Opinion ID: 1896848
Heading Depth: 1
Heading Rank: 5

Heading: Did the learned chancellor err in applying the proper measure of damages?

Text: The lower court ordered that the Brelands were entitled to their total expenditures prior to being put out of possession, plus the value of the soybeans that were cut. Damages for breach of contract must be proven with reasonable certainty and not based merely on speculation and conjection. Lovett v. Garner, 511 So.2d 1346 (Miss. 1987). The trial court allowed judgment to the Brelands computed as follows: Value of soybean crop at rates insured by the Federal Crop Insurance Program $9,226.00 Rent paid, initial payment 6,460.00 One-half of teledyne payment made for sizmagraph work 775.00 Road expense 475.00 Fertilizer expense 1,890.52 Fertilizer spreading expense 287.80 Cost of lime 2,852.00 Cost of seed 986.00 Cost of Toxaphene 552.50 Fuel expense 640.20 _________ Total 24,145.02 In general [t]he court's purpose in establishing a measure of damages [for breach of contract] is to restore the injured party to the financial position he would have been in had there been no breach. His recovery is limited to the loss actually suffered by reason of the breach, and he is not entitled to be placed in a better position than he would have been if the contract had been performed. Mid-Continent Telephone Corp. v. Home Telephone Co., 319 F. Supp. 1176, 1198 (N.Dist.Miss. 1970), Mississippi Power Co. v. Harrison, 247 Miss. 400, 152 So.2d 892 (1963). This Court has held that in the case of growing crops, the computation should be based, although not exclusively, upon the difference between the value of the crop immediately before and just after the damage; but such a rule must be given flexibility to allow consideration of pertinent practical factors dictated by fairness and reason, including the cost of cultivation, harvesting and marketing. Mid-Continent Aircraft Corp. v. Whitehead, 357 So.2d 122 (Miss. 1978). A sister state has applied the same test in its jurisdiction, but said it in different language. In Cutler Cranberry Co. v. Oakdale Elec. Cooperative, 78 Wis.2d 222, 254 N.W.2d 234 (1977) the Wisconsin Court held that damages to a growing crop are computed as follows: The measure of damages for injury to or partial destruction of a growing crop is the difference between the crop's value immediately before and after the injury or partial destruction. Under this rule, the most generally accepted method for determining damages for such injury to a crop is to compute the difference between the value at maturity of the probable crop if there had been no injury and the value of the actual crop at maturity, less the expense of cultivation, harvesting and marketing that portion of the probable crop which was prevented from maturing. 78 Wis.2d at 229, 254 N.W.2d at 238. It is this Court's opinion that the chancellor was correct insofar as the expenses awarded were attributable to the fallow property. However, gross profits and expenses attributable to the 85 acres planted in soybeans should not have been awarded. As to the soybean crop, Breland should be compensated for no more than his loss of net profits. The first issue addressed is the application of the before and after rule enunciated in Mid-Continent Aircraft, supra, to the determination of loss of profits in the instant case. The growing crop itself was of no value after destruction because that destruction was complete. Leard not only harvested the crop but also sold it and retained the proceeds. This after value is the same as the value of the actual crop at maturity, one of the required determinations in Cutler, supra . Likewise, the value of the crop before destruction is comparable to Cutler's value at maturity of the probable crop if there had been no injury ..., less the expense of cultivation, harvesting and marketing that portion of the probable crop which was prevented from maturing. In the instant case, this value at maturity of the probable crop is that of the gross receipts which were reasonably probable before destruction based upon such factors as the quality of the crop before destruction, the market prices at the probable time of harvest, and any insurance. Based on various testimony, particularly that the crop was of sufficient quality that the insurance would have secured a selling price of $7.00 per bushel, and that the market price would have been below $7.00 at harvest, the chancellor was not manifestly wrong in determining that the gross receipts would have been the minimum $7.00 per bushel times 1,318 bushels, for a gross profit of $9,226.00. However, the expenses which would have been required to earn that gross profit of $9,226.00 clearly should be deducted therefrom. At the least, direct costs of production must be deducted, that is, those costs