Vilter Mfg. Co. v. Abeel

191 F. 272, 111 C.C.A. 650, 1911 U.S. App. LEXIS 4940

• Court: Court of Appeals for the Fifth Circuit
• Decided: October 2, 1911
• Docket: No. 2,113
• Status: Published

Opinion

PARDEE, Circuit Judge

(after stating the facts as above). This case has been argued as though it were pending before us upon appeal, and all the matters decided in the court below were open for our examination; but we find that the case is before us on writ of error, and only rulings on matters of law can be reviewed.

The first 20 assignments of error which complain of the rulings of the court below on the pleadings are none of them well taken, because under the agreement all the issues between the parties were to be presented, and on the trial all the evidence offered by each party was received without objection, and was before the court for consideration, so that, if any of the rulings in question were subject to criticism, as charged, no prejudice resulted to either party. This seems to he clear for the further reason that the finding of the court was limited to the one proposition, breach of warranty vel non, and the damages resulting therefrom, which matter was well pleaded. The twenty-first to twenty-eighth, inclusive, and the thirty-sixth to forty-sixth assignments, inclusive, charge errors in findings based upon conflicting evidence, and do not present questions which we are authorized to consider and decide.

[1] The twenty-ninth and thirtieth assignments charge that certain items of damage-allowed by the trial court relating to tearing down old building and the erection of a new one are too remote and uncertain and not such consequential damages as under the law the plaintiff below would be entitled to recover in this action. The court found that there was a breach of warranty, and that the plaintiff below had not accepted, and was not obliged to accept, the plant contracted for. The pleadings and the evidence show and the court substantially found that the plaintiff below had incurred the expense and loss of the two items of damage, and that such expense and loss were incidental to and caused by the breach of warranty. The contract could not well have been executed by the defendant below without the tearing down of the old building and the erection (if the new, and the expenses and loss necessary must have been within the contemplation of the parties making the contract. In principle and under all the authorities such damages proved with certainty are recoverable. These two assignments are overruled.

The thirty-first assignment further complains that the item of damage allowed for erecting a plate tank building was erroneous, for the reason that the evidence shows that the said building remains upon the plaintiff’s premises, and is of value to olaiutiff, and, in fact, could be utilized by plaintiff in his business. This assignment raises questions depending on the evidence which we are bound to assume were passed upon by the court below and found against the defendant, and we think we are concluded by the finding of the court.

The remaining assignments of error attack the allowance of the sum of $13,540 on account of rent of the property for the year 1907, which is one of the items found by the court and included in the judgment, for the reasons (1) that the evidence in the record conclusively shows that the plaintiff operated his whole plant during the season of 1907, his old plant as well as the new plant installed by defendant and operated his old plant, to its full capacity, and manufactured and sold the output thereof in the regular course of his business; (2) that the evidence in the record shows that plaintiff operated the said property and plant and utilized the same and produced and sold a large quantity of ice therefrom in the regular course of his business during the season of 1907, and the evidence does not disclose how much ice was so produced and sold, and, under this state of facts, there was no basis to-calculate the loss to plaintiff for rental value of the said season of 1907, and therefore there was no sufficient evidence in the record by which to calculate the loss to plaintiff in rental value; (3) because the rental value of the property as sued for by plaintiff herein is not such element of damage as under the law is cognizable in an action of the character brought by the plaintiff herein, and therefore cannot form any proper basis for recovery.

Notwithstanding the wide scope of the pleadings and the evidence adduced, all of which is preserved in the record, the finding of the-trial court has limited the action to one for breach of warranty, and, that having been decided in favor of the plaintiff, the damage he can recover must be referable to and flow from the breach.

As to the allowance of $13,540 “for rent of the property, the finding and the judgment are indefinite. Is it for rent of plaintiff’s old plant?' Or for the ice plant and Corliss engine contracted for and held to be covered by the warranty? Or, again, is it for rent of the whole, the old and the new? In the pleadings the only specific reference to rental value for 1907 is the following:

“Plaintiff would further represent that said new engine and condenser were not installed on time, but when the same were installed, at the expense hereinabove set out and alleged, that the same failed to perform the service which it had been guaranteed and represented that it would do and perform, and said plant failed to produce said 50 tons of merchantable plate ice every 24 hours, and, in addition thereto, to furnish sufficient refrigeration for storage and the making of said 25 tons of can ice as hereinbefore alleged. And said defendant failed to install said plant and have same in running order during said season of 1907, as it had agreed and contracted to do, and that, by reason thereof that plaintiff lost the reasonable rental value of said plant for said season of 1907, which was the sum of $20,000.”

