Court Opinion

ID: 6544920
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:48.764824+00
Date Added: 2024-06-11T15:55:56.420004
License: Public Domain

Riddick, J. (after stating the facts). This is an action brought by the Hooks Smelting Company of Philadelphia against the Planters’ Compress Company of Helena to recover $520.87 as the price of two bronze worms and other castings which plaintiff made for the defendant company. The defendant set up, among other things, that the plaintiff was informed that the worms were needed by the 1st day of September, and that unless they were received the compress could not be run, and great loss would result to the defendant, and that the plaintiff thereupon agreed that it would ship the worms on or before the 1st of September, but that it failed to.ship them until the 30th of that month, and that when they were received they proved to be too large to go under the sector or arms of the compress, and for that reason were worthless, and that, as a result of the failure of the plaintiff to make the worms in accordance with the directions given it, and to deliver them as it agreed to do, defendant’s compress was stopped for several months, and defendant was put to considerable expense in other ways, the loss aggregating, in all, the sum of $7,322.59, for which it asked judgment. The result of the trial was that, while plaintiff asked judgment for the sum of $520.87, judgment was rendered against it for the sum of .$5=450- An examination of the bill of particulars filed with the complaint in connection with the evidence will show that the profits which the plaintiff might reasonably have expected to make on this contract did not probably exceed one or two hundred dollars, for we must remember that its business was smelting, and that the pattern making and finishing which make up nearly half the bill were done by other parties, upon whose work it does not appear that plaintiff expected any .profit. We are not saying that these parties were not, under the facts of this case, in some sense agents or employees of plaintiff, so as to make it responsible for the character of their work. We are simply calling attention to the fact that it does not appear that plaintiff was to get a profit on their work, except by securing the contract to do the casting required, and that on the whole contract its expected profits did not probably exceed the amount named. And yet for the failure to properly perform this contract plaintiff is subjected to damages nearly ten times greater than the gross amount to be paid it for all the materials it furnished. While the fact that the damages are greater than ordinarily follow the breach of contracts to furnish materials of that value does not show that the judgment is wrong, it calls attention to the case as one somewhat out of the beaten track of damage cases, and we therefore proceed with some interest to examine the law and the evidence upon which the judgment is based. The rule of law by which the defendant undertakes to support this judgment was first laid down in the case of Hadley v. Baxendale, 9 Exch. 341. In that case the plaintiffs were the owners of a steam mill. The shaft was broken, and they gave it to the defendant, a carrier, to take to an engineer, to serve as a model for a new one. On making the contract for shipment, the agent of the carrier was informed that the mill was stopped, and that the shaft must be sent immediately. He delayed its delivery, and in an action for a breach of the contract the owners of the mill claimed as specific damages the loss of profits while the mill was kept idle. It was held that, if the carrier had been informed that a loss of profits would result from delay on his part, he would have been answerable. But as, in the opinion of the court, it did not appear that he knew that the want of the shaft was the only thing which was keeping the mill idle, he could not be made responsible to such an extent. Now, we feel some doubt as to whether the learned court did not in that case refuse to follow its own rule. The court, it will be noticed, said that, if the agent of the carrier had been told that the mill could not run until the shaft was returned, and if that was the only cause for stopping the mill, the carrier would have been liable. But was not all this implied in what was told the agent? He was told that the mill shaft was broken, and the mill stopped, and that the shaft must be delivered to the engineer immediately, so that a new one could be made. It would seem that this was sufficient to give the agent notice that the stopping of the mill was the result of the broken shaft, or at least be sufficient to support a finding of a jury to that effect. If we look at what the court actually decided in that case, it seems itself to support the modification, subsequently engrafted in the rule as stated in that case, to the effect that mere notice is not always sufficient to make one liable for special damages. This modification we will notice further on. Mr. Mayne in his work on damages says of this case of Hadley v. Baxendale that it has been supposed to lay down three rules in respect to the recovery of damages. “First, that damages which may fairly and reasonably be considered as naturally arising from the breach of the contract, according to the usual course of things, are always recoverable. Secondly, that