Court Opinion

ID: 9572058
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:37:55.284953+00
Date Added: 2024-06-11T12:31:26.131381
License: Public Domain

McFADDEN, Justice,
dissenting.
I dissent from the majority opinion in several respects. First, it is my conclusion that no award for lost profits or other consequential damages should be allowed in this case. Even if such damages are allowable, however, the majority is remiss in not enunciating standards for which consequential damages are compensable. Finally, I would hold that Nora failed to show lost future profits with reasonable certainty.
I
I do not concur in the majority’s characterization of this suit as a conversion action. While Nora’s complaint alleges Safeco’s “unlawful retention” of the savings certificate, Nora did not ask for its specific return.1 Nor did Nora specifically ask for the value of the certificate as of the time Safe-co’s retention of it became unlawful. Rather Nora alleged that he and Safeco had an “understanding” that the certificate would be returned when the bond was cancelled and that Safeco did not do so. For this Nora asked for general “damages in the sum of $200,000.00.” Furthermore, Safeco’s answer alleged that the certificate was held with Nora’s “consent and permission” and denied any claim to the certificate. The answer, which was filed only ten weeks after the bond was cancelled, also offered to turn the certificate over to the court “to be paid to plaintiff.” Several weeks later and several months before trial the certificate was given to Nora’s counsel pursuant to a stipulation. After considering all these circumstances, I conclude that the action as tried sounds more in contract than conversion.
Damages recoverable in a contract action are limited by the rule of Hadley v. Baxendale, 9 Exch. 341, 156 Eng.Rep. 145 (1854). Although this court has not expressly adopted Hadley, in Lockwood Graders of Idaho, Inc. v. Neibaur, 80 Idaho 123, 326 P.2d 675 (1958), we adopted its functional equivalent. Quoting Sutherland on Damages, this court held:
In an action founded upon a contract only such damages can be recovered as are the natural and proximate consequences of its breach; such as the law supposes the parties to it would have apprehended as following from its violation if at the time they made it they had bestowed proper attention upon the subject and had full knowledge of all the *65facts. As otherwise expressed, the damages which are recoverable must be incidental to the contract and caused by its breach; such as may reasonably be supposed to have been in the contemplation of the parties at the time the contract was entered into. Direct damages are always recoverable, and consequential losses must be compensated if it can be determined that the parties contracted with them in view.
1 Berryman, Sutherland on Damages, § 45 at 170 (4th ed. 1916), as quoted in Lockwood Graders of Idaho v. Neibaur, supra, 80 Idaho at 127-128, 326 P.2d at 677.
In the instant case I would hold that the jury should have been asked to determine whether Safeco held Nora’s time certificate beyond the time agreed for its return and that, if it did, the jury should determine and award the value of the savings certificate’s lost use for that period of time, which is discussed below. I would also hold that the jury should have been asked whether other consequences, such as Nora’s lost business opportunities, were contemplated by the parties as results of a breach; if they were, the jury should have been instructed to award damages for these consequences in addition to the lost use value of the certificate. E. g. Olson v. Quality-Pak Co., 93 Idaho 607, 469 P.2d 45 (1970) (loss due to frost damage to potatoes held within contemplation of parties to a contract providing for construction of potato cellar).
II
Even if Nora’s action can be characterized as a conversion action, the amount of damages he might recover should not be significantly different. The reason lies in the public policy embodied in the rules limiting which damages may be recovered in the common law actions of trover, replevin and detinue.
In the classical trover action (conversion), the plaintiff seeks a forced sale of an item of personalty to the defendant who has wrongfully taken or detained it. His damages are limited to the value of the item at the time of conversion plus interest. 3 Blackstone Comm. 153 (21st ed. 1844); 4 Sutherland on Damages, supra, § 1109 at 4209. In suits in the nature of replevin and detinue, such as Idaho’s claim and delivery action (I.C. §§ 8-301 et seq.), the plaintiff obtains the return of the specific item taken or detained and compensation for lost use while the item was in the defendant’s hands. Under the common law, special consequential damages are not compensable in any of these actions.
