Martella v. Woods

James H. Woods, Jr., d/b/a Chaumiere Farms (defendant) entered into a contract with Ralston Purina Company, d/b/a Arkavalley Farm (Arkavalley). Under the contract, Woods agreed to purchase from Arkavalley three and four-month-old heifers, to feed them, and to allow them to breed with Arkavalley’s bulls. Woods also agreed to sell the bred heifers back to Arkavalley once the heifers reached approximately 24 to 30 months of age for use in Arkavalley’s dairy farm at a price to be determined by the weight of each heifer. Woods expected the heifers to reach 900 pounds between 18 and 19 months of age. Waiting until the heifers reached this size stood to benefit both parties because Woods would be paid more for heavier-bred heifers and Arkavalley would receive heifers that produce more milk. Most of the heifers did not reach 900 pounds between 18 and 19 months of age. Purina sold Arkavalley to Fred H. Martella and others (plaintiffs). Approximately one month later, Woods informed Arkavalley that Chaumiere Farms was losing money due to the slow growth of the heifers. Woods ultimately sold the heifers to a third-party. To make up for the heifers that Woods did not supply under the contract, Arkavalley purchased from third-parties for $63,088 50 pregnant heifers, which weighed between 1,100 and 1,200 pounds each. Arkavalley sued Woods for breach of contract. The district court found that Arkavalley partially covered Woods’s breach by purchasing the 50 pregnant heifers, determined that the contract-price for the 50 heifers would have been $19,840, and awarded Arkavalley $43,248 in damages, which represented the difference between the cover-price and the contract-price. Woods appealed the damages award and argued that the 50 replacement heifers purchased by Arkavalley were not like-kind substitutes for the heifers that Woods sold to third-parties.