Court Opinion

ID: 5459090
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:28:22.639688+00
Date Added: 2024-06-11T08:32:39.984552
License: Public Domain

By the Court, Hubbard, J.
I think, upon • well settled authority, the defendants are not entitled to recoup the loss of the gains and profits which they anticipated to realize, by the *589use of their machinery. They were, doubtless, upon the finding of the referee and the principle of his decision, entitled to recoup the loss of the value of the use of their machinery, &c., but not the profits of running it in their ordinary business.
It is perhaps difficult to state the precise measure of damages -to which they were entitled, growing out of the breach of the plaintiff’s covenant. The referee allowed interest on the value of the defendants’ investment in machinery, &e. while it remained unoccupied. This may not give a full indemnity in this respect, nor perhaps could ample compensation be made, short of going into speculative profits in the general business of the defendants, which the law will not allow, because of its great uncertainty, depending upon so many contingencies, and the success, it may be, of entirely collateral enterprises.
In a case like this, ordinarily, interest, together with damages for the delay of workmen, incidental expenses, &c. would present as safe and remunerative a rule, as could well be adopted. Another criterion might be adopted, which I think would be equally safe and entirely just. It is, in respect to the defendants’ mill, machinery, &c., to allow the value of the rent or use and occupation for the time, unoccupied. But no evidence was given by which to determine the value of the rent, and hence the referee could not adopt that measure of damages. The rule which he did adopt was, however, sound, and the only one which could have been adopted upon the evidence.
The general rule of damages applicable to executory contracts, for breaches, is well stated in the case of Freeman v. Clute, (3 Barb. 424.) “It is a general rule that the party complaining of a breach of an executory contract is entitled to indemnity for the loss which the non-performance of the obligation by the other party has occasioned, and of the gain of -which it has deprived him. But the gain contemplated by this rule is only that which is the direct and immediate fruit of the contract.” In that case the defendant agreed to make and prepare for the plaintiff a steam engine of ten horse-power, with a suitable boiler. There was a delay of three months, beyond the time stipulated, in putting them up. They were found to be *590defective, and further delay was occasioned. The learned justice, in deciding the case, says : “ I cannot agree with the counsel for the plaintiff that the estimated profits upon the manufacture of a specific quantity of flax seed into linseed oil, constitutes a, legitimate item of damages against the defendants. Such profits are entirely too speculative and uncertain to make them a measure of damages.” That case in its facts is quite analogous to the one at bar. The engine was intended to propel the plaintiff’s machinery in his oil mill. Damages were allowed for the use of the mill and machinery, fuel consumed, delay of workmen, and interest on the amount expended in purchasing stock for the mill. Upon what principle the value of the use of the mill and machinery was ascertained does not appear, but probably it was estimated by computing interest on the investment, by way of rent. The case, however, decides this point, that the anticipated gains and profits from the use of the engine in the plaintiff’s oil mill in his general business were not allowable. The measure of damages for the breach of an executory contract, which Pothier states as the rule of the civil law, has been adopted, and may be regarded as the settled law of this state. He says : “ In general the parties are deemed to have contemplated only the damages, and interest, which the creditor might suffer from the non-performance of the obligation in respect to the particular thing which is the object of it, and not such as may have been incidentally occasioned thereby, in respect to his other affairs; the debtor is therefore not answerable for them, but only for such as are suffered with respect to the thing which is the obligation.” (1 Evans’ Path. 91.) This rule is cited with approbation in Masterton v. The Mayor &c. of Brooklyn, (7 Hill, 61.) The gains and profits recoverable are those only which are the direct and immediate fruits of the contract, expressly stipulated for, or contemplated by the parties. The contract in Masterton v. The Mayor &c., was for the delivery of marble hewn in a certain manner, so as to be fitted for use in building. The defendants refused to receive all the marble stipulated for, .and the action was brought to recover damages upon the contract; for a breach of covenant. The *591plaintiff was allowed to recover the profits which he would have made had he been permitted to fulfill his contract. This was in analogy to that class of cases where a party is allowed to recover the profits of a good bargain in the purchase of a chattel which the other party refuses to deliver. He is allowed to recover the market value over and above the agreed price, as the legitimate fruit of his contract.
The case of Blanchard v. Ely, (21 Wend. 342,) it seems to me, is decisive of the case at bar. The head note, which is sustained by the case, is as follows : “ In an action for the recovery of the stipulated price for the building of a steamboat, the plaintiff is entitled to recover the full amount, without any deduction by way of recoupment of damages to the defendant in consequence of loss sustained by him for the loss of trips, and the profits resulting therefrom, occasioned by defects in the boat or its machinery. The defendant in such case is, however, entitled to an allowance for moneys necessarily expended by him in supplying defects in the vessel or its machinery, &c. The courts of common law seem inclined to adopt the rule of the civil law in respect to damages for breach of contract relating to personal property, which is, that the party entitled to claim performance may claim damages for the non-performance in respect to the particular thing, the object of the contract; but not such as may have been accidentally occasioned thereby in respect to his other affairs, &c.”
In the case at bar, the use of the defendant’s machinery, <fcc. may, upon the question of damages, be regarded as the object of the contract and within the legal contemplation of the parties, but certainly not the gains and profits of the general business of the defendants connected with that machinery. Such profits are no more allowable than the loss of trips and the profits therefrom, of the running of the steamboat, in Blanchard v. Ely.
The case of Davis v. Talcott, (14 Barb. 611,) seems to sustain the defendants in claiming the damages which they sought ,to recoup on the trial. That case was similar to this in its *592facts. The action was to recover damages for the defective execution of a contract to construct and put up machinery in a flouring mill. It was held that the plaintiff was entitled to recover, as one item of damage, “ such sum as the mill would have earned during the time it was necessarily delayed in consequence of the breaking or defect in the machinery; taking the ordinary earnings of the mill, after deducting from the gross earnings the expenses of running the same, as the net profits.” This decision was made by a divided court, one member dissenting, and having examined the authorities cited, I think they do not warrant the decision made. I have already referred to most of them. The case of Dewint v. Wiltse, (9 Wendell, 325,) cited as authority, establishes a liberal rule of damages. It is to be observed that the opinion of the court is' not published; the reporter’s note is simply given, with a brief statement of facts. The grounds of the decision are not stated. It may be that the loss of the rent of the tavern, store, &c. was a subject of damage expressly stipulated for in the contract of the parties, or it may have been recovered on the ground suggested by Justice Cowen in Blanchard v. Ely, (supra.) He says: “ The case of Dewint v. Wiltse must, I think, have been regarded by this court as a fraudulent breach of a covenant to keep a ferry in repair, which materially benefited the plaintiff’s tavern.” It may be questionable whether even a fraudulent breach could enhance the damages beyond those which are the subject of the contract itself and directly arising from it. However that may be, or whatever may have been the ground of the decision in Dewint v. Wiltse, I think it should not be- held authority to allow the recovery of damages beyond those connected with the particular thing which is the object of the contract. I cannot therefore concur in the decision of Davis v. Talcott.
It follows that the defendants were not entitled to recoup the loss of their anticipated profits in running their planing mills and machinery. These profits are not immediately and necessarily connected with the object of the contract. They are but the result or consequence of the derangement and cessation of *593the defendants’ general business; too speculative, uncertain and remote to be the subject of legal damage.
[Oneida General Term,
January 1, 1855.
The judgment and report of the referee must therefore be affirmed.
Hubbard, Pratt and Bacon, Justices.]