damages which would not arise in the usual course of things from a breach of contract, but which do arise from circumstances peculiar to the special case, are not recoverable unless the special circumstances are known to the person who has broken the contract. Thirdly, that where the special circumstances are known, or have1 been communicated to the person who breaks the contract, and where the damage complained of flows naturally from the breach of the contract under those special circumstances, then such special damage must be. supposed to have' been contemplated by the parties to the contract, and is recoverable.” Mayne on Damages (1st Am. Hd.), § 14. Now, the first two rules laid down by the decision in Hadley v. Baxendale have never been questioned or doubted, but the third rule, the one we are asked to enforce in this case, has often been criticised, and many cases could be cited where the courts have refused to apply it so broadly as stated in the principal case, for if thus applied it would in many cases result in obvious injustice. Suppose, for instance, that a large manufacturing establishment is driven by power from a single engine, and that, by reason of an accident to some small but important part of the engine or machinery, it becomes necessary to stop the operation of the whole plant until a new part can be made or the old one repaired. If thereupon a blacksmith or machinist is called in, and, for the price of a few dollars, undertakes to make the repairs, but through some mistake or unskillfulness the part supplied by him should fail to fit, requiring it to be remade and entailing still further delay, would any court hold that the blacksmith or machinist could be held liable for all the damages entailed by the delay when they were large, in the absence of a contract on his part to be thus liable, unless the notice and the circumstances under which he made the contract were such that he ought reasonably to have known that in the event of his failure to perform his contract the other party would look to him to make good the loss? Theoretically, under the third rule, as stated in Hadley v. Baxendale, the blacksmith, if he had notice, would be liable. ■but we know of no decision that has gone to that extent, but there are many cases in which such exorbitant claims for damages have been denied by the courts, on the ground that it would be clearly unjust to allow them. In the case of Fleming v. Beck, 48 Pa. St. 309, a millwright was employed to dress two pairs of burr mill stones at $16 a pair. He afterwards brought suit to recover the price, and the owner of the mill for defense alleged that the work was unskillfully done, and he claimed damages. In deciding the case on appeal the court said: “A very small part of the machinery of a mill or factor)'' may be so essential to its running that the want of it will stop operations until this part be mended or replaced, causing a large loss by suspension. But who has ever supposed that the blacksmith, millwright or mechanic who undertakes to repair or replace it, and whose compensation may be a few dollars, or even a few cents, is, by his implied contract 'to do his work in a workmanlike manner, to be held liable for ¡the large losses of being idle? But few men could be found to work at a risk so great for compensation so inadequate. But where, by the terms of the special contract or the facts brought into view at the time of his employment, the attention of the party is called to the fact that the risk is to be his, and he enters upon the duty with this consequence in his mind, he may be held to another measure of compensation.” It seems then that mere notice is not always sufficient to ■impose on the party who breaks a contract damages arising by reason of special circumstances, and the reason why this is so was referred to in a recent decision by the supreme court of the United States. In that case Mr. Justice Holmes, who delivered (the opinion of the court, after remarking that one who makes a contract usually contemplates performance, not a breach, of his contract, said: “The extent of liability in such cases is likely 'to be within his contemplation, and whether it is or not, should be worked out on terms which it fairly may be presumed he would have assented to if they had been presented to his mind.” Globe Refining Co. v. Landa Oil Co., 190 U. S. 540. Now, where the damages arise from special circumstances, and are so large as to be out of proportion to the consideration agreed to be paid for the services to be rendered under the contract, it raises a doubt at once as to whether the party would have assented to such a liability had it been called to his attention at the making of the contract unless the consideration to be paid was also raised so as to correspond in some respect to the liability assumed. To make him liable for the special damages in such a case, there must not only be knowledge of the special circumstances, but such knowledge “must be brought home to the party sought to be charged under such circumstances that he must know that the person he contracts with reasonably believes that he accepts the contract with the special condition attached to it.” In other words, where there is no express contract to pay such special damages, the facts and circumstances in proof must be such as to make it reasonable for the judge or jury trying