Inferentially this must be taken to refer to the ice plate plant, Corliss engine, and condenser, to be installed by the defendant. If we look to the evidence, we find that during the year 1907 the plaintiff used his old plant more or less in connection with the Corliss engine furnished by the Vilter Company, and. manufactured and sold the output thereof in the regular course of his business, and that during the-year the ice plant and Corliss engine contracted for were so far installed and used by the plaintiff that a large quantity of ice, though not as much as the guaranty called for, was thereby manufactured, and the same was sold by the plaintiff in his regular course of business. In other words, the plaintiff below had the Corliss engine contracted for in use in connection with the ice plate plant contracted for and the old can plant, and both plants were more or less operated during the season for the use and benefit of the plaintiff.

Under the findings of the trial court, the ice plate plant and the Corliss engine belonged to the defendant below, and in the judgment all the advances of plaintiff below are returned to him with interest and his other proved damages are allowed, so that it would seem by the judgment the plaintiff below without investment of capital therein is allowed a large sum “for rent of the property” that he did not own and of which lie had the use, or else “for rent of the property” he did own and of which he had the use and benefit, or both. The only evidence adduced bearing on the rental value of “the property” for the year 1907 is that of the plaintiff below as follows:

“I can’t answer ‘yes’ or ‘no,’ that I know the reasonable rental value of an ice plant that will make 50 tons of clear merchantable ice erected as the plant was erected by me for the installation of the Vilter machine. I have never heard of a plant — have never had any experience of a plant being rented, and don’t know that I ever heard of a plant being rented. The only thing I could answer would be from the money that was invested in it, as 1 would pass upon any other question as a business man, what It would be worth, as a business man, from the money invest,ed, what it ought to bring, I think 1 could have an idea of the rental value of the plant. A plant of that character except based upon the returns that I think the investor ought to have out of his money that he has invested in it, upon the basis of the — if he was called to pass upon any other question of that kind, as a business man. Man come to me and ask me what that property ought to be worth, what we want to rent this property; now what is that property worth? what ought it to bo worth for rental, what ought this property to be worth? The question I would ask him, what is it capable of doing, what are its profits, what is the money invested, that would be the only way you could get at a question of that kind. 1 have had no experience with ice plants except to pay bills. The Ice business has been before we got into this scrape very profitable. A man renting an ice plant — it would be quite a departure from the usual business, and he would have to find out what the plant was worth, what the rental value was worth. He would, predicate that perhaps upon the value of the property invested, and the man especially that was renting the property would want to know something about what basis the figures were made. He would want to know how much he was giving — how much he was giving this man to take the responsibility off his hands of running this plant, lie would want to know something about what the man was expected to make out of it; and that is about the only way I could know to- gei, at it. I never heard of an ice plant being rented. I know the profit or profits which that plant has made for a number of years. That is the old plant. The average profit which was made from that old plant for a number of years was between $25,000 and §30.000. perhaps nearer $30,000 than §25,000. But there were years when we lost money. The cause of the loss of money was our ice wars and competition wars between ourselves, selling ice and giving it away just for competition. We liad no other regular causes. No bad seasons, nothing of that kind. It was simply ice wars that made us lose money. The investment in the Vilter plant with the buildings and equipment necessary to run it and the value of tlie ground was over $100,000, have spent over $100,000, that was what was paid for the Diesel engine and what was paid Vilter, what money I absolutely put into the plant. The two payments were in payment of the Diesel engine and the other payment to the Vilters. That does not include the value of the ground. My last trial balance shows an investment there of over $240,000. The property here is worth $50,000. The Vilter plant uses half of it I should suppose. The ground would be worth about $25,000. I don’t think it uses quite half of it, but then it occupies space that we can’t use for any other purpose. I don’t think it occupies as much as the other. The reasonable rental value of the Vilter for the year 1906 was $20,000. Por 1907, if there had been an engine installed which was capable of producing 75 tons of ice per day, the reasonable rental value for that year would he possibly $25,000. I would like to he allowed to make a statement in that regard. In the management of that ice plant in all of those years, my principal business was looking after the finances. So far as the management was concerned, I didn't know anything about it. I know we paid dividends, and that the investment made from $25,000 to $35,000 a year. It made fully $25.000 a year always, when we didn’t have those troubles. They were not trade troubles, but fights, ice wars, when we sold the Ice for anything we could get for it. In predicating it entirely upon the conditions that surrounded us at that time — these plants are old plants and had become run down to a considerable extent. And with such plants as that we could make $25,000 a year, as we did with those three old plants. If we could do that, what could we expect to make with ail these new arrangements that we were contracting for? It is upon that hypothesis that I bank my judgment.”

