Opinion ID: 1297437
Heading Depth: 1
Heading Rank: 3

Heading: Damages for loss of profits

Text: Olson made his first sale of the infected cattle on September 17, 1963. Thereafter, the herd was quarantined from May 25, 1964 to October 8, 1964, when the herd again tested clean. Olson contends that by reason of his forced sale of cows to clean his herd, his milk production decreased since it was not feasible to replace the cows until the whole herd was cleared. This could not be done until the quarantine was lifted. As a result he contends he sustained a loss of profits. The trial court submitted the case to the jury on both express and implied warranty, as well as on fraud and deceit. Aldren does not challenge such submission on this appeal. In our opinion damages for loss of profits are sustainable under either theory if properly proved. See Annot., 87 A.L.R.2d 1317, 1379. Following the South Dakota statute, SDC 54.0169(6) (7), [1] the court instructed in part: the measure of damages for breach of warranty is the loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty. In the case of breach of warranty of quality, such loss, in the absence of special circumstances showing proximate damages of a greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered the warranty. However, where special circumstances are proven showing proximate damages of a greater amount, all damages which naturally may result from a breach of the warranty, accrue in favor of the party injured by such warranty if they are certain and determinate in nature or amount and are also directly attributable to the breach of the contract as their cause. We believe the evidence supports giving this instruction. The court also instructed under SDCL 1967 21-3-1 on the measure of damages in case liability was predicated on fraud and deceit and permitted assessment of exemplary damages on such theory. By special verdict the jury allowed no exemplary damages. Although sometimes difficult to prove, the generally accepted rule is that, where it is shown that a loss of profits is the natural and probable consequence of the act or omission complained of, and their amount is shown with reasonable or sufficient certainty, there may be a recovery therefor. 25 C.J.S. Damages § 42. However, such damages must not be speculative, contingent, or uncertain and there must be reasonable proof of the amount thereof. Any reasonable method of estimating a prospective profit is acceptable. 25 C.J.S. Damages § 90. Absolute certainty is not required. Olson attempted to show loss of profits by offering in evidence certain monthly production records he received from the dairy cooperative where he, and he and his father, had marketed milk from 1957 through 1964. These records showed the total pounds of milk marketed each month, the test, base price, surplus price, and Olson's proportionate share of association expense in connection with the marketing. It does not purport to show the number of cows milked during any period or the expense of production. Variations in production are not consistent. In some months after reactors were sold the amount of milk sold exceeded what had been produced and sold when the reactors were being milked. The trial court did not receive this evidence holding it too speculative. We agree. Olson then attempted to testify that he remembered approximately what each cow was producing when sold although he kept no written records. He also said he could fix with reasonable certainty the cost and expense of feeding the cow and the cost of producing the milk so as to arrive at the net loss on each cow from the time of sale to when the quarantine was lifted. The court did not permit this evidence because of the absence of written production records on individual cows. Although we feel the monthly production records of the marketing cooperative were inadmissible to prove loss of profits for reasons stated supra, we do believe Olson as an experienced dairyman may have been qualified to testify on estimated production and estimated expense of the dairy cows he was forced to sell, so that on a per day, week, or month basis, he could estimate with reasonable certainty the loss of profit from milk production on the cows sold. Essentially this is what the court permitted in Tuttle v. Bootes Hatcheries & Packing Co., D.C., 112 F.Supp. 705, in a case involving a loss of turkeys. We see no cogent reason why it cannot also be done in this case by adopting reasonable accounting procedures on estimated receipts and expenses. The fact that production records were not kept on each cow does not in itself disqualify Olson from fixing his loss of profit. Cases from which it appears damages for loss of profits were allowed in the absence of written records are Dillard v. Clutter, Tex.Civ. App., 145 S.W.2d 632; Hawkins v. Jackson, 97 Ga.App. 525, 103 S.E.2d 634; Lanesboro Produce & Hatchery Co. v. Forthun, 218 Minn. 377, 16 N.W.2d 326 and Frame v. Hohrman, 229 Minn. 468, 39 N.W.2d 881. The trial court received as evidence Olson's federal income tax returns for the years 1962, 1963 and 1964. Attached to each such return was a Schedule F, Form 1040, Farm Income and Expense, showing gross income from dairy products and from some other sources, farm expenses, depreciation, and other information usually contained in income tax returns of farmers. The returns do show some decline in dairy product gross income in 1964 from 1963, but in our opinion the many variables reflected in income tax returns of farmers from year to year make such evidence highly speculative and insufficient to sustain an award for loss of profits. Differences in weather, feed supply, costs of operation, and prices, in general, are such as to give little probative value to an income tax return for the purpose of showing a loss of profit. In our opinion they should not have been received in evidence in this case. In Bruha v. Bochek, 76 S.D. 131, 74 N.W. 2d 313, an owner was allowed damages for loss of four acres of oats upon proof that the remainder of the field yielded about 30 bushels per acre and the market price was 59 cents per bushel. This court held that in the absence of evidence of the fair and reasonable cost of tilling, harvesting, and marketing, the court was without sufficient data from which it could determine the actual damage. In our opinion in the case at bar, the jury did not have before it sufficient competent evidence from which it could determine damages for loss of profits. Reversed. BIEGELMEIER, P. J., and RENTTO, J., concur. ROBERTS, J., concurs in result. HANSON, J., dissents. HANSON, Judge (dissenting). My disagreement with the majority opinion relates to the admissibility of the brucellosis test report of plaintiff's dairy herd. In my opinion such report was clearly admissible under our Uniform Business Records as Evidence Act, SDCL 19-7-11. The Brucellosis and Contagious Abortion Program in South Dakota is governed by the provisions of SDCL Ch. 40-7. It is a contagious animal disease eradication program carried on in cooperation with the United States Department of Agriculture. See SDCL 40-7-6 and 7 U.S.C.A. § 450. State laws, rules and regulations are followed and enforced in the conduct of this program. When the results of a composite ring test of a dairy herd is suspicious the dairy owner is notified. A blood test of the herd is then made by a state or federal veterinarian or technician as provided by SDCL 40-7-9. When tested the cattle are identified by a tag. Reactors are branded on the left jaw with the letter `B' and tagged in the left ear with a brucellosis reactor identification tag. SDCL 40-7-9. The results of the brucellosis test of plaintiff's herd were transmitted to plaintiff. He was obligated by law to sell all reactors or his herd would be quarantined and he could be criminally prosecuted. Certainly, this official test report was admissible as one of plaintiff's business records made and received in the regular course of his business as a dairyman. As custodian, his identification of the test result was sufficient foundation for its admission into evidence. The purpose of the Business Records Act is to abrogate the antiquated and technical common law rules regarding the admission of business records in evidence as an exception to the hearsay rule. 30 Am.Jur.2d, Evidence, § 932, p. 52 and see Annot., Admissibility, As Against Hearsay Objection, Of Report Of Tests Or Experiments Carried Out By Independent Third Party 19 A.L.R.3d 1008