In 1888 and 1889 the defendants were druggists and engaged in business at the city of New York. In those years the plaintiff was a manufacturer of ice cream
and ices at the city of Brooklyn, which he sold to persons and families for immediate consumption. The defendants knew the character of the business in which the plaintiff was engaged. December 28, 1888, the defendants, for $2, sold and delivered to the plaintiff a bottle of "carlet red," which they had previously manufactured, representing "that it was absolutely pure and harmless." The defendants knew that it was purchased for coloring certain kinds of ice creams and ices. One of the defendants testified that the formula for "carlet red" is: "One ounce of red aniline, half a gallon of alcohol, and two pounds of glycerine, which when mixed makes 96 fluid ounces of "carlet red." March 4, 1889, the plaintiff manufactured some strawberry ice cream and apricot ice, using "carlet red" to give them color, and sold them to about forty different families who were his customers. About two hundred persons, who ate of the cream and apricot ice, were sick with symptoms of arsenical poisoning. An analysis of the "carlet red" showed that it contained arsenic. Some of the persons who ate of these articles became slightly, and others seriously ill. By reason of the sickness, complaints, and the discovery by the chemists of arsenic in the "carlet red" the plaintiff destroyed all of the ice creams and ices colored with that material, and he asserts that the occurrence greatly injured his business. He brings this action to recover: (1) The value of the ice cream and ices destroyed, and (2) The damages occasioned by the loss of customers, of sales and profits thereon, subsequent to the occurrences complained of. The trial court submitted the questions of fact to the jury, in a charge which was not excepted to in any respect, except as to the rule of damages laid down, and we must determine the case upon the theory that the issues of fact were well found for the plaintiff. The important question presented by this appeal is what damages was the plaintiff entitled to recover?
The principle on which damages should be assessed is well stated in the recent case of Wakeman v. Wheeler Wilson Manf.Co. (101 N.Y. 205), where it is said: "When it is certain that damages have been caused by a breach of contract
and the only uncertainty is as to their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach. A person violating his contract should not be permitted entirely to escape liability because the amount of the damages which he has caused is uncertain. It is not true that loss of profits cannot be allowed as damages for a breach of contract. Losses sustained and gains prevented are proper elements of damage." * * * That the plaintiff was damaged by reason of the impurity of the "carlet red" has been found by the jury upon conflicting evidence, and the verdict is binding upon this court upon the questions of fact. This injury was brought about by the breach of the contract by the defendants. When one violates his contract or his duty to another, the theory of the law is that compensation shall be made for the injury directly and proximately caused by the breach of contract or duty. Ordinarily upon the sale and delivery of a chattel accompanied by a warranty of its quality, which is broken, the measure of damages is the difference between its value had it been as warranted, and as it proved to be. But it seems to be conceded that this rule is not applicable to the case at bar. If it is, the plaintiff was not entitled to recover the value of the property destroyed, but the difference in the value of the "carlet red" as it was warranted to be, and as it was found to be, which could not have exceeded the purchase price of $2. In case a manufacturer of goods sells them to a purchaser to be used for a particular purpose, which is known by the vendor at the time of the sale, a more liberal rule prevails than in cases where like articles are sold as merchandise for general purposes. In the former cases profits lost and expenses incurred may be recovered. (Passinger v. Thorburn, 34 N.Y. 634; Van Wyck v.Allen, 69 id. 61; White v. Miller, 71 id. 118; White v.Miller, 78 id. 393; Messmore v. N.Y. Shot Lead Co.,
40 id. 422; Booth v. Spuyten Duyvil R.M. Co., 60 id. 487.)
This broader rule rests on the theory that the vendor, having sold the articles with the knowledge that they were purchased for a particular purpose, should be held liable for such
damages as naturally flow from the breach of his contract, and which he, or any reasonable man, might apprehend would follow from the breach. In the present case the defendants knew the precise use which the "carlet red" was to be put to, and we think it is reasonable to hold that they should have apprehended that the use by the plaintiff of a poisonous or deleterious article would destroy his business. It seems to us that the natural and probable result of the sale of a poisonous, for a wholesome, article to be used by the purchaser in the preparation of food, to be distributed to and eaten by his patrons, would entail a loss of business and of profit to the purchaser. Had the defendants incorrectly, but without malice, reported that the plaintiff had sold unwholesome or poisonous ice cream, they would have been liable for the plaintiff's loss of custom, (Hallock
v. Miller, 2 Barb. 630; Bergmann v. Jones, 94 N.Y. 51), although not, in the case supposed, for punative or exemplary damages. The rules governing the assessment of damages are the same in contract as in tort, unless exemplary damages are recoverable. (Baker v. Drake, 53 N.Y. 211; 11 Sedg. Dam. [8th ed.] p. 29, § 30; 2 id. p. 4, § 429.)
