Case ID: ny_223/html/0063-01.html
Source: Caselaw Access Project
Author: {"author": "Hogan, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Caroline V. Cramer et al., Respondents, v. Grand Rapids Show Case Company, Appellant.
    Damages — evidence — action to recover damages and expenses resulting from defendant’s failure to supply furniture and fixtures for plaintiffs’ store in time to begin business a.s planned — erroneous admission of evidence showing sales and profits in following year as basis for damages.
    In an action to recover damages and expenses caused plaintiffs by defendant’s failure to deliver furniture and fixtures for plaintiffs’ store at the time agreed, so that plaintiffs were unable to open their store, as planned, in time to sell, in the proper season, goods purchased for the fall and winter trade, the trial judge charged the jury, “ If a man has arranged to start a business at a certain time and is prevented from starting it by reason of wrong or breach of contract by somebody else, he is entitled to recover whatever profits he can show he would have made during that time for the breach of contract by the other party,” and the courts below have held that plaintiffs may recover for the breach of the contract such an amount of profits as they would have made had they not been prevented from starting in business, such damages not to be based upon ■ a business theretofore carried on but measured by profits during a period of time corresponding to the period of interruption one year later. Held, error; that a distinction exists between the interruption of an established business and a new venture; that the evidence of loss of profits and the submission of that question to the jury by the trial justice was in conflict with the determination of this court. (Witherbpe v. Meyer, 155 N. Y. 446, followed.)
    
      Cramer v. Grand Rapids Show Case Co., 165 App. Div. 942, reversed.
    (Submitted January 14, 1918;
    decided March 5, 1918.)
    Appeal from a judgment of the Appellate Division of the Supreme Court in the third judicial department, entered December 8, 1914, modifying and affirming as modified a judgment in favor of plaintiffs entered upon a verdict.
    The nature of the action and the facts, so far as material, are stated in the opinion.
    
      E. W. Personius and B. W. Nye for appellant.
    The measure of damages adopted, viz., expected profits, was erroneous. (Witherbee v. Meyer, 155 N. Y. 446; 8 Am. & Eng. Ency. of Law [2d ed.], 627; 1 Sedg. on Dam. [9th ed.] 183, 197; Central Coal & Coke Co. v. Hartman, 111 Fed. Rep. 97; Griffin v. Culver, 16 N. Y. 489; Wehle v. Haviland, 69 N. Y. 448; Blanchard v. Ely, 21 Wend. 343; Dodds v. Hakes, 114 N. Y. 260; Cassidy v. Le Fevre, 45 N. Y. 562.) The plaintiffs cannot maintain this action; at best they were undisclosed principals who cannot maintain the action; and even an undisclosed agency is not established. (Moore v. Vulcanite Co., 121 App. Div. 667; Johnson v. Morgan, 68 N. Y. 494.)
    
      Halsey Sayles for'respondents.
    The measure of damages adopted, viz., loss of profits, was'the correct one. (Stevens v. Amsinck, 149 App. Div. 220; Wakeman v. W. & W. Mfg. Co., 101 N. Y. 205; Nash v. Thousand Island 
      
      Steamboat Co., 123 App. Div. 148; Gagnon v. Sperry & Hutchinson Co., 206 Mass. 547.) The plaintiffs as principals have this action against defendant. (Meeker v. Claghorn, 44 N. Y. 349.)
   Hogan, J.

In May, 1910, the plaintiffs, residents of Watkins, Schuyler county,. formed a copartnership to carry on the business of dealing in ladies’ furnishings in the city of Amsterdam. The plaintiff Gurnett, though a business, man, had no previous experience in that line of business. The plaintiff Cramer had taught school in Amsterdam from September, 1909, until sometime in May, 1910, when she secured employment in a department store in the city of Elmira, and worked there from May 26th, 1910, until the latter part of July following.

Early in May, 1910, the plaintiffs leased a store in the city of Amsterdam at a monthly rental of one hundred dollars a month. The store was devoid of fixtures except electric wiring. Plaintiffs, desirous of securing the necessary furniture and fixtures to carry on the business and to open the store in September, on or about June 9th, 1910, sought to procure the same from the Watkins Undertaking Company. That company, following consultation with plaintiffs and one Marks, a representative of defendant, gave to Marks a purchase order in writing dated that day, addressed to the defendant, to ship the articles of furniture therein enumerated and described as “ sold to Watkins Undertaking Company, Watkins, N. Y., ship to J. W. Gurnett, Amsterdam, N. Y.” The furniture was specified in detail, the purchase price at $1,376.25, net fifty days, F. O. B. Grand Rapids to be delivered not later than August 15th. The contract was signed by defendant Marks, salesman, and accepted by the Watkins Undertaking Company.

