Case Name: The Saluda Manufacturing Company vs. C. M. Pennington and Wilson Nesbitt
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1844-05
Citations: 2 Speers 735
Docket Number: 
Parties: The Saluda Manufacturing Company vs. C. M. Pennington and Wilson Nesbitt.
Judges: Richardson, Evans, Butler, Frost, JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 29
Pages: 735–747

Head Matter:
The Saluda Manufacturing Company vs. C. M. Pennington and Wilson Nesbitt.
1. In covenant to recover damages against A & B, on a special agreement to construct a dam, A being the undertaker, and B the surviving surety for bis faithful performance, A filed a discount for work and materials, the plaintiffs having used the dam on its completion. A general demurrer was filed to the declaration, and withdrawn; and upon the discount, and without any formal plea, the parties went to trial upon the merits, and the case was fully tried, and decided without reference to the pleadings. Under such circumstances, the court will suppose that such pleadings were had as to authorize the result attained.
2. In a covenant which, though not in form, was in effect, an indenture between P. B. and N., of the one part, and S. of the other, it was covenanted by the former that P, should do for ¡3, work of a specified kind, who agreed to pay for the work, when performed, money to P. B, and N. for the benefit of P. B. died, and a joint action was brought on the covenant, against the survivors, to recover damages for a breach in not having performed the work according to contract, S, having used the work when finished, P. filed a discount for work and materials. As the survivors could have maintained an action for the price, upon completion of the work, it was held,, that there was nothing to prevent them from maintaining the cross action by discount, if, in substance, the discount would have been admissible had P. been, on one side, the only party to the covenant and the suit.
3. Where a manufacturing company, for whom a workman had undertaken to construct a dam, used the dam upon its completion, which after-wards gave way, from a deficiency in the work, it was held, in an action brought by the company to recover damages for the defect, that besides the amount expended in completing tbe work, the company were entitled to recover such damages as would cover the wages of the company’s hands unemployed, and the interest upon the capital invested by the company during the time that the machinery was unemployed, by reason of the breaking of the dam. And as there were no nett profits realized when the machinery was employed, the damages allowed was the proper measure of compensation, as it placed the company in at least as good a condition as it would have been in, had the same been originally well built.
Before Butler, J. Richland, Extra Court, July, 1842.
This was an action of covenant on a special agreement, efitered into by the plaintiffs on the one part, and the defendant, Pennington, with two sureties, Nesbitt and Brown, on the other part. By the general terms of the agreement, Pennington undertook to build a dam across Saluda river, for the purpose of turning water on the machinery of plain-; tiff’s cotton factory, in Lexington district, and then in operation ; and in consideration of his finishing the dam according to agreement, to be decided, in the case of difficulty, by three referees named, to wit, Black, Clark and Stroup, he was to be paid $3000. The agreement is dated 30th of March, 1839, the work to be finished by the 1 st day of July, ensuing, according to the plan of a dam of the Nesbitt Manufacturing Company in Spartanburgh. The defendant finished the dam sometime about the middle of June, when the plaintiffs commenced making use of it. At the time this dam was commenced, and while it was building, another dam built by Beck, was standing about 35 or 50 yards above. Perhaps, from its location and alleged deficiency as to work, the Beck dam was not deemed adequate to answer its intended purpose. At all events, it was upon this assumption of the company that the second dam was contracted to be made by Pennington. The company commenced using Pennington’s dam as soon as it was finished in June, before the time when it was to have been done according to contract, and before it was surveyed and inspected by the referees, but with some protestation at the time, that it was not received under the contract. After the company commenced using this dam, they ceased to use the Beck dam above ; or the last dam, in consequence of using the other, became useless ; part of it was taken up, and part was floated away by back water. Relying on the Pennington dam, the company ceased to keep in repair or to attend to the Beck dam, which they alleged vras never a good one. There is no doubt they could have continued to use it as they had done, by not using the Pennington dam, and leaving a way for the water to pass through it. They preferred using the Pennington dam, but refused to pay him any thing for it, on the ground that it was not finished according to contract, and subsequently, on the additional ground, thatin consequence of bad work on the dam, the company had sustained damages, greatly beyond the price agreed to be given for the dam itself — and it was to recover such damages that this action was brought. The right of the plaintiffs to recover was resisted, on the general ground that the damages were not equal to the benefit which they had