Washington & Georgetown Railroad v. American Car Co.

5 App. D.C. 524, 1895 U.S. App. LEXIS 3566

• Court: Court of Appeals for the D.C. Circuit
• Decided: March 5, 1895
• Docket: No. 402
• Status: Published

Opinions

Mr. Chief Justice Alvey

delivered the opinion of the Court:

This was an action of indebitatus assumpsit brought by the American Car Company, a corporation of the State of Missouri, against the Washington and Georgetown Railroad Company, a corporation of the District of Columbia, to recover the balance of the contract price for one hundred and twenty cable street cars, delivered to and accepted by the defendant.

The defendant company was incorporated by an act of Congress in 1862, and had been operating lines of street cars in the city of Washington, drawn by horses, for nearly thirty years, when it was deemed necessary that there should be a change in the motive power of the road. The Congress of the United States, by acts of March 2, 1889, and August 6, 1890, required the defendant to wholly dispense with horse power on the lines of its road, and to substitute therefor either an underground cable worked by steam,or other power mentioned in the statutes. By the act of 1890, it was provided that if the company should fail to so change its power on all its lines within two years, its franchises as a corporation should be forfeited. At the time of the contract made by the defendant with the plaintiff for furnishing the 120 cars, the substitution of underground cable for horse power on the Seventh street line of the defendant’s road, had been made, and the cars thereon were being operated by cable power; and the time limited for making the change on its other lines would expire on the 6th of August, 1892.

It was in view of this state of things, and to conform to the requirements of the acts of Congress, that the defendant ■company, on the 21st of November, 1891, entered into a ■contract with the plaintiff company for the construction and ■delivery by the latter company of the 120 cable cars, according to specifications.

This contract, as shown in evidence, was as follows:

“ St. Louis, Mo., November 21st, 1891.

"American Car Company hereby agrees to furnish and deliver to the Washington and Georgetown Railroad Company f. o. b. cars in Washington, D. C., 120 open trail cars for cable road, complete, for the sum of seven hundred and forty-nine dollars each, and to receive in part payment therefor 20 open cars, to be selected by the said railroad company, for the sum of five thousand (5000) dollars, f. o. b. cars in Washington, D. C. Delivery of new cars to be made in May, June, and July, 1892, and delivery of old cars to be made within thirty days after the opening of the new cable lines of said company. Specifications as follows: General Style and Finish — Similar to open cars now in use on 7th St. line of said companyetc.

The evidence shows that no cars were delivered until the 31st of July, 1892, and then only 20, and deliveries were made in various numbers at different times from the time of the first delivery to the 10th of October, 1892, when the last two cars of the 120 were delivered. Large payments were made by the defendant on account of cars received; but, according to the claim of the plaintiff, there remained a balance due, after the last delivery of cars, of $18,238.89, and for which this suit was brought.

The declaration contains the common counts in indebitatus assumpsit, according to the simplified form, and does not count upon the special contract. It is, however, entirely competent to the plaintiff to sue in indebitatus assumpsit, and give in evidence the special contract, not as proof of the promises declared on, but as furnishing the rule by which the damages for its breach are to be measured. And this right of the plaintiff to declare generally, as on the common counts, and use the special contract in evidence, is not affected by the fact that the work was not completed and delivered until after the time fixed for its completion and delivery. Brown v. Foster, 51 Penn. St. 165.

To this declaration of common counts in assumpsit, the defendant pleaded non-assumpsit and set-off; and filed with the plea of set-off, particulars of demand, claiming unliquidated damages for the violation of contract for the construction and delivery of the cars, in the non-delivery within the time specified, to the amount of $96,000.

After the trial had commenced and proceeded to a certain stage, the defendant filed notice of recoupment, as against the claim of the plaintiff; and in that notice the claim is set up — 1st. That the plaintiff failed to deliver to the defendant any of the said cars in May, June, and July, 1892, as required by the contract, and failed to deliver a large number of the said cars, to wit, sixty, until after the 1st of October, 1892, and failed to complete the delivery of all of said cars until after the 1st of November, 1892, whereby the defendant was deprived of the use and benefit in its business of the undelivered cars, and of the profits that would have accrued to the defendant, had the stipulations of the said contract, as to the delivery of said cars, not been violated by the plaintiff, and had said cars been delivered to the defendant according to the contract; and the defendant claims, by reason of the default of the plaintiff, the sum of $50,000.