In Michael v. Zehm, 74 Idaho 442, 263 P.2d 990 (1953), this court stated that, “Generally the successful party may recover such damages in claim and delivery action as will compensate him for the loss he has sustained, if any, by being wrongfully deprived of the possession of the property.” 74 Idaho at 445, 263 P.2d at 991. In Zehm we did not discuss the measure of damages, however, because we found the prevailing party not entitled to any damages. In National Motor Service Co. v. Walters, 85 Idaho 349, 379 P.2d 643 (1963), this court instructed a lower court as to the measure of damages in such an action. This court stated:
A recognized measure of damages for the wrongful taking or detention of personal property is the reasonable value of its use during the period of detention. [Citations omitted.] If the owner retakes the converted property, damages recoverable by the owner are based on the value at the time of the conversion, but in mitigation, the wrongdoer is entitled to credit for the value of the property at the time of return, though he is chargeable with the value of its use, of which the owner has been deprived, during the period of wrongful detention.
85 Idaho at 360-61, 379 P.2d at 651.
As a measure of lost use, the successful party in a claim and delivery action is entitled to interest on the value of the detained article:
“Ordinarily, unless the property in suit has a usable value, and the damages may be estimated on that basis, the prevailing party in replevin will be awarded interest on the value of the property during the *66time of the wrongful detention. * * ” This is a well established general rule.
Warren v. Griffing, 200 Okl. 108, 190 P.2d 1014, 1016 (1948); 77 C.J.S. Replevin § 276 (1952). The court in Warren went on to determine that jewelry, which had been successfully replevied by an estate administrator from one claiming the jewelry as a gift, had no “usable value” and that, therefore, the administrator was entitled to interest on the jewelry’s value. -The same court, in an earlier case, Thomas v. First National Bank of Tecumseh, 32 Okl. 115, 121 P. 272 (1912), stated:
One of the exceptions to the general rule, as to the measure of damage, for the wrongful taking and conversion of personal property, is where the property so taken has a distinct ‘usable value’; and horses, broken and trained to do work, would have, under ordinary circumstances, such ‘usable value,’ and where such property has been wrongfully taken by one, and detained from another, such other has the right to recover as damages the reasonable value ofthe^use of such property during the péííod of its wrongful detention; and;this value is ordinarily to be determined by the ordinary market price of the use of such property at the place of taking during the period of the detention.
121 P. at 272. The same rule was announced in Gregory v. Padilla, 379 P.2d 951 (Alaska 1963), in which the Supreme Court of Alaska approved the following jury instruction:
Where the property has a value for use, or usable value, which exceeds the amount represented by the lawful rate of interest, or where the interest would be inadequate compensation, the prevailing party is entitled ... to the usable value of the property, estimated by the ordinary market price of the use of such property, even though such usable value exceeds the value of the property and such usable value will constitute the measure of damages.
379 P.2d at 956.
The use value in the marketplace of some items is measured by the earnings that they bring their owner, if such can be established with reasonable certainty. The classic example is “tools of the trade.” Thus a carpenter can recover lost earnings (or, as it is sometimes referred to, “lost profits”) for the detention of his tools. Bodley v. Reynolds, 8 Q.B. 779, 115 Eng.Rep. 1066 (1846). A similar example is Steel Motor Service, Inc. v. Zalke, 212 F.2d 856 (6th Cir. 1954) (applying Michigan law). In that case a “freelance” trucker who owned a single tractor and trailer left the trailer at a terminal to be unloaded. The trailer was never returned to the trucker and, after several months of vain efforts to do business with only the tractor, the trucker was forced to sell the tractor for considerably less than its fair market value. The court affirmed the district court’s finding that the trailer was a “tool of his trade” and that “the difference between [the trucker’s] earnings with his trade equipment and without . was a measure of the value of the use of the equipment.” 212 F.2d at 859. The court also compensated the trucker for his loss on the forced sale of his tractor.