derived from the defendant’s work, and that the defendant, Pennington, was entitled to a discount equal to the actual value of his work and materials, and which, he contended, amounted to more than plaintitfs were entitled to, and would give him a right to recover against them. Most of the evidence was in writing, and if need be, can be referred to. A few days after defendant finished his dam, it gave way. This was before the first of July, and in consequence of it, the plaintiffs had to suspend the operation of their works for about ten days, during which time Pennington repaired the dam at his own cost, by hiring some of the hands of the company that were capable of assisting him. Most of the hands of the company were thus employed, the women and children being thrown out of employment entirely, as well as some white men employed about the machinery. In July, at the instance of some of the company, James A. Black inspected the dam; he said it was not done according to contract, or in a workmanlike and substantial manner, and pointed out several defects. Sometime after-wards, perhaps in August, Clark and Stroup examined the dam together, and they both said it was not finished in strict compliance with the terms of the contract, but that in many respects the work was well done, and could have been completed so as to answer the purpose for which it was intended. These witnesses differed in slight particulars, but agreed in saying that most of the materials were too slight, and that there was not enough timber on the dam. Clark said that one-third of the dam was, in every respect, well done, and that the other two-thirds were deficient in the particulars alluded to. He gave it as his opinion, that while the dam was building, it would not have taken more than $100 worth of labor to complete it according to the requirements of the contract, and that when he looked at it, it would not have taken more than $500 worth of labor to do the same — so that in no point of view was the work deficient more than $500.
In September, the dam gave way by a swell of water in the river, and the operation of the factory was stopped for 41 days. During this time the company employed a workman to repair the dam, and put under his direction all the efficient black hands, having at this time, in all, about 80 hands employed about the mill. The actual cost of these repairs amounted to about $500. This, at least, was the opinion of the workman employed to superintend the hands. The balance of the hands, consisting of women and children, and perhaps some white persons, were, during the 41 days, entirely unemployed, and were, of course, an expense to plaintiffs to some extent. The plaintiffs sustained no further inconvenience from the dam while they were the owners of the mill. It was sold some time in -, the dam having been made entirely good since the great freshet of 1841.
A Mr. Richards, who was employed by the plaintiffs about their mill, was examined as a witness to establish the amount of damage sustained by plaintiffs. He said the company used the Beck dam till Pennington’s was finished, and that then the use of the old dam was discontinued. The new dam broke about two weeks after it was used, and was repaired by Pennington, at his cost — the operation of the mill suspended, &c. Two hundred feet of the dam gave way in September, by a rise in the river, and was repaired at company’s cost. Some of the hands of the company were thrown out of employment during the time the dam was under repair, which was 41 days — how many were unemployed, the witness could not exactly tell. Before the dam broke, the company were working up about seventy bags of cotton per month, and during the time the work was suspended, they might have made about $4,000 or $5,000; and he gave it as his opinion, that the company had sustained that amount of damages in repair of dam, and the loss consequent on the suspension of the operation of the mill. He was asked the question, how much the value of the mill was effected by the deficiency in the dam. Before any objection was made to the question, he answered thus, that it would have sold for $10,000 more if there had been no defect in the dam, giving this as his mere opinion. Both the answer and the question were here objected to, as leading to incompetent testimony. The court thought it incompetent, and rejected it, for two reasons : 1st. Because it was the mere opinion of a witness, without facts or data — and, 2d. It would authorize conjectural and remotely consequential damages, referable to no settled measure or standard established by facts.
After the dam broke in September, Pennington offered to repair it, and to make it good, according to contract. The agent of the company, a Mr. Scott, refused* to let him have any thing to do with it, unless he would subject his work when done entirely to the judgment of the company; and that he might repair the dam, provided he would charge nothing at all for his work; and that he might do that, only for the purpose of relieving himself and sureties from liability, for the damages which the company had sus* tained ; but that he could not have any thing to do with the dam, if he intended to charge any thing for his work, in the past or present. Pennington refused to submit to such an understanding, insisting that he should be paid for his work when finished, according to the original agree* ment. This difference between the parties made up the real issue in the case.
