Court Opinion

ID: 6582564
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:28.079567+00
Date Added: 2024-06-11T15:57:20.336828
License: Public Domain

Carpenter, J.
On the 18th day of August, 1885, the defendant leased to the plaintiff a store and dwelling house, for one year from the 1st day of September, with the privilege of renewing the lease for three years, at a monthly rent of $50, payable in advance. One month’s rent was paid. The defendant failed to put the plaintiff in possession. It appears that when the lease was executed the property was in the possession of one Alexander, under a prior lease, with the right to hold the same until February 1st, 1890. He refused to surrender the possession.
In an action to recover damages the plaintiff claimed to recover the sum of $80, amount paid to clerks for release from contracts, and the sum of $586.35, amount paid merchants to take back goods bought, and for depreciation on the goods. The defendant objected to the introduction of all evidence upon either of these claims. The court admitted the evidence and allowed both items as damages.
Assuming that the plaintiff is correct in his claim that these were, or might have been, legitimate items of damage, still we think the testimony was objectionable, unless it further appeared that the sums paid were reasonable, and that the obligation to pay was entered into in good faith. The mere fact that the plaintiff paid them is not of itself sufficient to establish either proposition; and it does not appear that there was any other evidence tending to establish them or either of them. If the clerks employed by the plaintiff had sustained no damage, or damage to a less amount, or if the plaintiff was under no legal obligation to pay, then the payment was unreasonable. The same is true of the money paid to the merchants.
If these clerks were hired after he knew of the lease to Alexander, it can hardly be claimed that the plaintiff acted in good faith. How that was we, are not told. It appears that he had full knowledge of that lease on the 23d of August ; and it is consistent with every fact found that all the *490clerks were subsequently hired. So too with respect to the purchase of the goods. Four days after the plaintiff had actual knowledge that Alexander could legally retain the possession, August 27th, he wrote the defendant as follows :—“ As I am now situated I am on the fence, it being high time for me to buy goods, and I don’t know what to db about it.” On the same day he doubtless received the defendant’s letter informing him that the prior lease had a year and five months longer to run. The evidence is strong, if not conclusive, that he purchased his goods after that. If so, in no event has he any legal or moral claim on the defendant.
But the great question is,—What is the rule of damages in cases like this ?
Before considering that question we will briefly notice another claim that the defendant sets up, and that is, that it was the duty of the plaintiff, at his own expense, to take measures to gain possession of the property. Whatever may be the rule when a stranger wrongfully takes and holds possession, the principle contended for can have no application where a person holding rightfully under the lessor retains the possession.
Nor are we prepared to sanction the claim that in this case the defendant is only liable for nominal damages. We can hardly say that a landlord who knows, or who has the means of knowing, that his property is incumbered with an outstanding lease, which may prevent his giving possession, acts in good faith in leasing unconditionally to another.
We come back then to the question what is the rule of damages ?
In Hadley v. Baxendale, 9 Exch., 341, the rule is laid down thus :—“ Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should either such as may, fairly and reasonably, be considered as arising naturally, that is, according to the usual course of tilings, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation *491of both parties at the time they made the contract, as the probable result of the breach of it.”
This rule has been criticised somewhat as not being sufficiently definite; but we apprehend that any difficulty of that sort has necessarily arisen from the difficulty in applying the rule in given cases. It is not an easy matter in many cases to determine whether a given result is the natural consequence of a breach of a contract, or whether it arose from a matter which may reasonably be supposed to have been contemplated when the parties entered into the contract. Oftentimes it is a question on which men’s minds may well differ.
In that case the plaintiff was the owner of a steam mill. 'He sent the parts of a broken shaft by the defendant, a carrier, to a mechanic, to serve as a model for making a new one. The carrier did not deliver the article within a reasonable time, by reason of which the plaintiff’s mill stood still several days. In an action to recover damages the defendant pleaded by paying £25 into court. The case went to trial, and the plaintiff had a verdict for £25 more. A rule to show cause was argued, and the court promulgated the rule we have quoted.
In that case it was contended that the loss of profits was the direct and natural consequence of the defendant’s neglect. The court did not accept that view, but placed its decision on somewhat different grounds. The court says: “ How if the special circumstances under which the contract was actually made were communicated by the plaintiff to the defendant, and thus known to both parties, the damages resulting from a breach of such a contract which they would reasonably contemplate would be the amount of injury which would ordinarily follow from a breach of contract under those special circumstances, so known and communicated. But on the other hand, if those special circumstances were wholly unknown to the party breaking the contract, he at the most could only be supposed to have had. in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not *492affected by any special circumstances, from such a breach of contract. For had the special circumstances been known, the parties might have especially provided for the breach of contract by special terms as to the damages in that case, and of this advantage it would be very unjust to deprive them.”
Thus the loss was attributed to the failure of the plaintiff to inform the defendant of the special circumstances, by reason of which he contributed to the loss. For if the defendant had been fully informed, it may be assumed that there would have been a prompt delivery, and consequently no unnecessary loss. And because he was not so informed the court held that he was not liable for special damages. The essence of the rule seems to be that the defendant must, in some measure, have contemplated the injury for which damages are claimed. If it was the direct and natural result of the breach of contract itself, he did contemplate it; but if the injury did not flow naturally from the breach, but the breach combined with special circumstances to produce it, then the defendant did not contemplate it, and consequently is not liable, unless he had knowledge of the special circumstances.