Our case of Weaver v. Pacific Finance Loans, 94 Idaho 345, 487 P.2d 939 (1971), cited by the majority,2 is another good example. In that case (in dicta) we said that where a defendant unlawfully removes from plaintiff’s tavern his liquor license, the physical presence of which is necessary to do business, the plaintiff may recover lost profits. Certainly few items are as much a “tool of the trade” to a tavern owner as his liquor license. Thus it was reasonable to allow his lost profit as a measure of the lost use of the license.
In the instant case Nora does not seek “lost profits” for the detention of a tool of the trade. Had Safeco detained Nora's trucks, his chauffeur’s license or his Idaho *67Public Utilities Commission permit, the result would be different. Secondly, Nora does not seek “lost profits” as the value of the savings certificate’s lost use. The “lost use value” of the certificate is plainly the interest paid on the certificate, which Nora continued to receive during the entire time in question. Rather Nora seeks “lost profits” in the sense of lost business opportunities and harm to his business and credit reputation. These are not “lost profits” in the sense of lost use but in the sense of special consequential damages. Thus the majority does a sleight of hand when it simply says that “The award of lost business profits in this particular case was proper.” The majority also ignores this court’s statement in National Motor Service, which I would hold controls this case:
If the owner retakes the converted property, damages recoverable by the owner are based on the value at the time of the conversion, but in mitigation, the wrongdoer is entitled to credit for the value of the property at the time of return, though he is chargeable with the value of its use, of which the owner has been deprived, during the period of wrongful detention.
85 Idaho at 361, 379 P.2d at 651.
Once this court overrules National Motor Service and its statement of the common law rule and decides that lost profits and other special consequential damages are compensable in conversion and replevin actions, it must specify which consequential damages are sufficiently closely connected to the deprivation to be compensable. In every civil action where compensatory damages are awarded, some limitation is placed on the harms to be compensated. For example, a plaintiff in an action to recover a debt recovers only the amount of the debt plus interest, Wallace Bank & Trust Co. v. First National Bank of Fairfield, 40 Idaho 712, 237 P. 284 (1925); Steel v. Eagle, 207 Kan. 146, 483 P.2d 1063 (1971); Monarch Refineries, Inc. v. Union Tank Car Co., 193 Okl. 110, 141 P.2d 556 (1943) (quasi-contract), even though the defendant’s nonpayment has caused the destruction of plaintiff’s entire business. Similarly, the plaintiff in a breach of contract action recovers only the benefit of the bargain, even though the breach actually causes greater loss. E. g., McOmber v. Nuckols, 82 Idaho 280, 353 P.2d 398 (1960) (Damages for breach of service contract equal the cost of securing performance by other means). The rule of Lockwood Graders, supra, prevents unforeseeable consequential damages from being compensable. The plaintiff in a negligence action likewise may not be compensated for all actual loss, although the concept of proximate cause certainly allows compensation for more indirect losses than would be compensated in a breach of contract action.3 In intentional tort actions a plaintiff can recover even more extensive kinds of damages, including punitive damages. In all of these cases the civil law has made policy judgments as to the extent to which actual losses should be compensated.
The traditional actions of conversion and replevin represented policy judgments that special consequential damages should not be compensated. If this court is to change that rule, it must also establish guidelines as to the kind of consequential damages that will be compensated. Among the jurisdictions that do allow consequential damages in conversion actions, the rules are chaotic.4
*68I think the reason for the divergence in the cases lies in the fact that, although labeled a tort, conversion encompasses conduct remedial by actions sounding in tort, contract, debt and even strict liability. For example, each of the following is a converter: (1) a felon who steals personalty; (2) a bona fide purchaser of stolen goods; (3) a bailee who breaches his bailment contract by failing to return bailed goods; and (4) a pledgee who retains a treasury bond in violation of his pledge agreement. My point is this: it will not do to decide which consequential damages a thief will be liable for and apply the same rule to a bailee or pledgee. The only thing worse would be to make no rule at all.