There was evidence given tending to support the issues made by the pleadings, and, upon- the whole evidence, the respective parties prayed for instructions to the jury, as to their rights under the issues.

The prayers on the part of the plaintiff were all granted, and those on the part of the defendant, except the sixth, seventh and ninth in the series, were rejected by the court; and the defendant excepted to the rulings of the court in granting the prayers of the plaintiff, and in rejecting those of the defendant; and it also excepted to certain designated parts of the court’s charge to the jury.

The defendant, as appellant in this court, assigned several errors upon the rulings of the court below; but most of such errors assigned do not require any extended consideration by this court. In order to see what are the questions presented in this court, it is necessary to see what questions have been decided by the court below, in its final rulings upon the whole evidence of the case. These can be best shown by referring to the prayers ruled upon by the court.

The first, second, and fourth prayers on the part of the plaintiff, taken in connection with the sixth and seventh prayers of the defendant, which were granted, in respect to the general style and finish, and manner of construction of the cars, and what expenditure by the defendant was allowable to supply or remedy defects in the work, would seem . to be unexceptionable; and we do not understand the defendant to make any serious objection to those instructions as granted.

But the court instructed the jury, by the third prayer of the plaintiff, that if the cars were constructed in substantial compliance with the contract and specifications as defined by the court, then they should find for the plaintiff the amount of the contract price of said cars, less any payments made on account thereof, or for freight thereon, which they might find from the evidence to have been made by the defendant. And by the fifth prayer, the jury were instructed that, upon the whole evidence, they were not at liberty to deduct from any amount they might find from the evidence to be due the plaintiff, anything on account of the delay in delivery of the cars in the city of Washington. And further, the court in its charge to the jury, in speaking of the claims of the defendant by way of recoupment, said: “ The damages they claim are two-fold : First, those resulting from the delay in the delivery of the cars; but I have found as matter-of law that the defendant is not entitled to any damages because of the delay in delivery; so you are relieved from considering that question. You will not consider that, whether there was any damage arising to the defendant by reason of the delay in the delivery.” This passage in the charge was specially excepted to by the defendant.

On the part of the defendant, the court was asked to instruct the jury, by the first prayer offered, that under the true construction of the contract given in evidence, it was the duty of the plaintiff to deliver the cars in the months of May, June, and July, 1892; that this obligation was of the essence of the contract, and the failure of the plaintiff so to deliver, if found by the jury, constitutes in law a breach of said contract; and for which breach the defendant is entitled to damages to be recouped from any balance which the jury may find due to the plaintiff under said contract. This prayer, as will be observed, simply asserts the right of the defendant to damages for the breach of the contract, by way of recoupment, without reference to any particular mode of ascertaining or computing the damages. But, by the tenth, eleventh and twelfth prayers of the defendant, the court was asked to instruct the jury, that the defendant was entitled to be allowed as damages, to be deducted from the contract price of the cars, for any profits that were lost, by reason of the non-delivery of the cars, or that could have been made by the use of the cars, if they had been delivered as required by the contract; and these prayers were rejected by the court, and necessarily so, after granting the prayers on the part of the plaintiff, declaring that the defendant was not entitled to anything for being deprived of the use of the cars after the time when they should have been delivered under the contract, down to the time when they were actually delivered.

These prayers, those granted and rejected, present the leading and controlling questions of the case; and while there were other propositions made, they were subordinate and dependent in their character, and therefore not necessary to be specially remarked upon.