There may however be cases, growing out of the present methods of business, in which a promise may be implied from the nature of the transaction, or the character of the business in which the party is engaged, to be prompt, and to use the utmost diligence in the performance of the duty undertaken. In such cases the law will not require the party to be specially informed, but will deem him to have contemplated the importance of the business and hold him responsible accordingly.
Apply these principles to this case. The store was hired for a clothing store. That seems to be all that the defendant knew about it. He did not request the plaintiff to hire clerks and purchase goods, nor was he advised that the plaintiff would do so. While he may have supposed that the plaintiff would make suitable preparations to occupy the store, yet he could not know what preparations were necessary. He may have needed no clerks, or they may *493have been previously engaged, and the necessary goods may have been then in his possession. As a matter of law it cannot be said that the defendant contemplated that the plaintiff would hire clerks and purchase goods under such circumstances as to incur heavy liabilities in case of failure for any cause. In no proper sense therefore was the defendant a party to those arrangements, had no interest therein, and had no right to interfere; consequently he cannot be held responsible.
Again, if these liabilities were incurred after the plaintiff knew that it was doubtful whether he could have the store, as they probably were, then, as suggested in a former part of this opinion, they were incurred in bad faith, and he assumed the entire risk.
The English rule then, as we understand it, will not justify the measure of damages applied by the court below.
The rule we have been considering prevails generally in this country. Closely allied to it is another principle which has some application to this ease; and that is, that profits which are in their nature doubtful or uncertain, cannot be recovered as damages in such cases. But this principle does not exclude profits as such, but only those of a contingent nature. If they are definite and certain, and are lost by reason of the defendant’s breach of his contract, they are in some cases recoverable. An instance of this is the case of Booth v. The Spuyten Duyvil Rolling Mill Co., 60 N. York, 487. The plaintiff had contracted to deliver to a railroad company four hundred steel-capped rails at a given price. The defendant engaged with the plaintiff to manufacture them, but failed to do so. The plaintiff was allowed to recover the profits he would have made had he been able to deliver the rails. If a loss of profits may thus be compensated, we see no reason why a direct loss of money may not be compensated. In either event however the loss must be certain, not only as to its nature and extent, but also as to the cause which produced it, and must be capable of being definitely ascertained. In Griffin v. Colver, 16 N. York, 489, the rule is thus stated: “The broad general *494rule in such cases is, that the party injured is entitled to recover all his damages, including gains prevented as well as losses sustained, and this rule is subject to but two conditions. The damages must be such as may fairly be' supposed to have entered into the contemplation of the parties when they made the contract, that is, must be such as might naturally be expected to follow its violation ; and they must be certain, both in their nature and in respect to the cause from which they proceed.” Here we may concede that the loss sustained was sufficiently definite and certain as to the amount, but not so as to the cause from which it proceeded. As we have already seen, it is not probable that the violation of the contract caused these losses; but on the other hand the plaintiff himself needlessly subjected himself to them.
In an Illinois case, cited by the plaintiff, Greene v. Williams, 45 Ill., 206, it was held that necessary losses sustained might be recovered. The plaintiff’s case will hardly stand that test. The failure is twofold—in respect to the necessity for hiring clerks, and purchasing goods in the first instance, and also in respect to the payment of the sums paid. There is no finding, and the facts do not sufficiently indicate, that there was any necessity for either.
Thus far we have assumed that the damages recoverable in this case are the same as in ordinary cases of breaches of contract. The defendant however contends that the rule in actions on covenants in leases, express or implied, is that where the plaintiff has paid no rent or other expense only nominal damages can be recovered. Such a rule once prevailed. It was adopted in analogy to actions on covenants in deeds of real estate, and it now prevails to a limited extent in the state of New York. Conger v. Weaver, 20 N. York, 140. In that case Denio, J., not regarding the rule with favor, with apparent reluctance considered that it was too firmly established in that state to be disturbed.
In Mack v. Patchin, 42 N. York, 167, Smith, J., says:— “ But this rule has not been very satisfactory to the courts in this country, and it has been relaxed or modified more or *495less, to meet the injustice done to lessees in particular cases.” In Pumpelly v. Phelps, 40 N. York, 59, it is declared that the rule should not be extended, but limited strictly to those cases coming wholly and exactly within it. In both those cases the circumstances are enumerated which will take eases out of the operation of the rule. They are so numerous as to well nigh abrogate the rule itself.
In England the rule has been repudiated and such actions are placed upon the same footing with other actions on contracts. Williams v. Burrell, 1 M. G. & Scott, 402; Locke v. Furze, 19 Com. Bench, N. S., 96. In this state the rule has not been adopted, and we are not disposed to adopt it. We think it better to discard the rule, so as to be in a position to determine all such cases upon the general principles applicable to other contracts. In that way we think we shall be the better prepared to do justice in each case as it arises.
We suppose the correct rule to be that the plaintiff is entitled to recover the rent paid, and the difference between the rent agreed to be paid and the value of the term, together with such special damages as the circumstances may show him to be entitled to. Trull v. Granger, 8 N. York, 115.
The theory upon which the court below assessed damages being inconsistent with these principles, the judgment must be reversed and a new trial ordered.
In this opinion the other judges concurred.