Doehler Metal Furniture Co. v. United States

L. HAND, Circuit Judge

(dissenting in part).

I agree in all that my brothers ,say, except that I think that the defendant should be compelled in computing its damages, to deduct from what it paid to the Equipment Company so much of the amount which it set off as liquidated damages, as it cannot prove as actual damages for delay. I agree that the plaintiff is liable for all damages caused to the defendant by the delay of the *138 Equipment Company; indeed, for all actual damages for delay in delivery of the goods after the time fixed for delivery in the plaintiff’s contract until delivery by the Equipment Company; all such are part of its “proximate” damages. I cannot, however, see the relevance upon that issue of the contract between the defendant and the Equipment Company, which compromised in advance, as between them, the defendant’s damages for delay. There can be no real doubt that the liquidated damages did not in fact correspond to anything that the defendant could have recovered from the plaintiff on that score. I do not forget that the defendant’s actual losses may have been in fact as great as the liquidated damages —indeed, that possibility alone justified the clause — but the relevant question here is, not what was the defendant’s actual loss, but what it could have recovered from the plaintiff in dollars and cents; an issue as to which the contract between the defendant and the Equipment Company is res inter alios acta. To allow the defendant to disregard what it set off is to allow it to charge the plaintiff with liquidated damages; and if the defendant wished so to increase the plaintiff’s liability, the place, and the only place, was in the contract between the two.