Troitino v. Goodman

35 S.E.2d 277, 225 N.C. 406, 1945 N.C. LEXIS 338

Opinion

Stacy, C. J.

Tbe first exception is to tbe order of compulsory reference entered in tbe cause. Tbe appellant states no reason or argument and cites no authority in support of tbe exception. Hence it is to be taken as abandoned. Rule 28, Rules of Practice, 221 N. C., 562. Moreover, it is without merit. Chesson v. Container Co., 223 N. C., 378, 26 S. E. (2d), 904.

Also, it may be noted, tbe findings of fact, made by tbe referee and approved by tbe trial court, are not subject to review on appeal, except where some question of law is involved, as they are supported by competent evidence. Wilkinson v. Coppersmith, 218 N. C., 173, 10 S. E. (2d), 670; Kenney v. Hotel Co., 194 N. C., 44, 138 S. E., 349.

Tbe case divides itself into three parts :

I. The Cletrac Tractors.

There is no allegation of fraud or misrepresentation in tbe sale of tbe Cletracs. Tbe plaintiff relied upon tbe advice of bis former partner in making tbe purchase. It was a cash transaction. McAden v. Craig, 222 N. C., 497, 24 S. E. (2d), 1. Tbe amount paid was $9,250. In addition, and as an integral part of tbe sale, tbe defendant agreed to put tbe equipment in first-class condition for immediate use and to secure leases therefor at current rental prices for at least three months. Tbe defendant was to receive 10% of all rents collected on leases secured by him.

Tbe defendant neglected to put tbe equipment in first-class condition for immediate use and failed to secure leases for tbe full first three months, as be bad agreed to do, albeit some rentals were collected during this period. As damages for breach of tbe agreement tbe plaintiff was awarded tbe difference between tbe purchase price and tbe value of tbe Cletracs with interest from tbe date of sale, plus tbe alleged cost of parts and repairs, plus tbe full rental value for three months following delivery of tbe machinery, less 10% of this rental value due tbe defendant as commissions. Berbarry v. Tombacher, 162 N. C., 497, 77 S. E., 412; Lumber Co. v. Mfg. Co., 162 N. C., 395, 78 S. E., 284.

Tbe question now presented is tbe correctness of tbe measure of damages applied by tbe court below.

As an inducement to the sale of the detraes the defendant agreed to put them in first-class condition for immediate use and to secure leases for them at current rental levels for a period of at least three months— the defendant to he paid 10% of all rents collected on leases secured by him.

It has often been said that in actions for breach of contract, the damages recoverable are such as may reasonably be supposed to have been in the contemplation of the parties when the contract was made. Chesson v. Container Co., 216 N. C., 337, 4 S. E. (2d), 886; Frick Co. v. Shelton, 197 N. C., 296, 148 S. E., 318; Monger v. Lutterloh, 195 N. C., 274, 142 S. E., 12; Lane v. R. R., 192 N. C., 287, 134 S. E., 855, 51 A. L. R., 1114; Builders v. Gadd, 183 N. C., 447, 111 S. E., 771; Sprout v. Ward, 181 N. C., 372, 107 S. E., 214; Gardner v. Tel. Co., 171 N. C., 405, 88 S. E., 630, L. R. A. 1916-E, 484; Tillinghast v. Cotton Mills, 143 N. C., 268, 55 S. E., 621; 15 Am. Jur., 454; 55 C. J., 872. The injured party is entitled to full compensation for his loss, and to be placed as near as may he in the condition which he would have occupied had the contract not been breached. Bowen v. Bank, 209 N. C., 140, 183 S. E., 266; 8 R. C. L., 433. “Generally speaking, the amount that would have been received if the contract had been kept and which will completely indemnify the injured party is the true measure of damages for its breach.” Machine Co. v. Tobacco Co., 141 N. C., 284, 53 S. E., 885, 8 L. R. A. (N.S.), 255.