the case to believe that the party at the time of the contract tacitly consented to be bound to more than ordinary damages in case of default on his part. Wills, J., in British Columbia Sawmill Co. v. Nettleship, L. R. 3 C. P. 235; Globe Refining Co. v. Landa Oil Co., 190 U. S. 540; McKinnon v. McEwan, 48 Mich. 106; Snell v. Cottingham, 72 Ill. 161; Horne v. Midland R. Co., L. R. 8 C. P. 131; Booth v. Mill Co., 60 N. Y. 487; Wood’s Mayne on Damages (istAm. Ed.), p. 50'; 1 Sutherland on Damages, § 52; 8 Am. & Eng. Enc. Law (2d. Ed.), 593. Now, considering that the agent of plaintiff who made the contract-had never seen the compress, and considering the large excess in the amount of the damages claimed against plaintiff for failing to perform its contract over the consideration agreed to be paid for making the worms, we feel confident that, if plaintiff had been told that any mistake on its part, or on the part of the pattern maker or machinist employed by it, might render ■it liable for the value of the use of the compress during the time of any delay caused by such mistake, it would never have undertaken the work without an additional- consideration for taking such a risk. But the question of whether notice of the special circumstances proved in this case was given to the plaintiff in such a way as to show that plaintiff knew or should have known that, in case of failure to carry out its contract, the defendant would reasonably expect it to make good the special loss sustained, and the plaintiff accepted the contract under such conditions, is a question, not of law, but of fact. Where one has full knowledge or notice of special circumstances which may cause special damages to follow if the contract is broken, the fact that he accepts the contract under such circumstances is generally held to be sufficient evidence to support a finding of a court or jury that he did so knowing that, in the event of his failure to perform his contract, the other party would reasonably expect that he should make good the loss incurred by reason of ¡the special circumstances where such loss flows naturally from the breach of the contract under such special circumstances. Wood’s Mayne on Damages (1st Am. Ed.), p. 50. But each case of this kind must rest on its own merits, and the findings of the jury upon the facts may be reviewed as in other cases, and will be set aside when justice requires that it be done. Having stated what seems to us the correct rule of law that should govern the question of damages in this case, let us look at the facts to see whether they support the findings of the jury. The secretary of the compress company testified that he and the president of the company went to Philadelphia, and had an interview with the secretary of the smelting company on the 30th day of June, 1898. At that time they explained to him fully the construction of the compress, and told him that the compress could not be operated without the worms, and that the business of the entire plant would be stopped until the worms could be made. He further stated that at that time the smelting company had already made a price on the castings, and that the price had been accepted on the part of the compress company by letter, but that no price had been-made as to the patterns and finishings, for the reason that this work was to be done by outside parties. The letters and actions of the parties tend to support 'the testimony of the secretary of the defendant that before he went to Philadelphia the plaintiff and the defendant had agreed on the price of the work, and that this price was to be the prices quoted for the bronze castings, as stated above, and, in addition thereto, such sum as might be required for pattern making and machine work. The reason for leaving the price of the patterns and machine work open was that the plaintiff did not do work of this kind at its own shop, but had to hire it done by outside parties. But it is clear, we think, that if the price of these bronze screw worms was fixed, so far as plaintiff was concerned, before the interview at Philadelphia took place between the agents of the parties, there is no ground upon which this judgment for special damages can stand. For it is well settled that, in order to make a party to a contract liable for special damages, he must have notice of the special circumstances at or before the making of ■the contract. He must, at the time he receives notice of the facts showing that upon a breach he will be subjected to special damages, be free toÉ insist on such additional compensation as he may 'choose to demand. But if the price for the work, or for the part in which 1"' is most interested, has been fixed, so that he must go ahead with his contract, then notice of the circumstances will have no effect to enlarge his liability. Globe Refining Co. v. Landa Oil Co., 190 U. S. 545. We will now notice another phase of this matter. It seems that when these parties met on the 30th of June both of them expected that the work would be commenced at once. One of the witnesses for defendant present at that interview testified 'that the plaintiff agreed that the work should be completed and delivered not later than the 1st day of September. The other witness for the defendant testified that the delivery should be made not later than the 15th of September. There thus seems to be some discrepancy between