About August 15th the plaintiffs were in the city of New York. They called on. Marks and told him that they were in the city for the purpose of purchasing a stock of seasonable goods, which they would not purchase if they were going to be delayed in receiving the furniture. They were assured by defendant, through Marks, that the furniture would be shipped in a few days. Plaintiffs, thereupon, purchased a stock of goods suitable for the fall and winter trade at a cost of $7,842.37 and planned to open the store in Amsterdam between September 15th and 20th. The defendant failed to ship the fixtures and furniture and this action was brought to recover damages for a breach of the contract. The amended bill of particulars of the damages claimed consists of seven separate items and in view of the evidence adduced on the trial reference to the same is material. The total amount claimed was $6,703.62. Óf that amount $5,916 was stated as damages sustained by reason of fall and winter trade and the profits which plaintiffs otherwise would have made from the sale of goods. The balance of $787.62 consisted of loss of rent of store, two months, $200; temporary fixtures, $100; interference of business, placing new furnishings, $200; increased price for same, $100; obligation to pay commissions, $137.62; small items for board, $50. The evidence fails to disclose that plaintiffs after purchase of new fixtures paid any sums therefor in excess of the amount stated in the contract to be paid, or that any amount was paid or obligated to be paid for commissions, or for board bills. Those items deducted would leave the claim sought to be established $5,916 for loss of profits and remaining items $500. The jury rendered a verdict in favor of plaintiffs for $3,310. The Appellate Division reduced the same to $1,500, which was assented to by plaintiffs and as thus modified the judgment was affirmed.

It is apparent that the verdict largely included an allowance to plaintiffs for loss of profits. As the Appellate Division affirmed without opinion we are unable to determine the basis of the modification made by it. The recovery allowed by the modification, however, is greatly in excess of the amount of damages claimed by plaintiffs other than for loss of profits.

Upon the trial, plaintiffs, over objection and exception of defendant, were permitted to prove the amount of sales made by them and the profits thereof from September 15th to November 14th, 1911, one year subsequent to the breach of the contract, also sales-made from November 14th, 1910, to April 1st, 1911, and an estimated loss of thirty-five per cent on such sales made, as well as additional facts of like nature.

The trial justice in submitting the case to the jury upon this question instructed them as follows: “If a man has arranged to start a business at a certain time and is prevented from starting it by reason of wrong or breach of contract by somebody else, he entitled to recover whatever profits he can show he would have made during that time for the breach of contract by the other party,” to which instruction to the jury exception was duly taken by defendant’s counsel.

I have pointed out the limited business experience of plaintiffs, the fact that the enterprise was an adventure in á locality where neither one of them had before been engaged in business. No doubt the plaintiffs entertained hope that the business venture upon which they were about to embark would prove successful. Such expectation was evidently based upon a consideration of the resident population of the city of Amsterdam, the business activity of the residents of that city and the number and character of competitors in the same general line of business. Plaintiffs, however, had no assurance that the venture would not prove to be a failure. At the time the contract was made they had the lease of a vacant unfinished store. They had not as yet purchased goods, placed goods on sale or secured one customer. They had before them the labor of building up a new business. Nevertheless, the courts below have held that plaintiffs may recover for the breach of the contract such an amount of profits as they would have made had they not been prevented from starting in business, such damages not to be based upon a business theretofore carried on but measured by profits during a period of time corresponding to the period of interruption one year later. Therein, material error was committed.

The evidence of loss of profits and the submission of that question to the jury by the trial justice was in conflict with the determination of this court in Witherbee v. Meyer (155 N. Y. 446) where the rule of damages is fully considered and the case of Wakeman v. Wheeler & W. Mfg. Co. (101 N. Y. 205), relied upon by counsel for plaintiffs, distinguished. The reasoning in the Witherbee' case renders unnecessary additional citations from other jurisdictions or the United States Supreme Court in harmony with that decision.

A distinction exists between the interruption of an established business and a new venture. The owner of an established business may have it in his power to establish with reasonable certainty the amount of capital invested, the monthly and yearly expenses of operating his business, and the daily, monthly or yearly income he derived from it for a long time prior thereto and for the time during which the interruption of which he complains continued, thereby furnishing a reasonably correct estimate of the nature of the legal injury and the amount of damages which resulted. therefrom. While evidence of such facts may be admissible they must not be.uncertain or problematical. (Dickinson v. Hart, 142 N. Y. 183.) The requirement imposed upon one whose business has been established and interrupted cannot be enforced as to him and made less stringent to one embarking in.a new business who cannot furnish data of past business from which the fact that anticipated profits would have been realized can be legally deduced.

The conclusion reached requires a reversal of the judgment and a new trial. Upon a second trial we are of opinion without detailing the facts as they appear in the record that the question as to whether or not the Watkins Undertaking Company was a principal in the contract, or the agent of plaintiff, is a question of fact.

The judgment should be reversed, and new trial granted, costs to abide the event.

His cock, Ch. J., Chase, Collin, Cuddeback, ■ McLaughlin and Crane, JJ., concur.

Judgment reversed, etc.