As to what would be the measure of damages, the court charged that plaintiffs should recover for all the actual expenses incurred in consequence of the deficiency of the dam, which was five hundred dollars, in repairing if in September; that the jury might also give damages for all the losses which plaintiffs sustained in consequence of the manufactory being stopped by reason of defendant’s insufficient and defective work on the dam. That for the loss of labor during the time plaintiffs’s hands were thrown out of employment, they should be fully compensated, the vavalue of which labor would be the proper measuie. The gross sum that all the hands might have made, in working up 70 bags of cotton per month, was contended for; but all the witnesses concurred in saying that the factory was a losing concern, and that the company had lost by its operation ; so that in fact the hands were making nothing during the time they were engaged ; but by being employed they might, perhaps, to some extent, have diminished the losses.
Another ground for damages would be interest on the investment of the company in machinery and fixtures. All these were allowed by the finding of the jury, which was a verdict of $1200 for defendant; which was allowing $1800 damages to plaintiffs. The court did not think the plaintiffs entitled to conjectural damages, founded on the opinion of a single witness, as to how much more the property would have sold for, had the dam been built according to contract. The ground was taken, that defendant could be allowed nothing for his discount; but his Honor instructed the jury, that as the plaintiffs had actually used the defendant’s work and materials, thus deriving a benefit to themselves, defendant should be compensated. No excep tion was taken that there could not be a verdict for the defendant, on the ground that he and Nesbitt were sued.
The case was argued as a contract between Pennington and the company, so far as it regarded the adjustment of accounts and damages under the contract. In general terms, it was alleged that in no point of view could the jury find a verdict for the defendant. The presiding Judge was of opinion that plaintiffs got all the damages they were entitled to from the evidence.
Plaintiffs moved the Court of Appeals for a new trial in the above case, upon the following grounds :
1st. Because his Honor the presiding Judge erred in refusing to allow the plaintiffs to prove that the defectiveness of the dam built by defendant Pennington, diminished the value and injured the sale of their Manufactory, and thereby occasioned great damage to the plaintiffs.
2nd. Because his Honor erred in instructing the Jury, that they were not at liberty, in estimating the damages sustained by plaintiffs in consequence of the defectiveness of the dam, to take into consideration the diminution in the value of plaintiffs’ manufacturing property, occasioned by the defectiveness of the dam.
3rd. Because his Honor erred in instructing the Jury, that the plaintiffs, having received and used Pennington’s dam, how much soever it was proved to have been defective, and not built according to the contract, derived a benefit therefrom, and incurred a liability to pay to the extent of that benefit; although it was proved that the old dam, which stood in the river until Pennington’s dam below it was completed, was a better one than his, and would have enabled the plaintiffs to carry on their business, if it could have remained there; but that the raising of the water by the new dam on its completion, necessarily loosened and destroyed the old one ; and that Pennington’s dam being built at the lowest point in the river at which a dam could be constructed, on the brink of the falls, it would not have been practicable for plaintiffs, in building any other dam, to carry on at the same time their manufacturing operations by means of Pennington’s dam, in the same way as they had been able to carry on their operations by means of their old dam, while Pennington was building his.
4th. Because his Honor erred in charging the Jury, that in estimating the loss which the plaintiffs sustained by the stoppage of their manufacturing operations (in addition to the expense of repairing the dam,) it was proper to take into consideration the following elements only: 1. The
value of the labor of those slaves who were thrown out of all employment during the time of repairing the dam ; and 2. Interest on the capital of plaintiffs, invested in real estate and machinery. Although it was proved that there were a number of white men employed in the manufactory at considerable wages, which ought to have been submitted to the Jury, as well as the question whether the plaintiffs could have made more than the legal interest on their capital, in order that the damages might be estimated accordingly.
