Court Opinion

ID: 9636173
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:18:46.03345+00
Date Added: 2024-06-11T12:06:37.228150
License: Public Domain

JOHNSEN, Circuit Judge
(dissenting in part).
I am unable to agree that the recovery on paragraph 11 of the complaint should be modified. In that paragraph the subcontractor sought to recover damages resulting from the cancelation of about 60% of the asphalt work in his contract, which reduced by $207,508 the total of $461,964 which he wa.s to have received for full performance. Instead of attempting to recover for his loss of profits on the canceled work, he merely sought to be made whole for the costs or expenses and other losses which he had sustained in having prepared to do the work.
These costs or expenses and other losses consisted (1) in having dismantled, shipped, and set up at the place where the contract was to be performed, and being ultimately obliged to return, an asphalt plant of larger capacity than otherwise would have been necessary or would have been committed to the job; (2) in having committed to the job also other excess equipment and machinery, which similarly was necessary to the performance of the contract as made, but which too was not us.able, or usable to capacity, when the .-amount of the asphalt work was reduced, .and which likewise would not have been thus committed except for full performance ■needs; and (3) in having lost the rental value of this excess equipment, which could have been rented to other contractors, if it had not been committed to his full contract performance.
The opinion of the majority holds that the subcontractor is entitled to his out-of-pocket costs or expenses in dismantling, shipping, setting up, and returning the excess-capacity asphalt plant and the other equipment which was unneeded as a result of the partial cancelation, but that he is not entitled to recover the rental value of its use for the time that it had been obliged to be thus idly tied down to the job. To me the loss of the use of the excess equipment on other jobs and the rental value which the subcontractor could have received therefor, if it had not been committed to the performance of the canceled contract-work, are just as real and direct damages as any rental payment made by him on someone else’s equipment would have been, which would have been recoverable under the opinion.
If the subcontractor had sought to recover loss of -profits on the canceled work, instead -of foreseeable special and limited damages from having prepared to carry out his contract and having been prevented from doing so, he would have been required under Arkansas law to have included the reasonable rental value of his equipment as a cost or expense item in arriving at his profits, even though he was the owner of the equipment. Singer Mfg. Co. v. W. D. Reeves Lumber Co., 95 Ark. 363, 129 S.W. 805. The present case seems to me merely to involve an application of this principle in transposition.
Arkansas also has specifically recognized in a number of cases — though they are not immediately in point on their facts or legal situations — that the rental value of property necessarily may be the basis for awarding contract damages, where there clearly has been an injury from a breach and rental value appears to afford the fairest and soundest standard of compensating for it. Dilday v. David, 178 Ark. 898, 12 S.W.2d 899; Lamkins v. International Harvester Co., Ark., 182 S.W.2d 203; and see also St. Louis, I. M. & S. R. Co. v. Saunders, 85 Ark. 111, 107 S.W. 194.
Restatement, Contracts, § 331(2), states the general rule thus: “Where the evidence does not afford a sufficient basis for a direct estimation of profits, but the breach is one that prevents the use and operation of property from which profits would have been made, damages may be measured by *851the rental value of the property or by interest on the value of the property.” See also 5 Williston on Contracts, Rev.Ed., § 1346A.
This principle has perhaps most commonly been applied to a situation where a contractor has failed to complete a building on time. See 125 A.L.R. 1242, 1244, Annotation. But I can see no difference, so far as the right to damages is concerned, between a situation where the owmer of a building has been prevented from making a profitable use of his building and one where the owner of machinery and equipment has been prevented from making a profitable use of his machinery and equipment. By the tying up of machinery and equipment which has a rental value, the rental value certainly has been as much lost as by the tying up of a building.
I think that the aggregate amount allowed by the trial court as damages for the costs or expenses incurred in making the excess equipment available, and for the rental value of such excess equipment while it was necessarily tied to the job, should be allowed to stand.