Whether special damages arising from the breach of a contract may he regarded as “within the contemplation of the parties,” and therefore recoverable, would depend upon the information communicated or the knowledge of the parties at the time and the reasonable foreseeability of such damages. Iron Works v. Cotton Oil Co., 192 N. C., 442, 135 S. E., 343; Gardner v. Tel. Co., supra; Barrow v. R. R., 184 N. C., 202, 113 S. E., 785; Steel Co. v. Copeland, 159 N. C., 556, 75 S. E., 1002; Peanut Co. v. R. R., 155 N. C., 148, 71 S. E., 71; Hardware Co. v. Buggy Co., 167 N. C., 423, 83 S. E., 557; Hadley v. Baxendale, 9 Eng. Exch., 321; Gulf States Creosoting Co. v. Loving, 120 F. (2d), 195; 46 Am. Jur., 867.

The following expression of the pertinent test is to be found in the Restatement of the Law on Contracts, page 509:

“Sec. 330. Foreseeability of Harm as a Requisite for Recovery. In awarding damages, compensation is given for only those injuries that the defendant had reason to foresee as a probable result of his breach when the contract was made. If the injury is one that follows the breach in the usual course of events, there is sufficient reason for the defendant to foresee it; otherwise, it must he shown specifically that the defendant had reason to know the facts and to foresee the injury.”

Our own decisions are in full support of this statement. Pendergraph v. Express Co., 178 N. C., 344, 100 S. E., 525; Cary v. Harris, 178 N. C., 624, 101 S. E., 486; Kime v. Riddle, 174 N. C., 442, 93 S. E., 946; Winn v. Finch, 171 N. C., 272, 88 S. E., 332; Robertson v. Halton, 156 N. C., 215, 72 S. E., 316; Cable Co. v. Macon, 153 N. C., 150, 69 S. E., 14; Lumber Co. v. R. R., 151 N. C., 23, 65 S. E., 460; Furniture Co. v. Express Co., 148 N. C., 87, 62 S. E., 145, 30 L. R. A. (N. S.), 483; Spiers v. Halstead, 74 N. C., 620.

As a general rule, the loss or injury actually sustained, rather than the price paid or agreed to be paid on full performance of the contract, is the measure of damages for its breach. 15 Am. Jur., 445. The purpose is to save the innocent party from harm, or to make him whole, so far as can be done by monetary award. 15 Am. Jur., 449. The injured party is entitled to the pecuniary difference between his position upon breach of the contract and what it would have been, had the contract been performed. But he is not entitled to be enriched by the breach. Perry v. United States, 294 U. S., 330, 79 L. Ed., 912, 95 A. L. R., 1335; Texas Co. v. Pensacola Marine Corp., 279 F., 19, 24 A. L. R., 1336. It all comes to what was reasonably in the minds of the parties at the time of the making of the contract. The question of special damages was fully considered in the cases of Iron Works v. Cotton Oil Co., supra; Builders v. Gadd, supra; and Furniture Co. v. Express Co., supra.

The proper measure of damages for the breach of the agreement here under review would seem to be the difference between the value of the detraes as delivered and what the value would have been if they had been put in first-class condition for immediate use as promised, plus a fair rental value for a period of three months less commissions on such rental value. Guano Co. v. Livestock Co., 168 N. C., 442, 84 S. E., 774; L. R. A., 1915-D, 875; Underwood v. Car Co., 166 N. C., 458, 82 S. E., 855; Brewington v. Loughran, 183 N. C., 558, 112 S. E., 257, 28 A. L. R., 1543; Brown v. R. R., 154 N. C., 300, 70 S. E., 625; Mfg. Co. v. Oil Co., 150 N. C., 150, 63 S. E., 676, 134 Am. St. Rep., 899; Parker v. Fenwick, 138 N. C., 209, 50 S. E., 627; Mfg. Co. v. Gray, 126 N. C., 108, 35 S. E., 236; S. c., 129 N. C., 438, 40 S. E., 178, 57 L. R. A., 193; Pritchard v. Fox, 49 N. C., 141; Marsh v. McPherson, 105 U. S., 709; 46 Am. Jur., 863.

