L. Albert & Son v. Armstrong Rubber Co. case brief

L. Albert & Son v. Armstrong Rubber Co.; (2^nd Cir, 1949 – Judge Hand)

• Facts: D, Armstrong Rubber Co., rubber refinery, agrees to buy 4 refiners, but last two delayed. D refuses to accept all 4, but already accepted power engine and starting using it. Trial ct dismisses claims on refiners, but grants damages to P for power engine. D offered affirmative defense that it shouldn’t pay b/c P would have lost money in business given dramatic drop in rubber prices resulting from global glut in supply. D files reliance counterclaim. D wants (1) costs invested in reclaim dept; (2) cost of scrap rubber; (3) cost of putting foundations in for the refiners
  
• Issue: Should D be able to recover reliance damages even though they probably would have incurred a loss on the K?
  
• Holding: Can recover reliance, but subject to reduction of any amount seller can prove would have been the buyer’s loss upon the K.
  
• Rule: “the promisee may recover his outlay in preparation for the performance, subject to the privilege of the promisor to reduce it by as much as he can show that the promisee would have lost, if the K had been performed”
  
• Commentary: This is RELIANCE. Why not seeking expectation? Expectation would have actually been at a loss. P allowed choice of remedy – by choosing reliance, end up even. Rare case where reliance greater than expectation. Victim gets to choose the remedy. But then breacher has a privilege – with burden of proof – to offset. Hand is doing quasi-expectation – to the extent can put them where they would have been, do so. This is an expectation-based view that still finds room for reliance. Difference b/t this and Dempsey is that Dempsey lacked compelling evidence that the D’s would have lost money. Here, it was almost certain they would have.
  
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