This evidence, given full effect in favor of the plaintiff below, is that the rental value of the property old and new with an engine installed that would produce 75 tons of ice per day (the guaranty was for 50 tons for the plate ice tank and refrigerating power for 25 tons of can ice per day) was possibly $25,000, and taken as given by the witness was speculative, and his estimate is wholly based on contingencies and uncertainties. “Damages must be certain both in their nature and in respect to the cause from which they proceed. Hypothetical or speculative damages are not recoverable.” Sedgwick, Elements of Damages, p. 24. See, also, pages 20, 21. “For breach of a warranty the purchaser’s measure of damages is the difference between the actual value of the subject of sale and the value which it would have had at the time of the sale, if it had corresponded with the warranty.” Sedgwick, Elements of Damages, p. 270.

In Howard v. Stillwell & Bierce Mfg. Co., 139 U. S. 199, 206, 11 Sup. Ct. 500, 503 (35 L. Ed. 147), the general rule that anticipated profits are not recoverable on breach of a contract is recognized, and the court says:

“The grounds upon which the general rule of excluding profits in estimating damages rests are (1) that in the greater number of cases such expected profits are too- dependent upon numerous uncertain and changing contingencies to constitute a definite and trustworthy measure of actual damages: (21 because such loss of profits is ordinarily remote and not, as a matter of course, the direct and immediate result of the nonfulfillment of the contract; (3) and because most frequently the engagement to pay such loss of profits, in case of default in the performance, is not a part of the contract itself, nor can it he implied from its nature and terms. * * * But it is equally well settled that the profits which would have been realized had the contract been performed, and which have been prevented by its breach, are included in the damages to be recovered in every case where such profits are not open to the objection of uncertainty or of remoteness, • or where from the express or implied terms .of the contract itself, or the special circumstances under which it was made, it may be reasonably presumed that they were within the intent and mutual understanding of both parties at the time it was entered into.”

In Ramsey et al. v. Tully et al., 12 Ill. App. 470, we find:

“It is quite unnecessary to multiply the citation of cases. The principle which underlies them all is that where one of two' contracting parties, not being himself in default, suffers a lass by the wrongful default of the other, he ought to receive full and just compensation therefor. His recovery, however. is to ho limited to snch damages, in the language of Baron Alderson in Hadley v. Baxendale, ‘as may fairly and reasonably bo considered either «.rising naturally, i. e., according to the usual course of things, from the contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as a probable result of the broach of it’ This definition excludes all such damages as are remote or merely speculative.’’

The attempts to discriminate between an estimated rental value o£ property not delivered in time or not in full compliance with the contract and anticipated profits have been frequent, and some have been successful.

Griffin v. Colver, 16 N. Y. 489, 69 Am. Dec. 718, a leading case on the subject, held:

"Upon the breach of a contract to deliver at a certain day a steam engine built and purchased for the purpose of driving a planing mill and other definite machinery, the ordinary rent or hire which could have been obtained for the use of the machinery whose operation was suspended for want of the-steam engine may be recovered as damages.”

