Opinion ID: 2610682
Heading Depth: 1
Heading Rank: 2

Heading: The award of damages to plaintiff included items which were improper.

Text: Defendant assigns as error the finding of the trial court that the contract dated January 11, 1968, merely modified the previous contract of October 18, 1966, instead of replacing and discharging that contract, and that this resulted in the improper award of damages under the original contract. Plaintiff contends, on the contrary, that a subsequent contract does not discharge a prior contract if it is not agreed that it shall and it is not inconsistent therewith, citing 3 Corbin on Contracts 373-375, § 574. Plaintiff also contends that the 1968 contract was not intended to supersede the 1966 contract, but only to help defendant by providing funds as a result of the new provision for down payments, and that there were only two other minor changes. An examination of the 1968 contract, however, reveals substantial changes and inconsistent provisions, as previously discussed. In addition, the new franchise agreement expressly stated that it superseded the previous agreement and constituted the entire understanding of the parties. It follows that upon execution of the contract of January 9, 1968, the contract of October 18, 1966, was discharged, including all duties and obligations by either party under that contract. Dorsey et ux. v. Tisby et ux., 192 Or. 163, 173, 234 P.2d 557 (1951). This included defendant's duty to deliver the remaining 54 units of the original order for 100 units, as placed under the 1966 contract. Thus, instead of allowing plaintiff's claim for damages on 254 undelivered units, such damages should have been limited to defendant's failure to deliver the 200 units included in the two orders placed by plaintiff under the new contract. The court also erred in allowing additional damages for the 150 units ordered from plaintiff (not defendant), by Mr. Frizzell, the Seattle distributor. Again, part of these units were also ordered prior to the contract of January 11, 1968, and although the remaining units were ordered after that date, there was no evidence that such an order was transmitted by plaintiff to defendant, much less that a 50% down payment was made to defendant on that order, as required to impose upon defendant a duty to deliver that order. Defendant also assigns as error the finding of the trial court that plaintiff was entitled to an award of general damages in the form of profits lost on the undelivered orders, upon the ground that the amount of such profits was speculative and had not been proved with reasonable certainty. In addition, defendant assigns as error the finding that plaintiff was entitled to special damages representing expenses claimed by plaintiff to have been incurred as promotion and sales expenses, particularly those incurred prior to January 11, 1968, the date of the second contract. Plaintiff responds with the contention that uncertainty as the amount of lost profits is not fatal and that, in any event, the amount of the profits that would have been earned on the orders which defendant failed to deliver was proved with reasonable certainty. Plaintiff also contends that he was entitled, in addition, to an award of special damages for the amount of his promotion and sales expenses under the rule of Hockersmith v. Hanley, 29 Or. 27, 44 P. 497 (1896); Bredemeier v. Pacific Supply Co., 64 Or. 576, 131 P. 312 (1913); and Howland v. Iron Fireman Mfg. Co., 188 Or. 230, 213 P.2d 177, 215 P.2d 380 (1950). It is now the established rule in Oregon that in order to recover damages for lost profits, both the existence and the amount of such profits must be proved with reasonable certainty. Douglas Construction Corp. v. Mazama Timber Products, Inc., 90 Adv.Sh. 1663, 471 P.2d 768 (1970), and cases cited therein. We hold, however, that in this case plaintiff offered sufficient evidence to support the finding of the trial court, with reasonable certainty, that he would have made a gross profit of $37.06 per unit on the 200 hoists ordered by him under the contract of January 11, 1968; i.e., the difference between the price payable by plaintiff to defendant for such units and the price which he would have received on sale of such units. Since, however, plaintiff was entitled to no more than the net profit from such sales, it follows that the expenses incurred by him in the promotion and sale of these units were expenses which plaintiff was required to pay in order to earn such profits, rather than to charge such expenses to defendant. This is particularly true, under the facts of this case, in which most of such expenses were incurred under the original contract, which was discharged, and some undefined portion of such expenses would appear to be more properly allocable to plaintiff's ordinary cost of doing business, as distinguished from promotional expenses. In Howland v. Iron Fireman Mfg. Co., supra , a distributor also contended, as in this case, that he was entitled to payment by the manufacturer not only for the gross profit that he would have earned on goods not delivered, but also for overhead and operating expenses incurred by him. That claim was rejected by this court at p. 299 of 188 Or., at p. 206 of 213 P.2d, stating that: In any event, plaintiff could only be entitled to his net profit. Furthermore, on the most liberal view of the pleadings plaintiff was not entitled to recover expenses in addition to profits as claimed by him in the testimony quoted. To the same effect, as stated in 17 A.L.R. 2d 1318: The rule applies similarly in the case of a sales agency or distributor's contract. Even if the contract contemplates preliminary expenditures of time or money by the agent or buyer  as for advertising or traveling or even leasing and fitting up salesrooms  he cannot recover these in addition to his prospective profits on the articles to be sold, figured, for example, as the difference between the price to him and the price at which they would be sold, less the future cost of selling them. See also McCormick on Damages § 142. As we read Hockersmith v. Hanley, supra , and Bredemeier v. Pacific Supply Co., supra , the results in those cases, as applied to the facts of such cases, do not require a different result, as applied to the facts of this case. Also, as previously stated, this is not a case in which plaintiff is contending that the contract has been terminated by its total breach by defendant, with the result that some of such expenses might be more properly allocable, as in Bredemeier, supra . In any event, to the extent that those cases may appear to require a different result in this case, they have been superseded, if not overruled, by Howland v. Iron Fireman Mfg. Co., supra . From the foregoing discussion it is clear that the identity of the various items of damage payable to plaintiff, together with the amount properly payable for each item, can be determined from the record before this court. Therefore, rather than to remand this case for new trial, with the resulting delay and expense, and under the power conferred upon this court by Art. VII, § 3 (Amended) of the Constitution of the State of Oregon, this case is remanded with instructions that judgment in favor of plaintiff and against defendant be entered in the sum of $10,812.45, to include general damages for loss of profits on the 200 hoists, at $37.06 each, for a total of $7,412, and special damages in the sum of $3,400.45, representing the down payments on such orders. Plaintiff is still entitled to payment of costs on the original trial, but defendant is entitled to costs on this appeal. Modified.