Breland would have incurred had Leard not breached the contract and excused Breland's further performance. Dunn, Recovery of Damages for Lost Profits, §§ 6.1, 6.4 (3d ed. 1987). Some expenses of crop cultivation were already incurred at the time of destruction. The amount of these expenses should not have been awarded because compensation for the crop destruction was to be based upon lost profits and not simply a return of expenses. The chancellor's award of both profit and expenses required to make that profit is a double recovery. On the other hand, the opposite mistake should not be made. These expenses, which were already paid or incurred, should not be deducted from gross profits because reduction of an award of profits for such expenses has the effect of a double reduction. Breland has already paid these expenses in order to earn his profit; to reduce the actual award of the profit would, in effect, make Breland pay the same expenses twice and would penalize him for taking good care of his crop. In summary the cost of completion or expenses saved should be deducted from any recovery of lost profits. Dunn, § 6.1; 22 Am.Jur.2d Damages § 178 (1965). The expenses saved include the cost of any continuing cultivation necessary to secure receipt of the insurance proceeds and the costs of harvesting and marketing the crop, as specifically enumerated in Mid-Continent Aircraft, supra, and in Cutler, supra . The chancellor did not deduct the expenses of continuing crop cultivation, harvesting, and marketing that were saved, and this Court can find no evidence thereof in the record. It is clear that at least two of the three above named costs would definitely have been incurred. Evidence of expenses saved is part of plaintiff's case and plaintiff must prove it. Dunn, § 6.3. Thus, Breland should have proved that these costs would have been no more than a given amount, thereby reducing his profit by only that amount, which proof could then have been rebutted. This proof of costs can be based upon evidence of average costs for the season on land in the vicinity or of costs on the same land in other years. Cf. Dunn, § 2.28. As in the case of damages generally, Burnham v. Joseph, 482 So.2d 1151 (Miss. 1986), and the case of loss of future profits, Lovett v. Garner, 511 So.2d 1346 (Miss. 1987), recovery for lost profits will be allowed only if their loss is proved with reasonable certainty. Dunn, § 1.2; 22 Am.Jur.2d Damages § 172 (1965). This Court can only speculate even as to whether any profit at all remains after deduction of expenses saved because those expenses have not been proved. However, the difficulty of ascertaining the amount of damages will not bar recovery of damages. Burnham, supra . When expected profits are too speculative to be recoverable, the Court may always use as an alternative measue of damages the expenses incurred in preparation for performance or in part performance, that is, expenses already paid by Breland in raising the crop up to the point of destruction. The defaulting party is generally not harmed if the plaintiff recovers only such expenses. If the nondefaulting party would have suffered a net loss, the defaulting party bears the burden of proving the loss and in the absence of such proof, the full amount of the expenses will be allowed. 22 Am.Jur.2d Damages § 161. Therefore, in the absence of proof of expenses saved, net profits are too speculative to be awarded. Breland has had the chance to prove lost profits and has failed. Therefore, as to the portion of the property which had the growing crop, this Court awards only the amount of the expenses incurred to raise the crop up to the point of destruction. However, this Court also awards expenses attributable to the fallow property, which were clearly incurred in reliance upon the contract, are of no value now to Breland, and were foreseeable by Leard, the defaulting party. Of course, profits are too speculative as to the fallow property. 22 Am.Jur.2d Damages § 159 (1965). Expenses need not be prorated between the property with the crop and the fallow property because this Court awards all expenses already paid or incurred. The resulting amount is equal to the expenses awarded by the chancellor, as enumerated above. When the gross profit of $9,226.00 is excluded from the chancellor's award of $24,145.02, total expenses incurred of $14,919.02 remain. This Court affirms as to liability, reverses as to damages, and renders damages in the amount of $14,919.02. The Court considers the appellees' right to re-enter the premises as having been abandoned by him. AFFIRMED AS TO LIABILITY, REVERSED AS TO DAMAGES AND DAMAGES RENDERED IN THE AMOUNT OF $14,919.02. ROY NOBLE LEE, C.J., HAWKINS and DAN M. LEE, P.JJ., and ROBERTSON, ANDERSON and GRIFFIN, JJ., concur. SULLIVAN, J., not participating.