The instant ease presents the same problem. As previously noted, although this suit has been labeled a conversion action, it sounds more in contract for breach of a pledge agreement or for collection of a debt. Yet the majority has not explained why, in a conversion action for a $10,000 savings certificate, a plaintiff should be compensated for lost business opportunities, while in an action on a $10,000 debt he should not. The practical result is to make Safeco pay as if it were a thief when its conduct more resembles that of a nonpaying debtor.
Ill
I also dissent from the majority’s holding that Nora showed lost future profits with reasonable certainty. “This court has explicitly stated that damages for loss of earnings or profits must be shown with reasonable certainty and that compensatory awards based upon speculation or conjecture will not be allowed.” Rindlisbaker v. Wilson, 95 Idaho 752, 761, 519 P.2d 421, 430 (1974); Jolley v. Puregro Co., 94 Idaho 702, 496 P.2d 939 (1972); McLean v. City of Spirit Lake, 91 Idaho 779, 430 P.2d 670 (1967); Belts v. State ex rel. Dept. of Highways, 86 Idaho 544, 388 P.2d 982 (1964); McOmber v. Nuckols, supra; Coast Transport, Inc. v. Stone, 79 Idaho 257, 313 P.2d 1073 (1957); Huggins v. Green Top Dairy Farms, Inc., 75 Idaho 436, 273 P.2d 399 (1954). I would hold that much of Nora’s testimony was speculative and conjectural and that the testimony of Glen Capps should not have been allowed because his business was significantly different from Nora’s.
*69Nora testified that in the 1974-75 season he moved 1481 tons of hay and that the next season he would have hauled four times that amount. Nora had never hauled hay to either California or Nevada and could name no buyers in those states, yet he was allowed to testify that the next year he would have entered those markets and sold twice as much hay there as he had hauled to all his customers in 1974-75. Nora said he expected to develop in Nevada a bigger market during his first year there than he had developed in his home state during 1974-75, his first year in business. Nora admitted on cross-examination, however, that he didn’t know what he would pay drivers going to California and Nevada and that he had made no investigation into trading or trucking regulations in those states.
As for his home state hay market, Nora estimated that, based on his knowledge of the market, he would have doubled his sales in 1975-76.
Nora also testified that in 1974-75 he had hauled 890 tons of wheat. He estimated that the following season he would have hauled more than six times that amount: 2500 tons. Again Nora could name no certain buyers but based this estimate on his experience in the business and the contacts he had developed. While the majority correctly states that Nora produced sixteen favorable witnesses who said they had and would continue to conduct business with Nora, the majority does not point out that all sixteen were from Twin Falls or Jerome counties. Thus I would hold that much of Nora’s testimony was too speculative to be the basis of an award.
Furthermore, I would hold that the testimony of witness Capps was irrelevant and therefore should not have been admitted. In my opinion, the record shows that Capps’ business was substantially different from Nora’s. Capps testified that his stepfather was a trackbuyer, that he started working for his stepfather in 1948, that he had been buying and selling since 1950 and that he had run the business on his own since his stepfather’s death in 1965. Nora, on the other hand, had been buying and selling about a year and was properly bonded and licensed for only two months, during which time he transacted no business whatever. Nora further testified that he was unaware of any bonding and licensing requirements until he received a letter from the Idaho Department of Agriculture ordering him to comply with their regulations.
As for Nevada sales, Capps testified that his market there had been developed over a 20-year period and was never steady. Yet Nora, with no experience in the Nevada market, was allowed to state his estimated sales there.
Capps was also permitted to testify to his business profits, apparently so that the jury could establish Nora’s prospective earnings. Yet Capps himself admitted that his profits history bore no relation to Nora’s potential profits:
Q Do you know whether or not this experience of yours as far as profit and margin between purchase and sale price is typical among track buyers in this area?