5. Because his Honor erred in instructing the Jury, that it was not proper, in estimating the damages sustained by plaintiff’s in consequence of the stoppage of their manufacturing operations, to take into consideration the expense of feeding and clothing those hands that were thrown out of all employment.
6. Because his Honor erred in not instructing the Jury, that they might take the amount of gross profits which plaintiffs might have made by their manufactory during 10 days in June and 41 in September and October, as a measure of the damages sustained by plaintiffs in consequence of the stoppage of their manufacturing operations, (the difference between which sum and the actual value of the dam built by Pennington, if of any value at all, or otherwise, the whole of which sum, together with the amount to which the value of plaintiffs’s property was diminished by the said dam, ought to have been the amount of the verdict in favor of the plaintiffs,) it having been proved that at the time the manufactory was stopped in September it was working up about 3 bales of Cotton of 300 pounds each and every day; that the cost of the said Cotton was 12 1-2 cents a pound, which would have amounted to $112 50 for 3 bales ; and that the articles manufactured from said Cotton, might have been sold for twice as much as the Cotton cost, which would have left the gross profits of the establishment, after paying for the raw material, $112 50 a day.
The plaintiffs also moved in arrest of judgment, on the following grounds:
1st. That as the case came up on demurrer by defendants, and on their waiving the demurrer went to the Jury to assess the damages, his Honor erred in allowing any discount to go to the Jury, and in instructing the Jury that they might find a verdict of damages against the plaintiffs, and that the finding of the Jury was therefore contrary to law.
2nd. Because his Honor erred in not charging the Jury, that the discount of the defendant Pennington, could not legally be set off against the plaintiffs’s demand upon Pennington and Nesbitt, and the finding of the Jury was, therefore, contrary to law.
3rd. Because the finding of the Jury of damages in favor of “the defendant,”, there being two defendants, is void, by reason of its uncertainty.
Gregg and Gregg, for the motion.
DeSaussure, contra.

Opinion:
Curia, per
Wardlaw, J.
The first ground taken in arrest of judgment was not heard of below. It now appears that a demurrer which had been filed, was withdrawn ; upon a discount filed, and without any formal plea, the parties went to trial upon the merits, and the case was fully tried and decided without reference to the pleadings. This court must under such circumstances suppose that such pleadings were had as would authorize the result attained. The verdict for the defendant will be understood as a verdict for the defendants, or for the defence, if the defendants jointly were entitled to such a verdict. The only question of difficulty presented by the grounds in arrest of judgment, is that arising under the second, whether the legal right to the demand set up by the discount belonged to both defendants, or only to Pennington. If the discount do not present a question between the same parties in the same right as the original action, however the matter of it might serve for defence, there can be no verdict for the ex cess of it, as in a cross action by the defendants against the plaintiffs. There is much force in the observation that the matter of discount here grew out of the question sued on; and the analogies may be correct which have been drawn from the rules that have been assumed, rather than shown to exist, in cases of discounts for defect of title or for unsoundness, set up after partial payments by several defendants sued upon a note given by them in consideration of an article purchased by one of them. But in this particular case it seems sufficient to rely upon the plain proposition, that where a legal right is vested in two for the benefit of one of them, the two must sue, and if the one for whose benefit the right is to enure should die, the action must be by the survivor, and not the representative of the deceased: The covenant upon which the suit is brought, although in some parts its form is opposed to such construction, seems, when fully examined in all its parts, to be an indenture between Pennington, Brown and Nesbitt, of the one part, and the Saluda Manufacturing Company of the other part, whereby the three persons of the first part covenant that Pennington shall do work of a specified kind, and the Company of the other part covenant for the work, when performed, to pay money to the said three for the benefit of Pennington. Brown is dead, and by bringing a joint action against the survivors of the three, the Company shows that it considered the covenant made to and with it, to have been made jointly by the three, for work to be done by one of them. The effect of the terms used in the covenant by the Company, is what the mutuality of the contract requires — that the Company is bound to pay to the three for the benefit of one of them. As the survivors could, then, have maintained an action for the price upon completion of the work, there is nothing in form to prevent them from maintaining the cross action by discount, if in substance the discount would have been admissible, had Pennington been, on one side, the only party to the covenant and suit.