Beeovery is to be restricted to the difference, not necessarily between the purchase price and the value of the Cletracs, but to the difference between their actual value and what their value would have been if they had been put in first-class condition for immediate use. 46 Am. Jur., 863. The evidence here discloses quite a disparity between the purchase price of the tractors and what their value would have been if they had been put in the condition as promised. Jn 1942, plaintiff’s former partner, upon whose judgment the purchase was made, thought they were worth $4,600 apiece, or a total of $9,200. On the hearing, he said he had changed his opinion and he then believed they were worth “2000, if they had been in good mechanical condition.” This estimate was accepted by the referee and approved by the court below. So, if the plaintiff paid $9,250 for tractors worth only $2,000, he is not to recover for this slothfulness, in the absence of an allegation of fraud or overreaching on the part of the defendant. Liberty to contract carries with it the right to exercise poor judgment as well as good judgment. Knott v. Cutler, 224 N. C., 421, 31 S. E. (2d), 359. It is the simple law of contracts that “as a man consents to bind himself, so shall he be bound.” Elliott on Contracts (Vol. 3), sec. 1891; Feigel v. Products Co., 195 N. C., 659, 143 S. E., 186; Nash v. Royster, 189 N. C., 408, 121 S. E., 356; Clancy v. Overman, 18 N. C., 402.

True it is, that in a number of cases the rule for the admeasurement of damages for breach of warranty in the sale of personal property has been stated as the difference between the purchase price and the actual value of the goods sold, but these cases proceed upon the theory that, in the absence of evidence to the contrary, the purchase price is to be regarded as the value of the property. Guano Co. v. Livestock Co., supra; Critcher v. Porter Co., 135 N. C., 542, 47 S. E., 604; 55 C. J., 872; 46 Am., Jur., 866.

It follows, from what is said above, that there was error in approving the first conclusion of the referee.

Nor is the plaintiff entitled to recover for sums alleged to have been expended by him in an effort to put the Cletracs in condition for operation and service. This would be included in arriving at the difference between the value of the Cletracs and what they would have been worth had they been put in first-class condition for immediate use. Mfg. Co. v. Oil Co., 150 N. C., 150, 63 S. E., 676. It has been repeatedly held that where the articles delivered are not what the contract calls for, as in the case of defective machinery, the measure of the vendee’s damage is what it would reasonably cost to supply the deficiency. Marsh v. McPherson, 105 U. S., 709; Mfg. Co. v. Phelps, 130 U. S., 520, 32 L. Ed., 1035. In any event, however, the plaintiff is entitled to but one recovery for the deficiency. He may not have the difference in value and then the cost of eliminating this difference.

The case is not like Underwood v. Car Co., supra, or Kester v. Miller Bros., 119 N. C., 475, 26 S. E., 115, where the vendee was induced to make repairs at the instance of the vendor in an effort to see if the car in the one case and tbe engine in tbe other could be made to come up to representations.

It would seem tbat tbe exception to tbe third conclusion of tbe referee was well interposed.

II. The TD-40 INTERNATIONAL Tractor

Tbe plaintiff purchased an International Tractor from tbe defendant for $3,500 and paid $2,000 on account. As an inducement to tbe sale, tbe defendant agreed to equip tbe tractor with angledozer and pump, put it in first-class mechanical condition, and lease it at tbe prevailing rental price for a period of at least three months. Tbe referee found tbat this agreement bad been breached, and awarded tbe plaintiff a recovery of tbe cash payment of $2,000, with interest from tbe date of sale, plus tbe rental value of tbe tractor for a period of three months. It is not apparent upon what theory a recovery of tbe “cash payment” was allowed. If upon tbe theory of a rescission of tbe contract, tbe rental value for three months would not be recoverable, as this would be to rescind in part and to affirm in part. 13 C. J., 623. A plaintiff may not sue for tbe rescission of a contract and its breach at tbe same time. Lykes v. Grove, 201 N. C., 254, 159 S. E., 360. Tbe one is in disaffirmance of tbe contract; tbe other in its affirmance. Machine Co. v. Owings, 140 N. C., 503, 53 S. E., 345.