That the plaintiff was aware of the necessity for compliance with the terms of the contract, as to the time fixed for the delivery of the cars, would seem scarcely to admit of a doubt. It knew that the cars were intended to enable the defendant to make a change or transition from one motive power to another, and a change of one make or structure of car for another of quite a different structure. That such, change was not a work of gradual operation or adjustment, but the transition involved, by operation of mechanical laws, the simultaneous substitution of one system for and the displacement of the other; and this, by a public statute, was required to be effected by a certain date. The plaintiff, by its officers, well understood, from the very nature and terms of the contract, that the cars contracted for were intended to supersede and take the place of horse cars, and to enable the defendant to effect the change from horse power to steam cable power, and that the two systems could not be operated together on the same road. There is no question as to the number of cars delivered, nor as to the time when the several lots or parcels were actually delivered; and that all, except the first twenty, were delivered between the 3d of August and the 10th of October, 1892. The primary question is, whether there was a breach of contract, causing damage to the defendant, and if so, how is such damage to be ascertained and measured ?

In a contract made of the nature and under the circumstances of the contract in this case, time is of the essence of the contract. And, unless the defendant has agreed for an extension of time for the performance of the contract, or has, by some decisive act, induced or given warrant to the contractor to change his position, or to believe that time of performance would be dispensed with, if a breach in respect to time has actually occurred, the latter must answer in damages for the legal consequences of such breach. Jones v. United States, 96 U. S. 24. If sufficient facts be shown, the party entitled by the terms of the contract to insist upon strict performance as to time, may be estopped. But in this case, the correspondence in the record would seem plainly to indicate a pressing desire on the part of the defendant for performance, and a full admonition to the plaintiff, that the matter of time was not only important but of pressing necessity to the defendant.

In cases of executory contracts, of the class of the one here involved, the general principle for estimating the damages for breach, is that laid down in the leading case of Hadley v. Baxendale, 9 Exch. 341. That case has been accepted and followed, both in England and in this country, with but few exceptions, as establishing the correct general rule for the measure of damages for breach of contract; though there may be cases, owing to peculiar facts and circumstances attending the contract, where this general rule would have to be applied with some qualification. The rule laid down in Hadley v. Baxendale, and as formulated by the court, may be stated thus:

“ Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract, should be such as may fairly and reasonably be considered, either as arising naturally, i. e. according to the usual course of things, from such breach of contract itself; or such as may reasonably be supposed to have been in contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. If the special circumstances under which the contract was actually made were communicated by the plaintiff to the defendant, and thus known to both parties, the damages resulting from the breach of such contract which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances, so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract.” This rule has been quoted with approval by the Supreme Court of the United States, in several cases, as appears in the cases of Western Union Tel. Co. v. Hall, 124 U. S. 444, 456; Howard v. Stillwell Manfg. Co., 139 U. S. 199, 207, and Primrose v. West. Union Tel. Co., 154 U. S. 29.

The rule has been under review in the English courts in a great many cases; and it was extensively discussed in the case of Cory v. Thames Iron Works Co., L. R. 3 Q. B. 181. In that case the plaintiff claimed damages for the non-delivery at the time specified, of the hull of a floating boom derrick, which they intended to use for working machinery in the discharge of coals; but the defendants were not aware of this intended use, and supposed that the hull was wanted for the storage of coals. It was contended for the defendant, that no damages were recoverable, because the two parties had not in contemplation the same results from the breach; but the court held this an inadmissible construction of the rule in Hadley v. Baxendale; and that the true rule is, that the vendor is always bound for such damages as result from the buyer’s being deprived of the ordinary use of the chattel; but that he is not bound for the further special damage that the buyer may suffer, by being deprived of the use of it for some special and unusual purpose, not made known to the vendor when he contracted for the delivery of the article.

While such is the general rule upon the subject, for the measure of damages, the question here is as to the manner of estimating and shewing the amount of damages sustained. The defendant insists that it should be allowed to show what amount of receipts and profits, in the way of passenger fares, would have been realized by it, if the cars had been delivered in accordance with the terms of the contract. But the plaintiff objects to this, and insists that the defendant is not entitled to any such damages, because of the uncertain, contingent, and speculative nature of such profits; that there is no method by which such profits could be ascertained and determined, and therefore the defendant cannot be allowed to show in reduction of the contract price of the cars, a mere probable estimate of profits that would have been made, if the cars had been delivered in due time. And in this contention there is certainly great force, and, indeed, great intrinsic difficulty in dealing with the proposition urged by the defendant. It would seem to be simply impossible to reduce the damages to a certainty, or to any sum approximating certainty, by any attempt to show the number of persons who would have traveled on the cars, or to show the amount of loss sustained by being deprived of the use of the cars to carry persons who desired to be carried.