It seems now to be settled in the English Courts, that damages occasioned by the departure of work from the specifications, may constitute a defence to an action, either upon the contract for the price stipulated, or upon a quan turn meruit for the work done; and although it has been more contested, it seems that, to the extent of defeating the action, the value of the work may be shown in defence of an action for damages occasioned by violation of the specifications. Much difficulty, however, in allowing such defences, has arisen from a consideration of the consequences which may result from a verdict for the defendant, obtained by his making the defence suggested in either of these cases. Shall such defendant be precluded from afterwards bringing his cross action, although he may not have obtained full satisfaction by simply defeating the former action 1 Or shall he, in a cross action, bring a second time under examination the same matters before investigated, and perhaps obtain a second time allowance of the. same matter before allowed, by way of set-oflP? These difficulties, however, cannot arise where, as in this case, under our Act, notice of discount is given, and thus the extent of the defendant's demand is ascertained by matter of record, and a full opportunity is given to settle in one action all the rights of both parties under the contract. It is immaterial whether we regard this as an action by the workman for the price stipulated, in which, by reason of damages occasioned by non-performance on his part, the jury have reduced his compensation from $3,000 to 1,200; or regard it as an action by the Company for the damages, to which the workman has opposed his cross action for work done, and in which the jury have found that the value of the work exceeds the damages by $1,200. In eithér view, the verdict shows the excess of the defendant's just demands over those of the plaintiffs, under the mutual covenants, to be $1,200; and the remaining inquiries are, whether the Jury have been properly instructed as to the mode of computing the damages, and whether any testimony has been improperly excluded. It is'unnecessary here to consider cases of work, from which the party for whom it was done has derived benefit, where the variations from the specifications have not reduced the actual value, or where such variations, comparatively unimportant, could not be made to conform to specifications without labor or cost greatly disproportioned to any advantage thence to result. In a case like this, wdiere the variation to its whole extent diminished the value of the structure, and where the readiest way of perfecting the scheme begun and partially carried on, was to make the work conform to the requisitions of the contract, there is no doubt that if the work be accepted or used, it must be paid for —not at the price stipulated, but at that price reduced by the deduction of the expenditure which has been made, or must be made, to correct the deficiency; and by deduction also of all direct damages, in way of trouble occasioned, expectation disappointed, loss incurred, or gain prevented, which have resulted from the workman's violation of his contract, and which are capable of pecuniary measure and compensation. The only question in this case, is, what were the damages over and above the $500 expended in completing the work? The jury have allowed a sum, which by calculation clearly appears to cover the wages of all the Company's hands unemployed, and the interest upon all the capital invested by the Company, during the time that the machinery was unemployed, by reason of the breaking of the dam, and the consequent repairs and completion. It appears that while the machinery was employed, although much cotton was consumed, and large products in gross obtained, the nett profits were nothing— or in other words, constant loss was incurred. Surely then, when the Company was indemnified for what they ought to have made, without regard to what they probably would have made, in all the time that was lost, and have been re-imbursed for the outlay occasioned by the defect of the dam, it is in at least as good a condition as it would have been in, if the dam had been originally well built. Is it of any importance that one or more witnesses may have had opinions that greater losses were sustained, which are thus contradicted by actual examination of the items ? or can it be important that some person supposed to have an intention of buying, should have greatly magnified the defects and importance of the dam, in his estimate of the whole value of the Factory? To his conjectures and estimates, the Company might have replied by an engagement to put the dam, (as was afterwards done,) in complete repair, and to compensate him for all the time thereby lost. The cost of such engagement would have been then, as now, a set off against the workman's demand for labor done. It appears, then, to this Court that the jury were properly instructed ; that no material testimony, relevant to the issue; was excluded; and that the plaintiffs have no just ground of complaint against the verdict. The motions are therefore dismissed.
Richardson, Evans, Butler, Frost, JJ. concurred.
O'Neall. J. having an interest in the Company, did not sit.