Opinion ID: 2588258
Heading Depth: 2
Heading Rank: 1

Heading: Colorado Kenworth Corp.

Text: The parties in Colorado Kenworth Corp. entered into a sales agreement for the purchase of a truck-tractor. 144 Colo. at 542, 357 P.2d at 628. The purchaser, Whitworth, made an initial payment and agreed to pay the balance in seventeen successive monthly payments. Id. He gave a note for this balance secured by a chattel mortgage on the truck-tractor. Id. Whitworth purchased the truck-tractor for the purpose of hauling freight, and Kenworth, the seller, knew this. Id. at 549, 357 P.2d at 631. Due to a dispute between the parties, Kenworth repossessed the truck. Id. at 544-45, 357 P.2d at 629. Whitworth claimed that this repossession was wrongful and brought suit. Id. at 545, 357 P.2d at 629. The parties stipulated at a pretrial conference that the action was founded on a theory of conversion. Id. As part of his damages, Whitworth claimed consequential damages resulting from his inability to perform a freight-hauling contract with a third party. Id. On appeal this court articulated the relevant issue before it in this way: Are consequential damages recoverable in a conversion action, or is the plaintiff restricted to a recovery of the value of the article taken with interest on such value. Id. at 549, 357 P.2d at 631. Thus, the issue on appeal as framed by the court was not the standard by which the recovery of consequential damages are to be determined but simply whether they are recoverable at all in a conversion action. The court founded its analysis of this issue on an initial premise: that Kenworth knew Whitworth purchased the truck-tractor for the purpose of hauling freight. Id. It then cited both of the competing standards for recovery of consequential damages in a tort action involving purely economic interference. Id. First, the court acknowledged that conversion is a tort and thus Kenworth should be answerable to such damages as will completely indemnify Whitworth for the natural and probable consequences of its conversion. Id. Under this standard, whether consequential damages are recoverable depends only on a determination that these damages were proximately caused by the wrongful act and that they are reasonably ascertainable. Then, the court cited the rule derived from Hadley v. Baxendale for recovery of special damages [2] in a contract action: Damages flowing from a conversion which are not ordinary, usual, or commonly to be expected are recoverable `if, under the circumstances, it can fairly be said that both parties have these consequences in contemplation at the time of the wrong complained of, as the probable result thereof, and if these unusual consequences are neither uncertain, unnatural, nor remote as to cause, nor speculative and conjectural in effect.' 144 Colo. at 549, 357 P.2d at 631-32 (quoting Cannon v. Oregon Moline Plow Co., 115 Wash. 273, 197 P. 39, 41 (1921)). Under either a tort or a contract standard, the foreseeability of the consequences is a factor. However, the test derived from Hadley imposes a more restrictive foreseeability limitation. To be recoverable under the Hadley test, consequential damages must be so likely that it can fairly be said both parties contemplated these damages as the probable result of the wrong at the time the tort occurred. Under the tort standard, damages need only be reasonably foreseeable. Importantly, because Kenworth knew Whitworth purchased the truck-tractor for the purpose of hauling freight, the consequential damages Whitworth claimed satisfied even the more restrictive Hadley standard of foreseeability. Thus, it was not necessary for the court to decide between the two tests, and it never did. After reciting both tests, it simply concluded that lost profits resulting from a conversion of property are recoverable. [3] 144 Colo. at 549, 357 P.2d at 632. Accordingly, we do not read Colorado Kenworth Corp. as deciding whether a tort or a contract measure of damage should govern the recovery of consequential damages in an economic tort action. We therefore address this issue now.