Court Opinion

ID: 8866766
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:08:58.67568+00
Date Added: 2024-06-11T17:06:01.752756
License: Public Domain

THAYER, Circuit Judge,
after stating the case as above, delivered the opinion of the court.
It is contended in behalf of the defendant below, the defendant in error here, that the demurrer to the complaint was properly sustained because the contract declared upon was a contract between the defendant and the White Cliffs Portland Cement & Chalk Company, hereafter termed the “White Cliffs Company,” and that no such privity exists between the plaintiffs and said company as will enable them to sue on an agreement made by it. This contention, however, cannot be sustained. A fair construction of the complaint leads inevitably to the conclusion that the agreement described in the complaint was one between the defendant and the plaintiffs, the latter acting individually, and not merely as officers of the corporation. The consideration for the alleged promise by the defendant to take the bonds of the corporation to the amount of $20,000, and to pay for the same, and also to loan to the White Cliffs Company on its note $75,000 when its funds should give out, moved entirely from the plaintiffs, acting in an individual capacity, and consisted of an assignment to the defendant of stock in said company to the amount of $25,000, which they then owned. The fact that the consideration for the promise moved from the plaintiffs, and that the promise was made to them, compels us to regard the agreement as one that was made with the plaintiffs in an individual capacity, for the breach of which they are entitled to sue.
It is next insisted that the damages claimed are too remote and speculative to be recovered, and that, even if nominal damages might *179have been allowed, nevertheless the judgment below ought not to be reversed for that reason. The rule seems to he well established in the state of Arkansas, from whence this case comes, that a judgment will not be reversed by an appellate tribunal, and a new trial granted, when it appears from the statement oí his cause of action that the appellant, or the plaintiff in error, is only entitled to nominal damages. Trippe v. Duval, 33 Ark. 811; Buckner v. Railway, 53 Ark. 16, 18, 13 S. W. 332. The same rule obtains in many other states, and rests, as we think, upon sound reasons, since the time of the courts ought not to be consumed in the trial of cases in which no substantial right is involved, and where the recovery must, in any event, be limited to a merely nominal sum. Frivolous litigation of that character should be discouraged by all lawful methods, and appellate courts may well decline to reverse judgments rendered at nisi prius when it appears that the only error committed was in refusing to allow the plaintiff to recover an insignificant sum. Harris v. Kerr, 37 Minn. 537, 35 N. W. 379; Faulkner v. Closter, 79 Iowa, 15, 17, 44 N. W. 208; McAllister v. Clement, 75 Cal. 182, 16 Pac. 775; Bustamente v. Stewart, 55 Cal. 115; McConihe v. New York & E. R. Co., 20 N. Y. 495, 498. See, also, 1 Sedg. Dam. § 109, and cases there cited.
We accordingly turn to consider the question whether the damages laid in the complaint are too speculative and remote to be recovered, if such be the cane, the judgment below should be affirmed. It will be observed from the foregoing statement that the plaintiffs do not claim any other damage than the loss of the stock which they were compelled to give as a bonus to procure a loan to the corporation in the sum of $50,000, after the defendant had declined to keep his engagement. It is also noticeable that, as the contract is described in the complaint, the defendant did not promise to loan the White Oiilis Company the sum of $75,000 for any specified period, or at any prescribed rate of interest. In view of these facts, it is manifest that, i he complaint does not disclose a breach of contract which could occasion any substantial loss or damage to the plaintiffs, unless they are entitled to recover the value of their stock which they transferred io secure a loan from another source. Hince no agreement appears io have been made by the defendant to make a loan to the White (lliits Company for any definite period, the law implies that the borrower was under an obligation to return it on demand (Thompson v. Ketchum, 8 Johns. 190; Purdy v. Philips, 11 N. Y. 406); and no substantial damage was occasioned by a refus'al to loan money which the corporation was legally bound to repav forthwith (Bradford, E. & C. R. Co. v. New York, L. E. & W. R. Co., 123 N. Y. 316, 327, 25 N. E. 499).
Counsel for the plaintiffs insist, however, and have argued at considerable length, that because the agreement in suit was made and was not fulfilled by the defendant, the plaintiffs had the right to procure the money from some other source, and to charge the expense of obtaining it to the defendant; also that the value of their stock, which is said to have been worth $300,000, is in this instance a proper item of damage, because the defendant was aware when he made the *180agreement that if he did. not keep his promise the plaintiffs would be compelled to part with a part of their stock, as a bonus, to obtain a loan elsewhere. It will be seen, therefore, that the plaintiffs invoke an application of the doctrine first announced in Hadley v. Baxendale, 9 Exch. 341, 354, 356; the claim being, in substance, that the contract in suit was made in view of special facts and circumstances, that were known to both of the contracting parties, which render the value of the lost stock recoverable, although, under ordinary circumstances, it would not be a legitimate item of damage, because it was not a loss Avhich, in the usual course of events, would result from a breach of the agreement. Attempts have been made repeatedly, of which the case in hand is an example, to push the doctrine of Hadley v. Baxendale to an unreasonable limit, but such attempts have usually failed. In a recent case (Trust Co. v. Clark, 34 C. C. A. 354, 92 Fed. 293) this court had occasion to consider under what circumstances damages for the breach of a contract, other than the customary damage, might be allowed, because of the special circumstances of the case, and because they were within the contemplation of the parties when the contract was made. The conclusion announced in that case was, in substance, that anticipated damages, different from those which would ordinarily be sustained, are not always recoverable, but will only be awarded when, in vievv of special circumstances, they may be regarded as the natural and direct result of the breach, and were not problematical, but were capable of being foreseen, and of being estimated with reasonable accuracy.
Now, conceding it to be true, as stated in the complaint, that the White Cliffs Company had no means of borrowing money when the contract in suit was executed, except by assigning to the lender some of its stock as a bonus, and that this fact was well known to the defendant, and was even discussed by the parties to the agreement, still we do not perceive that by reason of these facts the defendant . was bound to foresee that if he did not keep his promise the plaintiffs would part with a great amount of their own stock to secure a loan to the corporation. The complaint does not show that all the stock of the corporation had been issued when the contract was signed, and that the company had no stock of its own to sell or hypothecate, and, even if that fact did appear, we would be unable to hold that the defendant was bound to anticipate that the plaintiffs would sacrifice a large part of their own holdings to secure a loan to the corporation if he did not comply with his agreement. The action of the plaintiffs in giving away some of their own stock to secure the loan was voluntary, and the defendant might as well have anticipated that, if the plaintiffs elected to use their own credit to obtain money for the corporation, they would raise it by the sale or hypothecation of some other kind of property, which was more marketable, and would not involve any considerable sacrifice. It certainly cannot be inferred, from any allegations found in the complaint, that the defendant, Avhen he entered into the agreement in suit, had any reason to anticipate that, if he did not keep his engagement, the plaintiffs would sacrifice property of the value of $300,000 to obtain a loan in the sum ■of $50,000; The damages suéd for cannot be recovered, therefore, *181because they are not the natural and direct result of the breach of contract complained of, neither are they made such by any special facts or circumstances alleged in the complaint: showing that the loss of plaintiffs’ stock was an anticipated result of the breach, or that it ought to have been anticipated. In accordance with these views, the judgment below is affirmed.