the testimony of these witnesses for the defendant, but it is probable that one of these witnesses was speaking of the delivery on the cars in Philadelphia, and the other was speaking of the delivery at Helena. The secretary of the plaintiff, who was present at that interview, testified that he made no promise to deliver at any particular time; that the parties representing the plaintiff told him that it was necessary for the machinery to be in Helena at the opening of the cotton season, which he understood was about the 1st of October, and that he told them he would do the best that he could; that he explained to them that the time required to make the machinery depended to a large extent on the pattern maker and machinist, and that on that account he could not name an exact date on which he could complete the work. However, as neither Cempini, the secretary of the smelting company, nor Faulkner, the secretary of the compress company, was a practical machinist, and as it was necessary to consult a machinist and a pattern maker aboet making the patterns, it was agreed between the two parties that, if it was found that further information was'wanted before the work could commence, Faulkner should be notified at New York, where he expected to stay awhile, so that he could return to Philadelphia, and give the information desired. It turned out that more information was needed, and in a few days Faulkner was notified, and returned to Philadelphia, and had a second interview with Cempini, at which a machinist and pattern maker were also present. On this interview it developed that Faulkner could not give all the measurements desired, and it was agreed that the machinist would make a sketch or drawing of the worm and sector, and indicate thereon the measurement he desired, and that this sketch would be sent to Faulkner, the secretary of the defendant, at Helena, and that he would have the measurements made, and write them on the sketch, and then return it to the plaintiff for the use of the machinist. There is a conflict in the testimony as to the purpose of getting these additional measurements. Faulkner, the secretary of the compress company, testified that it was only to test the alignment of the compress, to see if some defect in that respect was the cause of the trouble with the worms. On the other hand, the machinist, Faulkinau, testified that the measurements were needed in order to determine the distances from centers, so that he could tell what the dimensions of the worm should be, and that he so told Faulkner, ■the secretary of defendant. Whatever may be the truth about ■this matter, it is certain that both parties understood that the making of the worms was suspended until these measurements were obtained. The sketch was sent to Faulkner, at Helena, and in his letter of July 21, returning same, he said: “I return you herewith sketch of machinery with measurements inserted as asked for in your letter. * * * Please make me a bid on two bronze castings, one right and one left; also upon eight segments, four right and four left. * * * I want this work rushed, and hope you will rush me reply, and if it is satisfactory I will wire you to proceed with work, as it will save two days’ time. I hope this will be all the information required, and that the work will not be delayed longer than necessary.” The smelting company replied, quoting the prices on phosphor bronze worms in the rough, as before given, and in addition stating the price for the patterns and segments, and saying the price for finishing could not be given exactly, but that it would probably be about $100. On the 6th of August the compress company replied by letter saying: “Your letter of the 3d offering prices on work formerly left there is received, and prices are satisfactory. You will begin the work immediately, and rush to completion.” On the 10th of August the smelting company acknowledged the receipt of the letter as follows: “We are in receipt of your valued favor of the 6th instant, and note contents, for which please accept thanks. It is impossible just to state a definite date when the castings will be shipped, as it depends a great deal upon the pattern maker and machinist; but we will hurry the work and make shipment with all possible dispatch.” No reply or objection was made to this letter, and defendant either assented to the terms contained in it, or led plaintiff to believe that it did. A consideration of these letters and the testimony makes it quite plain that, if the plaintiff ever agreed to deliver this machinery on any certain day, it did so when the parties first met, and when they both believed that there was no obstacle in the way of commencing the work at once. But the postponement of the work for an indefinite time by consent necessarily abrogated the promise to complete the work by the 1st of September, if such promise was made. The parties not only recognized this, but they seem to have treated the contract of June 30 itself as abrogated. This is put beyond controversy by the letters of the defendant from which we have quoted above. It would be obviously unjust to hold plaintiff to his promise made on the 30th of June to deliver the machinery by the 1st of September, when both parties afterwards consented that the work should be delayed over a month. At the time he made the promise he had two months in which to complete