This question of probable or estimated profits that could have been made if the contract had been performed, is one that has undergone great consideration by courts of the highest authority in the country; and the general conclusion reached has been that such method of arriving at the damages sustained for breach of contract is too uncertain and speculative to receive judicial sanction, except in cases where the possible or probable profits are the very objects of the contract, and are necessarily in the contemplation of the parties.

In the case of Blanchard v. Ely, 21 Wend. 342, the action was for the price of a steamboat; and the defense was that part of the machinery of the boat was unsound and imperfect, by reason whereof considerable delay was caused; and that the loss of the probable profits that would have been made upon the trips that might have been run during the time the vessel was delayed on account of the imperfections in its construction, should and might be recouped in the action for the price of the boat. But the court held that such contingent profits could not be allowed. That case has been approved by a good many subsequent cases, and has been quoted with approval by the Supreme Court of the United States, in Howard v. Stillwell Mfg. Co., supra. The same principle is fully and clearly stated and made the rule of decision, in the case of Pennypacker v. Jones, 106 Penn. St. 237; and also in the case of The Callaway Mining & Manfg. Co. v. Clark, 32 Mo. 305, and both of which cases are referred to with approval in the opinion of the court in Howard v. Stillwell Manfg. Co., supra.

In the case of Abbott v. Gatch, 13 Md. 314, the action was by the builder against the owner to recover the contract price for building a mill, and the effort was made there to recover estimated profits lost by reason of the plaintiff’s failure to complete the mill within the stipulated time for completion. But the court, in a very full and carefully considered opinion, held that such estimated profits were too speculative and uncertain to be made the standard of damages to be allowed by way of recoupment. In that case many of the previous cases upon the subject are reviewed, and the conclusion was fully sustained by authority, that estimated or probable profits for the time that the party was deprived of the use of his mill, could not be shown in proof to reduce the claim of the plaintiff for the contract price.

In the case of Griffin v. Colver, 16 N. Y. 489, a leading case upon the subject, the facts were that the plaintiff agreed to build a steam engine, with boilers, etc., for the defendants, and to deliver it to them on a day certain. He failed to do so, and a delay of one week occurred, during which time the defendants lost the use of certain machinery for the sawing and planing of lumber, which the steam engine was intended to drive. The plaintiff having brought his action for the price of the engine, the defendant sought to recoup their damages for the failure to deliver it at the time fixed by the contract. The court, in a very clear and learned opinion by Mr. Justice Selden, held it to be clear, that the defendants were not entitled to measure their damages by estimating what they might have earned by the use of the engine and the other machinery, had the contract been complied with. Nearly every element, said the court, entering into such a computation would have been of that uncertain character which has uniformly prevented a recovery for speculative profits.

But this question of the right to recover probable or estimated profits for failure to complete work or. deliver an article by a time certain, according to the terms of contract, would seem to be concluded by the decision in the case to which we have already referred, of Howard v. Stillwell Manfg. Co., 139 U. S. 199. That was an action by a contractor to recover the contract price for putting up mill machinery, and where the defendant, by way of reconvontion or recoupment, sought to recover from the plaintiff the amount of losses caused by the failure of performance of the contract by the plaintiff within the time stipulated; and the court held, upon full examination of the decisions, that anticipated profits of the defendant resulting from grinding wheat into flour and selling the same, had the mill been completed at the date specified in the contract, could not be recovered by way of damages for delay in putting up the mill. It was laid down as a settled general rule, subject to certain qualifications, that anticipated profits, prevented by the breach of acontract, are not recoverable as damages for such breach.