Consumers’ Pure Ice Co. v. Jenkins, 58 Ill. App. 519. In a suit, for balance due on contract for ice plant, and there was delay in completion and delivery, the vendee was allowed to recoup damages for the delay based on rental value. Maryland Ice Co. v. Arctic Ice Machine Mfg. Co., 79 Md. 103, 29 Atl. 70, is to the same effect. Standard Supply Co. v. Carter & Harris, 81 S. C. 181, 62 S. E. 150, 19 L. R. A. (N. S.) 155. “Held, the failure to deliver an engine at the time agreed upon by which a purchaser is deprived of putting in operation his cotton-ginning outfit for a time, the manufacturer having been notified of all the facts, the purchaser is entitled to a fair-rental value of the plant for the time it was idle, because of manufacturer’s default." Tompkins v. Dallas Cotton Mills, 330 N. C. 347, 41 S. E. 938, is to the same effect. Paola Gas Co. v. Paola Glass Co., 56 Kan. 614, 44 Pac. 621, 54 Am. St. Rep. 598. In a suit on a contract to furnish gas to run a glass factory damages for breach allowed based on the rental value of the property to be operated while it was idle. Tn Dixon Woods Co. v. Phillips’ Glass Co., 169 Pa. 167, 32 Atl. 432, damages for breach of contract held to include fair compensation for the use of the plant, while deprived of its use by plaintiff’s breach. In Wall v. Ice & Cold Storage Co., 112 Mo. App. 659, 87 S. W. 574, this rule was approved. If the plaintiffs failed to deliver the cans mentioned in the time agreed on, the amount of damages to which the defendant is entitled is the reasonable value of the use of the cans from the time they should have been delivered until the date of this delivery. In Hooks’ Smelting Co. v. Planters’ Compress Co., 72 Ark. 292, 79 S. W. 1052, in regard to rental value, it was held:

“Assuming that the defendant made out a ease for special damages, under the law those damages should have been limited to the reasonable rental value of so much of the compress plant as was stopped through the failure of the plaintiff to, perform his contract.”

In Livermore v. Union S. & C. Co., 105 Tenn. 187, 58 S. W. 270, 53 L. R. A. 482, the Supreme Court of Tennessee approved this charge:

“But if you find that it was in the contemplation of the parties that, in the event of default by the defendant to furnish suitable and proper machinery, the loss of the use of the compress would necessarily ensue, and if you find as a necessary result of the explosion due to the negligence of the defendant in furnishing a defective cylinder that the plaintiff was deprived of the use of the compress, 'plaintiff would be entitled to recover the rental value of thfe compress, as shown by the,evidence dhring the period it was so deprived of its use.”

The digests will show many more cases on the same line, but the writer has found none substantially differing from the above in principle, and none where the vendee was allowed rent for any property when he was not delayed in using the same. If we assume in the case in hand that the rent allowed was for the use the vendee might have made of the plant contracted for if it had filled the guaranty, and we consider the undisputed facts as shown by the .record, we have a case .of entering the field of speculation to find damages based on “numerous uncertain and changing contingencies” and’ which damages may well be held remote, and not contemplated by the plaintiff in error at the ■time of the contract.

[2] The record presents a case where the plaintiff in error installed an ice plant .for the defendant in error with a guaranty that it would produce 50 tons of plate ice per day. It fell short by some few tons of the production, but it was worked the whole season for the use and benefit of the defendant in error. For the breach of the guaranty the contract is practically rescinded, the plaintiff in error is, left with an ice plant and engine at his own risk on defendant in error’s land, and is, besides, condemned to refund all advances with interest and to pay large sums for damages, more or less certainly proved, and, in addition, to pay the defendant in error in the guise of rent the sum of $13,540, more than half the contract value of the ice plant installed, as what he might have made if the plant had come up to the guaranty and he could have rented the same. If the defendant in error had accepted and paid for the ice plant and engine installed, his damages for breach of the guaranty, under some of the cases above cited, might have included diminished rental value of the plant if the evidence had been certain. An entirely different case is presented. Defendant in error does not accept nor pay for the ice plant and engine. All his proved proximate damages are allowed. He had the use of the plant without paying rent through the season, and we find no evidence in the record that he could have sold more ice than that which was actually .produced by the plant and sold by him to his trade; and this would seem to leave no just claim for rental value of machinery on the ground of deprivation of the use of same nor for delay or hindrance.

In addition, we find that the only evidence before the court on which a finding of any specific sum'as rental value could be based was insufficient to support any finding for rent; the same being “speculative and based on numerous circumstances and changing contingencies.”

The thirty-fourth and thirty-fifth assignments of error are well taken, and a reversal of the judgment of the Circuit Court necessarily follows, unless the amount of $13,450 “for rent of property” is eliminated.

The judgment of the Circuit Court is reversed and the cause is remanded, with instructions to grant a new trial, unless within 30 days from filing the mandate of this court the defendant in error shall enter a remittitur on the judgment for $13,450, in which case the judgment as so reduced shall stand affirmed.