In Crain v. Petrie (6 Hill, 522) an executory contract existed between Petrie and Gage, a butcher, by which the latter agreed to purchase of the former a quantity of mutton. Gage refused to accept of the mutton because he learned that Crain had sold diseased sheep to Petrie. The action was to recover damages for selling diseased sheep. The plaintiff sought to recover the damages occasioned him by the non-fulfillment of Gage's contract, and also the damages sustained by the refusal of others to purchase mutton of him. The court, in discussing the right to recover special damages, said that such damages "must appear to be the legal and natural consequences arising from the tort, and not from the wrongful act of a third party remotely induced thereby." * * * "That the refusal of Gage to receive and sell good and well cured hams, shoulders, etc., contrary to a previous arrangement with him, in consequence of the reports that the plaintiff had purchased a lot of diseased sheep of the defendant, was a
wrongful breach of contract by Gage, for which the plaintiff had an adequate remedy against him, and, therefore, such damages could not be recovered against Crain, who sold the sheep." The court, in its opinion, cites Vicars v. Wilcocks (8 East. 1) and Morris v. Langdale (2 Bos. Pull. 284), which lay down the same rule, but these cases have been expressly overruled. (Lumley v. Gye, 2 E. B. 216; Lynch v. Knight, 9 H.L. Cas. 577, 586, 590, 600; Green v. Button, 2 C.M. R. 707;
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In 1888 and 1889 the defendants were druggists and engaged in business at the city of New York. In those years the plaintiff was a manufacturer of ice cream
and ices at the city of Brooklyn, which he sold to persons and families for immediate consumption. The defendants knew the character of the business in which the plaintiff was engaged. December 28, 1888, the defendants, for $2, sold and delivered to the plaintiff a bottle of "carlet red," which they had previously manufactured, representing "that it was absolutely pure and harmless." The defendants knew that it was purchased for coloring certain kinds of ice creams and ices. One of the defendants testified that the formula for "carlet red" is: "One ounce of red aniline, half a gallon of alcohol, and two pounds of glycerine, which when mixed makes 96 fluid ounces of "carlet red." March 4, 1889, the plaintiff manufactured some strawberry ice cream and apricot ice, using "carlet red" to give them color, and sold them to about forty different families who were his customers. About two hundred persons, who ate of the cream and apricot ice, were sick with symptoms of arsenical poisoning. An analysis of the "carlet red" showed that it contained arsenic. Some of the persons who ate of these articles became slightly, and others seriously ill. By reason of the sickness, complaints, and the discovery by the chemists of arsenic in the "carlet red" the plaintiff destroyed all of the ice creams and ices colored with that material, and he asserts that the occurrence greatly injured his business. He brings this action to recover: (1) The value of the ice cream and ices destroyed, and (2) The damages occasioned by the loss of customers, of sales and profits thereon, subsequent to the occurrences complained of. The trial court submitted the questions of fact to the jury, in a charge which was not excepted to in any respect, except as to the rule of damages laid down, and we must determine the case upon the theory that the issues of fact were well found for the plaintiff. The important question presented by this appeal is what damages was the plaintiff entitled to recover?
The principle on which damages should be assessed is well stated in the recent case of Wakeman v. Wheeler Wilson Manf.Co. (101 N.Y. 205), where it is said: "When it is certain that damages have been caused by a breach of contract
and the only uncertainty is as to their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach. A person violating his contract should not be permitted entirely to escape liability because the amount of the damages which he has caused is uncertain. It is not true that loss of profits cannot be allowed as damages for a breach of contract. Losses sustained and gains prevented are proper elements of damage." * * * That the plaintiff was damaged by reason of the impurity of the "carlet red" has been found by the jury upon conflicting evidence, and the verdict is binding upon this court upon the questions of fact. This injury was brought about by the breach of the contract by the defendants. When one violates his contract or his duty to another, the theory of the law is that compensation shall be made for the injury directly and proximately caused by the breach of contract or duty. Ordinarily upon the sale and delivery of a chattel accompanied by a warranty of its quality, which is broken, the measure of damages is the difference between its value had it been as warranted, and as it proved to be. But it seems to be conceded that this rule is not applicable to the case at bar. If it is, the plaintiff was not entitled to recover the value of the property destroyed, but the difference in the value of the "carlet red" as it was warranted to be, and as it was found to be, which could not have exceeded the purchase price of $2. In case a manufacturer of goods sells them to a purchaser to be used for a particular purpose, which is known by the vendor at the time of the sale, a more liberal rule prevails than in cases where like articles are sold as merchandise for general purposes. In the former cases profits lost and expenses incurred may be recovered. (Passinger v. Thorburn, 34 N.Y. 634; Van Wyck v.Allen, 69 id. 61; White v. Miller, 71 id. 118; White v.Miller, 78 id. 393; Messmore v. N.Y. Shot Lead Co.,
40 id. 422; Booth v. Spuyten Duyvil R.M. Co., 60 id. 487.)