A No, I couldn’t answer that because I am not aware of what their costs are or how they operate or prices. We generally get our own prices, and our own expenses and so forth. It’s each individual’s business, so I can’t answer your question there.
In light of the differences between Nora’s and Capps’ businesses and Capps’ own statements comparing the profitability of the two businesses, I would hold that Capps’ testimony should not have been admitted. With or without this testimony, I would also hold that Nora’s estimates of his 1975-76 business, particularly in Nevada and California, were too speculative to be used as the basis for an award of lost profits.
For these reasons I dissent from the majority opinion.
BAKES, J., concurs.

. Had Nora wished the immediate return of the certificate, he would have filed a claim and delivery action pursuant to I.C. § 8-301 et seq., which replaces the common law replevin action in Idaho. National Motor Service Co. v. Walters, 85 Idaho 349, 379 P.2d 643 (1963).

. The majority also cites Duff v. Draper, 98 Idaho 379, 565 P.2d 572 (1977), in which the issue of whether consequential damages can be recovered in a conversion action was not directly discussed by the court.

. “The modern rule in tort is quite different and it imposes a much wider liability [than the rule in contract actions]. The defendant will be liable for any type of damage which is reasonably foreseeable as liable to happen even in the most unusual case, unless the risk is so small that a reasonable man would in the whole circumstances feel justified in neglecting it; and there is good reason for the difference. In contract, if one party wishes to protect himself against a risk which to the other party would appear unusual, he can direct the other party’s attention to it . . . . In tort, however, there is no opportunity for the injured party to protect himself in that way, and the tortfeasor cannot reasonably complain if he has to pay for some very unusual but nevertheless foreseeable damage . .” Koufos v. C. Czarnikow Ltd. (The Heron II), [1967] 3 W.L.R. 1491, 3 All.E.R. 686, 691-2 (H.L.) (Lord Reid).

. Some cases have not stated the limits on compensable damages. The Restatement (Second) of Torts states that the deprivation *68must be the “legal cause” of the harm. Restatement (Second) of Torts § 927 (Tent.Draft No. 19, 1973). In Preble v. Hanna, 117 Or. 306, 244 P. 75 (1926), the Oregon Supreme Court stated that the damages must “naturally flow from the tortious act.” 244 P. at 78. On the other hand, some jurisdictions have limited special damages by adopting a rule analogous to Hadley v. Baxendale. The Washington Supreme Court, in Cannon v. Oregon Moline Plow Co., 115 Wash. 273, 197 P. 39 (1921), denied recovery for lost profits to a farmer plaintiff whose tractor had been converted by the tractor’s seller. The farmer had been unable to plant his crop as a result. The court said:
The damages demanded in this case do not come under the head of the ordinary, usual, or commonly to be expected consequence of such tort. They must, then, be brought within the head of unusual and peculiar consequences of the wrongdoer’s act, if, under the circumstances, it can be fairly 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.
197 P. at 41. Similar facts and the same theory lead to a different result in a more recent Colorado case. In Colorado Kenworth Corp. v. Whitworth, 144 Colo. 541, 357 P.2d 626 (1960), plaintiff trucker sued the seller of his truck-tractor for wrongfully repossessing it. The court stated:
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? Any answer to this question must take into consideration that we are dealing with a commodity purchased for a purpose: hauling freight; this was in the contemplation of the contracting parties. Although the suit is in tort, Kenworth should be answerable to such damages as will completely indemnify Whit-worth for the natural and probable consequences of its conversion.
357 P.2d at 631. The seminal case for this rationale appears to be Bodley v. Reynolds, 8 Q.B. 779, 115 Eng.Rep. 1066 (1846). See also, Barrington v. Offenbach, Sup., 163 N.Y.S. 423 (1917); McCormick on Damages, § 123 at 466 (1935).