Court Opinion

ID: 5626297
Source: CourtListenerOpinion
Date Created: 2022-01-11 04:54:24.086367+00
Date Added: 2024-06-11T08:37:37.229617
License: Public Domain

ON MOTIONS TOR REHEARING.
Guerrt, J.
This court stated in its opinion in this case as originally written that "damages were prayed for to the extent of the profit it would have made on the minimum amount of ice to be sold under the contract, or the difference between the contract price and the cost of producing and delivering the same.” It appears from a further examination of the record that this allegation was stricken from the petition by amendment, and we have amended the opinion by striking therefrom this statement.
Counsel for the plaintiff has filed a motion for rehearing, complaining of the following language used in the opinion: "It is true that any ice the plaintiff may have manufactured and sold to outside parties should bear its proportionate part of the overhead expense, and the defendant have the benefit of such savings.” It will be borne in mind that the fixed or overhead charges are ordinarily a part of the cost of manufacture, and in an anticipatory breach of an executory contract they are to be considered in estimating the damages because of a breach of such contract, which damages are the profits the contracting party would have made if the contract were performed. It is true, had the defendant complied with its contract and purchased and paid for the full tw.enty thousand tons of ice yearly, that any amount of ice made and *531sold by tbe plaintiff in excess of sncli snm would have yielded an additional profit to the plaintiff by reason of the fact that the overhead or fixed charges might have been cared for by the twenty thousand tons sold and paid for by the defendant, and the profits on this additional amount would have been larger because the overhead had already been cared for. It is not true, where the defendant has not taken the minimum amount, that any ice sold by the plaintiff to outside parties should not bear its proportionate part of the overhead, after taking into consideration the minimum amount to be taken under the contract. The measure of damages applied in this case is so applied because of the special contract between the parties, by reason of which the fixed charges were incurred. It is clear that had the buyer canceled the contract before the seller had assumed the burden of the overhead charges incidental to the manufacture of the ice, the seller’s damages would have been limited to the difference between the cost of manufacture and the contract price; and that in estimating such cost of manufacture or production, overhead charges or fixed expenses incidental to the business would have been a proper item for consideration in determining the cost of production. It is also true that the duty to mitigate or diminish damages does not arise until a breach of the contract, and the breach of the present contract did not occur until the end of the year. This, however, does not affect the rule we have laid down, that the plaintiff is entitled to any damage caused by the breach, and this damage consists of losses sustained as well as profits denied which are caused by the breach of the contract. Profits denied, however, are profits arising out of the present contract, and not corporate profits or profits which the plaintiff might make out of other sales of ice. In other words, the -defendant is under obligation to pay damages caused by its failure to take and pay for the minimum number of tons of ice. Until it has paid overhead charges on twenty thousand tons of ice, it is not entitled to any proration on other ice manufactured and sold. If the defendant had paid for the 30,000 tones of ice each year, and the plaintiff had sold an additional five thousand tons, the overhead or fixed charges of the plant would have been borne by the aggregate amount.sold; that is to say, the cost of production chargeable to defendant in such a case would be in the ratio of 30 to 35 or 4/5 of the total cost. We are de*532tiding that the plaintiff may recover such items on the principle that it has been induced to occupy such a position and incur such expense in the first place because of the contract entered into between the parties, and losses sustained as well as profits denied are necessarily to be considered in placing plaintiff in the position it would have occupied had the contract been performed. Any failure by the defendant to take and pay for'the minimum amount of ice contracted for caused a loss to the plaintiff; such loss or damage, so far as fixed overhead charges are concerned, is in the ratio or proportion that the 20,000 tons sustain to the entire amount of ice manufactured and sold by the plaintiff, to wit, 20,000 tons plus any tonnage produced and sold by the plaintiff to outside parties. The proportionate part of the cost of manufacture or overhead expense, as referred to in the opinion, means that the defendant, having entered into a contract to take a minimum of 20,000 tons each year, must pay at least the overhead on that much ice each year. If outside parties should take 5000 tons of ice, the plaintiff’s overhead should be allocated to 25,000 tons of ice, and the defendant pay 4/5 of the overhead expenses, and 1/5 be borne by the ice sold to outside parties. If 20,000 tons were sold to outside parties, it would bear 1/2 the overhead. If only 9000 tons were taken by defendant 'and 5000 tons were sold to outside parties, the proportionate part is not 9/14 and 5/14, but is still 4/5 and 1/5; or if the defendant took no ice, and the plaintiff sold 5000 tons to outside parties, the defendant should still pay the overhead on 20,000 tons, and the 5000 tons pay 1/5 the overhead expense.
Counsel for the defendant also has filed a motion for rehearing. We have carefully read this motion, and we find nothing therein discussed or contended for that was not covered by our original opinion. Both motions are denied.