Court Opinion

ID: 3517878
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:29:19.886385+00
Date Added: 2024-06-11T13:45:14.105249
License: Public Domain

ON SUGGESTION OF ERROR.
It is earnestly insisted that the original opinion is wrong in holding that, in determining the amount of damages to which the appellee is entitled for breach of a *Page 415 
contract, the amount that would be necessary to be expended in making sales should be deducted from the commissions contracted for.
We think, under the facts in this case, that the appellee would necessarily have to expend considerable sums in earning the commissions. The appellant was not to pay his expenses in so carrying out the contract.
It is a fundamental rule that, in a suit for damages for breach of a contract the plaintiff is to be compensated only for the profits he would have made had he been permitted to complete the contract. His commissions would represent the total earnings under the contract, and, as he would have to expend considerable money of his own in carrying out the contract, he would only be damaged the difference between the commissions and the expenses necessary to be incurred in earning them. That is the only profit that he was entitled to. "Profits" are defined by Black in his Dictionary as, "The advance in the price of goods sold beyond the cost of purchase. The gain made by the sale of produce or manufactures, after deducting the value of the labor, materials, rents and all expenses, together with the interest of the capital employed" — citing authorities.
Definitions of like effect are to be found in Words and Phrases, defining the word "profits."
We think these views are sustained in Birdsong v. Ellis,62 Miss. 418, and Beach v. Johnson, 102 Miss. 419, 59 So. 800, Ann. Cas. 1914D, 33, and the authorities contained in these decisions.
Brach  Son v. Stewart, 139 Miss. 818, 104 So. 162, so much relied on by appellee, is annotated in 41 A.L.R. at page 1172. Manifestly the annotator did not understand the decision to mean what appellee contends it does. At page 1183, under the caption, "Deduction of expense of selling; recovery of expense of advertising before breach," the following language is used by the annotator, and authorities cited: *Page 416 
"It seems that upon the breach of such exclusive agency contracts as are considered in this annotation, the agent is not entitled to recover the full amount of commissions that he might have earned in the territory assigned; reduction must be made for the amount of expense which would be necessarily incurred in selling the goods, and also, in case he was not required to devote his time exclusively to selling, for the value of his time released for other employment. Burghardt v. Scioto Sign Co. (1920), 191 Iowa, 384, 179 N.W. 77, and Huntington v. Jacob Haish Co. (1921), 190 Iowa, 1197, 181 N.W. 480. See, also, Rice v. Caudle (1883), 71 Ga. 605.
"So as the measure of recovery for the loss of profits is the amount of profits which the agent would have made under the contract, and not the amount of commission lost, damages for the breach will not be allowed in the absence of evidence as to the cost of obtaining orders, including the cost of transportation, hotel bills, and other necessary expenditures, or of the value of the plaintiff's own time as an experienced and successful sales agent, since, in the absence of any evidence on these points, any estimate or finding of damages is little better than a guess. Burghardt v. Scioto Sign Co. (Iowa), supra.
"And it was held in Rice v. Caudle (Ga.), supra, that, in a suit for compensation growing out of the breach of a contract giving the plaintiff the exclusive right to sell certain goods in a designated territory, in violation of which others were employed to do the work without his consent, the measure of damages would be the profits of the enterprise, after deducting the legitimate and actual cost of its execution."
We do not understand that there are any cases referred to in the annotations that hold to the contrary.
If the appellant had been under contract to pay the expenses of the appellee during the course of his employment, of course the expenses would not be counted *Page 417 
against the commissioners, as that would be a part of his compensation under the contract.
In 18 R.C.L. 523, title "Master and Servant," section 34, quoting from the suggestion of error, it is said that: "Broadly speaking, the employee is entitled to recover the actul loss or damage sustained by him on account of the employer's breach of the contract. . . . Where a contract of employment is such that the employer assumes the payment of the personal expenses of the employee while engaged in its performance, the employee, upon being wrongfully discharged and thus compelled to pay such expenses himself, is entitled to be reimbursed as to this injury, as well as to any other loss resulting from the discharge."
It necessarily follows as a corollary that, where an employee is to pay the expenses in earning commissions, these expenses must be deducted in order to determine whether he has been damaged or not, and the extent of his damages.
It is difficult to see how he could be damaged the total amount of the commissions, when he would necessarily have had to expend considerable money to earn them. Much depends upon the character of the employment and the terms under the contract; but we think the authorities of this state fully sustain these views.
The suggestion of error will therefore be overruled.
Suggestion of error overruled. *Page 418