## Facts

- A seller agreed by correspondence to supply a buyer with four rubber-reclaiming “refiner” machines under a single contract.
- Two refiners were delivered in August 1943; the remaining two were delivered in late August or early September 1945.
- The buyer rejected all four machines in October 1945, asserting that the late delivery breached the contract.
- The trial court found the contract was indivisible (four machines as a unit), the second delivery was late, and the buyer’s rejection eliminated liability for the contract price.
- After rejection, the buyer used a 300-horsepower motor and accessories that had been delivered with the equipment, putting them to its own purposes on February 20, 1946.
- The trial court awarded the seller the value of the motor and accessories, denied interest, and dismissed the buyer’s counterclaim for breach damages for failure of proof.
- Both parties appealed.

## Issues

1. Whether late delivery of the second pair of machines under an indivisible contract justified the buyer’s rejection of all four.
2. Whether the buyer’s conduct after rejection, including later use of the motor, constituted acceptance requiring payment of the contract price.
3. Whether the seller was entitled to interest on the value of the motor and accessories appropriated and used by the buyer.
4. Whether the buyer could recover reliance expenditures incurred in preparation for performance, and which party bore the burden to show the contract would have produced a loss.

## Decision

- The court held the delayed delivery was untimely and justified the buyer’s rejection of all four machines under an indivisible contract.
- The buyer’s later use of the motor did not amount to acceptance of the machines as a whole and did not obligate payment of the contract price.
- The seller was entitled to restitution for the value of the motor and accessories the buyer appropriated, with interest running from the date of appropriation.
- The court rejected broader consequential-loss claims for insufficient proof of causation but ruled that reliance expenditures could be recoverable, subject to reduction for any loss the seller proved the buyer would have suffered upon full performance.
- The case was modified to allow interest on restitution and to apply the correct burden allocation on reliance damages.

## Legal Principles

- When a contract is indivisible, a material delay in delivering essential portions of performance may permit rejection of the whole.
- Post-rejection retention or use of a separable item does not necessarily constitute acceptance of the entire tender; it can instead support restitution for the benefit retained.
- A party that appropriates another’s property for its own use after rejection may owe the item’s value in restitution, with prejudgment interest from the date of appropriation.
- A non-breaching party may recover reliance expenditures made in preparation for performance, but recovery is reduced by any loss the breaching party proves would have occurred had the contract been fully performed.
- The burden to show expected loss that limits reliance recovery rests on the breaching party.

## Conclusion

The court treated the agreement as an indivisible contract whose late performance justified complete rejection, limited the seller to restitution (plus interest) for the motor the buyer appropriated, and clarified that the buyer may recover reliance costs unless the breaching seller proves those expenditures would have been offset by losses from full performance.


L. Albert & Son v. Armstrong Rubber Co., 178 F.2d 182 (2d Cir. 1949)