his contract, but when the order was renewed he had only one-third of that time. Certainly, the defendant did not expect to hold plaintiff to this promise to deliver the machinery by the 1st of September, for, if it did, why did it, on returning the sketch with the required dimensions, request a new quotation of prices, thus intimating that in its opinion the contract was not closed, and that plaintiff must wait for further orders before proceeding with the work? This letter was written on the 21st of July, and the order directing plaintiff to proceed with the work was not written until the 6th of August; thus showing that defendant, by treating the contract of June 30 as abrogated and insisting on another quotation of prices, itself caused a loss of sixteen days. The machinery was shipped on the 30th of September, and, if we deduct the sixteen days, the loss of which is directly traceable to the act of defendant itself, we shall see that but for this act the machinery could have been shipped on the 14th of September. As the president of the company testified that the cotton season did not open - until the 15th of September, it is very plain that defendant would have suffered little, if anything, by the delay in the shipment, but for its demand for another quotation of prices — a demand which is utterly inconsistent with its contention that the contract of June 30th was still in force. We feel, therefore, no hesitation in saying that defendant is entitled under the proof here to no damages on account of the delay in the delivery of the machinery, unless it be shown that the plaintiff failed to exercise due diligence in the making of the machinery after it received the order mailed by defendant on the 6th of August. We will next inquire as to what damages the defendant may recover on account of defects in the machinery made by plaintiff, assuming that the evidence is sufficient to sustain a finding that these worms were not made in accordance with the directions given. If the fact that these worms would not go under the sector, and were therefore useless for the purpose required, was the fault of the plaintiff, and due to its failure to carry out its contract, then defendant would be entitled to recover on its counterclaim against plaintiff the amount required to replace the defective worms with other worms of the kind the contract called for. This amount, less any value received by defendants from the worms furnished by plaintiff, should go as a credit on the claim of plaintiff; and if the amount of these damages exceed the claim, the defendant would be entitled to recover the excess. As to the special damages claimed, assuming that defendant has made out a case for special damages under the law referred to, those damages should be limited to the reasonable rental value of so much of the compress plant as was stopped through the failure of plaintiff to perform its contract for a time long enough for plaintiff to replace the bronze worms. We confine this to the replacing of the worms, for the reason that the worms are the only part of the machinery made by plaintiff which defendant claims to be defective. Some of the segments broke, but it was said in argument by counsel for defendant that this was caused on account of defects in the worms. The evidence in the record here is not quite clear as to whether, in the absence of the worms, there was any usable value to any part of the compress plant or not. The company in its businsss charged for storage as well as for compressing; and if the warehouses of the defendant had still a usable value, that value should not be charged against plaintiff. Only the rental value of that part of the plant, the use of which was necessarily lost on account of the failure of plaintiff to make the worms as he agreed to do, should be charged to him under any circumstances. Again, the defendant can only be charged with the rental value only for the time necessarily required by defendant, acting with due diligence, to replace the defective worms. The time lost by defendant in attempting to use these defective worms, or damage caused thereby, cannot be charged to plaintiff, for he did not know or consent that the defendant should experiment by cutting down and using worms that were obviously unsuited to the work. There is some intimation in the testimony that, with a proper lathe, the worms could have been reduced in diameter and made to fit, but that defendant ruined them by attempting to cut them down in an improper way. If this had been proved, of course the facts would have called for a very different judgment, for, if defendant ruined the worms by its own act, it could not hold plaintiff responsible for a result which it brought about itself. Nor do we think that plaintiff can, under the facts in proof, be charged with the rental value of the plant, or any part of it, during the time required for the new worms to return from a distant place, for there is nothing to show that plaintiff had any notice that these worms could not be replaced at Helena or Memphis or some other nearby town. The fact that the order for the worms was placed in Philadelphia does not show that the worms could not have been procured in Helena or in Memphis, for some people prefer the foreign market. The fact that one does not patronize a home industry does not prove that there are no home industries. If a