This broader rule rests on the theory that the vendor, having sold the articles with the knowledge that they were purchased for a particular purpose, should be held liable for such
damages as naturally flow from the breach of his contract, and which he, or any reasonable man, might apprehend would follow from the breach. In the present case the defendants knew the precise use which the "carlet red" was to be put to, and we think it is reasonable to hold that they should have apprehended that the use by the plaintiff of a poisonous or deleterious article would destroy his business. It seems to us that the natural and probable result of the sale of a poisonous, for a wholesome, article to be used by the purchaser in the preparation of food, to be distributed to and eaten by his patrons, would entail a loss of business and of profit to the purchaser. Had the defendants incorrectly, but without malice, reported that the plaintiff had sold unwholesome or poisonous ice cream, they would have been liable for the plaintiff's loss of custom, (Hallock
v. Miller, 2 Barb. 630; Bergmann v. Jones, 94 N.Y. 51), although not, in the case supposed, for punative or exemplary damages. The rules governing the assessment of damages are the same in contract as in tort, unless exemplary damages are recoverable. (Baker v. Drake, 53 N.Y. 211; 11 Sedg. Dam. [8th ed.] p. 29, § 30; 2 id. p. 4, § 429.)
In Crain v. Petrie (6 Hill, 522) an executory contract existed between Petrie and Gage, a butcher, by which the latter agreed to purchase of the former a quantity of mutton. Gage refused to accept of the mutton because he learned that Crain had sold diseased sheep to Petrie. The action was to recover damages for selling diseased sheep. The plaintiff sought to recover the damages occasioned him by the non-fulfillment of Gage's contract, and also the damages sustained by the refusal of others to purchase mutton of him. The court, in discussing the right to recover special damages, said that such damages "must appear to be the legal and natural consequences arising from the tort, and not from the wrongful act of a third party remotely induced thereby." * * * "That the refusal of Gage to receive and sell good and well cured hams, shoulders, etc., contrary to a previous arrangement with him, in consequence of the reports that the plaintiff had purchased a lot of diseased sheep of the defendant, was a
wrongful breach of contract by Gage, for which the plaintiff had an adequate remedy against him, and, therefore, such damages could not be recovered against Crain, who sold the sheep." The court, in its opinion, cites Vicars v. Wilcocks (8 East. 1) and Morris v. Langdale (2 Bos. Pull. 284), which lay down the same rule, but these cases have been expressly overruled. (Lumley v. Gye, 2 E. B. 216; Lynch v. Knight, 9 H.L. Cas. 577, 586, 590, 600; Green v. Button, 2 C.M. R. 707;S.C., Tyr. Gr. 118; Mayne Dam. [4th ed.] 661; Stark. S. L. [4th Eng. ed.] 320, 438; 1 Suth. Dam. 68; 2 Smith's L.C. 464.)
The only authorities referred to by the two text writers cited in Crain v. Petrie, are the two overruled cases.
Petrie's case is distinguishable from the one at bar in the fact that he did not purchase the sheep to sell to persons who were to use them for food, but he intended to sell them to a butcher who was to sell to consumers, besides it was not shown in that case that the defendant knew that the plaintiff purchased the sheep for the purpose of having them converted into food, even by others. Again Petrie did not sell the diseased sheep, so he sustained no loss by reason of their sale.
The case at bar is distinguishable from a class of cases in which the damages sought to be recovered arise from a breach of contract or of duty, or from the wrongful act of a third person, which breach of contract, duty or wrongful act may have been remotely caused by the person sued. In such cases the person injured has a right of action against those who have violated their contract or duty, or have committed a wrongful act to his injury, but here this plaintiff has no cause of action against his former customers who refused to patronize him because of his sale of poisonous ice cream.
The judgment should be affirmed, with costs.