manner.

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If Clark had agreed to paint pictures for Marsiglia, rather than clean them, how, according to §2-704(2), could (or should) he have responded to Marsiglia's repudiation?

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February 15, 2015

10.5.8.2 Notes - Clark v. Marsiglia

10.5.8.2 Notes - Clark v. Marsiglia

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