lady of Tittle Rock orders a gown in Paris, that does not prove that gowns are not made in Tittle Rock. While it may be that the” making- of bronze worms is not quite so universal as the making of gowns, still most towns of any importance now have facilities for making such castings, and, as it was not shown that plaintiff had notice that the castings could not be replaced at Helena, its responsibility for the rental value of so much of the plant as was lost by its failure to perform its contract must be limited to the time reasonably required to make and replace the defective worms. Nor does the evidence show that plaintiff had notice that a breach of its contract and a stoppage of the compress would cause the defendant to pay out wages to unemployed hands in order to retain them in its service, and, in the absence of such proof, evidence of the amount of such loss was improper, and should have been excluded, for, under the evidence as found in the record, there is no reason to believe that such damages were within the contemplation of the parties at the time the contract was made. As.to the instructions, it will only be necessary to say a few words. The instruction on the measure of damages seems to us to be much too general in its nature.. In closing his opinion in the case of Hadley v. Baxendale, supra, to which counsel on both sides have referred, Alderson, B., said: “The judge, ought, therefore, to have told the jury that, upon the facts then before them, they ought not to take the loss of profits into consideration at all in estimating the damages.” In other words, he held that the charge of the court should have been more specific. So, in this case the presiding judge should have instructed the jury that under the facts proved nothing could be allowed the defendant on account of delay in delivery, unless the evidence showed that plaintiff failed to use due diligence in making the machinery after it received the order to go ahead with the work. He should also have told them that no damages for stoppage of compress after delivery could be allowed beyond the rental value of that part of the compress which was necessarily stopped until new worms could be obtained, and then only for the time reasonably required to make and replace the worms. As the order for the new worms was made on the 8th of November, and the worms were completed on the 13th of December following, it can be seen that less than a month and a half was all the time required for that purpose. The law in reference to the circumstances under which special damages may be allowed was given to the jury in instructions 5 and 6, as requested by counsel for appellant, and it has no right to complain of the charge in that respect. The court, we think, committed no error in refusing the instructions asked by plaintiff, for each of them was more or less defective. Take, for instance, instruction No. 7, which is copied in the statement of facts. It assumes that the measurements furnished by defendant were furnished for the purpose of determining the dimensions of the worms and segments, whereas there was a conflict in the testimony on that point. A witness for defendant testified that those measurements were not furnished for the purpose of showing the dimensions of the worms, but only for the purpose of testing the alignment of the compress machinery. If this was the purpose for which the measurements were furnished, and if plaintiff, without consulting defendant, used these masurements in determining the dimensions of the worms, and thereby made them too large, it should suffer the consequences. On the other hand, if the defendant was informed that other measurements were needed to properly construct the worms, and thereupon undertook to furnish and did furnish measurements for that purpose, and if the plaintiff constructed the worms in accordance with such measurements, and the measurements proved to be incorrect, and for that reason the worms were made too large, and were not suited for the purpose intended, then, if the worms were in other respects properly made, and would have been suitable for the purpose intended, but for the error in measurements made by defendant, plaintiff would be entitled to recover the contract price, notwithstanding such defect, for the blame for that would under those circumstances rest on defendant, and not on plaintiff. It follows from what we have said that if defendant directed plaintiff to make the body of the worms slightly concave, as the old worms were made, so as to conform to the curve of the segment into the teeth of which the threads of the worms were to be geared, and if plaintiff disregarded this direction, and made the body of the worms straight, and if the failure of the worms to fit and go under the arms of the compress was due to this fact, and not to any error in measurements sent by defendant, then the consequences would rest on plaintiff, and not on defendant. In conclusion, we must say that not only was the instruction on the measure of damages too general, but the damages assessed by the jury seem to us clearly excessive. And, notwithstanding the verj’’ able brief and argument of counsel for defendant, we are of the opinion that under the facts in proof it would be very unjust to allow a judgment for such a large amount of damages to stand. The judgment is therefore reversed, and a new trial ordered.