Nor has tbe plaintiff sought to rescind here. He is seeking to recover for breach of tbe contract, but there are no findings to support tbe recovery of tbe “cash payment” as an award of damages under tbe proper rule for their admeasurement. In a cash transaction, it is generally understood tbat tbe payment of tbe purchase price and tbe delivery of tbe property are to take place simultaneously or as concurrent acts. Hence, in an action for specific performance or for breach of tbe contract, it would seem tbat tbe plaintiff in tbe action, whether buyer or seller, would be required to show an offer on bis part to perform, or tbat such offer was rendered unnecessary by tbe refusal of tbe defendant to comply. McAden v. Craig, 222 N. C., 497, 24 S. E. (2d), 1; Hughes v. Knott, 138 N. C., 105, 50 S. E., 586; S. c., 140 N. C., 550, 53 S. E., 361; Blalock v. Clark, 137 N. C., 140, 49 S. E., 88; Ducker v. Cochrane, 92 N. C., 597; 55 C. J., 322 and 1116.

Much tbat is said above under tbe beading of The detraes may be applicable to tbe facts as they are finally established in respect of the sale and purchase of tbe TD-40 International Tractor. Tbe exceptions to tbe fourth and fifth conclusions of tbe referee should have been sustained and additional findings made.

III. The BacK Hoe.

On 12 November, 1942, tbe plaintiff purchased from the defendant a Back Hoe, paying therefor in cash the sum of $750. As an inducement to the sale, the defendant agreed to attach it to plaintiff’s Ensley Crane or Shovel and deliver same to plaintiff in first-class mechanical condition. This he neglected to do. The referee finds that the failure to attach the Back Hoe to the plaintiff’s crane or shovel rendered it worthless to him, and awarded the plaintiff recovery of “the purchase price of a Back Hoe, viz., $750, with interest thereon from November 12, 1942.” This was approved by the trial court.

It is in evidence, however, without contradiction, that the Back Hoe could have been attached to the crane or shovel for not “more than $25.” In fact, this is the plaintiff’s own testimony. The law, therefore, imposed upon the plaintiff the duty “to do what reasonable business prudence requires in order to minimize his loss.” Cotton, Oil Co. v. Tel. Co., 171 N. C., 705, 89 S. E., 21; Monger v. Lutterloh, supra; Oil Co. v. Burney, 174 N. C., 382, 93 S. E., 912.

It is true that where a party breaches his contract without any valid excuse, the courts are not disposed to permit him to prescribe the rights of the innocent party. Nevertheless, it is a sound principle of law that one who is injured in his person or property by the wrongful or negligent act of another is required to protect himself from loss, if he can do so with reasonable exertion or at trifling expense; and ordinarily, he will be allowed to recover from the delinquent party only such damages as he could not, with reasonable effort, have avoided. Construction Co. v. Wright, 189 N. C., 456, 127 S. E., 580; Mills v. McRae, 187 N. C., 707, 122 S. E., 762. “The general principle is fully recognized with us that, in case of contract broken or tort committed, the injured party should do what reasonable care and business prudence require to minimize the loss”-Hoke, J., in Yowmans v. Hendersonville, 175 N. C., 574, 96 S. E., 45.

In application of this principle, the exception to the referee’s sixth conclusion should have been sustained and additional findings made.

Where'a case is tried under a misapprehension of the law, or correct principles are erroneously applied, the appellate practice with us is to order another hearing. Coley v. Dalrymple, ante, 67; McGill v. Lumberton, 215 N. C., 752, 3 S. E. (2d), 324; S. v. Williams, 224 N. C., 183, 29 S. E. (2d), 744.

The cause will be remanded for further proceedings as to justice appertains and the rights of the parties may require.

Error and remanded.