But though this be the general rule, does it necessarily follow that a party damnified by breach of contract, in a. case like the present, has no redress ? The law in all cases seeks to do complete justice; and the general rule is, in cases of the breach of contract, that the injured party is entitled to recover all his damages, including gains prevented as well as losses sustained. Griffin v. Colver, supra. It becomes then simply a question,by what principle or method are the damages sustained to be ascertained and computed. It must be by some certain and definite rule or standard, calculated to reach results with certainty, and not one that necessarily involves elements of contingency, speculation, and uncertainty, which may lead to great injustice. In the case just referred to, of Griffin v. Golver, supra, the court, while holding that estimated or probable profits could not be shown as the measure of damages, yet held that 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, could be recovered as damages. And so in the case of Abbott v. Gatch, supra, while estimated or probable loss of profits were excluded as the measure of damages, it was held that the defendant- was entitled to damages for the breach of the contract, and that the standard or criterion by which the defendant’s loss was to be estimated was the fair rent of the mill for the time he was kept out of its use, by reason of the plaintiff’s failure to complete it within the time stipulated.

In the case of Brown v. Foster, 51 Penn. St. 165, the action was brought by the plaintiffs to recover for work that was to be done for a steamboat by a day fixed, for a specified •price, in which they made default as to time. The Supreme Court of Pennsylvania, in an opinion by Mr. Justice Strong, held, that the measure of damages for the delay was the ordinary rental or hire of such a boat whilethe plaintiffs were in default; and the court rejected, as wholly inadmissible, the proposition made to measure the damages by what the boat could have earned, had there been no default on the part of the plaintiffs as to the time for doing the work. That is to say, estimated or anticipated receipts and profits of the boat could not be allowed as the measure of damages, but the ordinary rent or hire of such a boat would be allowed as the proper measure of the loss sustained. And this we think is just and reasonable. Because one method of measuring the damages sustained may be rejected, as being too uncertain and speculative, it does not necessarily follow that all others are inadmissible, and that the party damnified should go without redress.

Now, it is clear, the defendant was entitled to have the cars delivered to it, according to the terms of the contract, unless the plaintiff was relieved from that obligation by some competent legal authority; and the defendant was entitled to have the use of the cars from the time they were required to be delivered. Being deprived of the use of the cars, by the act or default of the plaintiff, it would seem, upon fair and reasonable principle, that the defendant is entitled to an amount equivalent to a reasonable hire or rent for such cars, for being deprived of the use thereof, as the measure of damages, for the time that they could and would have been in actual service, if delivered in accordance with the terms of the contract, to the time they were actually delivered, less the interest on the contract price of the cars, ■during the time for which such equivalent amount to hire •or rent is allowed. This is clearly within the principle of the case of Hadley v. Baxendale, and of the cases to which we have referred, where hire or rent has been allowed as the measure of damages. And the claim for recoupment, claiming that the “ defendant was deprived of the use and benefit in its business of the undelivered cars, and of the profits that would have accrued to the defendant, had the stipulation of the said contract as to the delivery of the said cars not been violated by the plaintiff,” etc., is sufficiently comprehensive to embrace the admeasurement of damages by allowance of an amount equivalent to rent or hire.

With this view of the case, it follows that there was error below in granting the third prayer of the plaintiff, as that prayer excluded all consideration of allowance to the defendant of damages for the delay in the delivery of the cars; and that there was error in granting the fifth prayer of the plaintiff — that prayer denying all right to such allowance.

It also follows from what we have said that there was •error in refusing to grant the first, second, and third prayers of the defendant; and that the exception taken to the paragraph in the court’s general charge to the jury, was well taken. But the court did not err in refusing to grant the tenth, eleventh, and twelfth prayers of the defendant, nor did it err in excluding the evidence offered by the defendant, as to the means of ascertaining the loss of profits, and referred to in the third assignment of error. Nor do we perceive any error in excluding as evidence the contract for closed cars dated November 1,1891. In what we have said, we have covered and disposed of all the substantial questions of the case; and it is unnecessary further to prolong this opinion.

It follows that the judgment appealed from must be reversed, and the cause be remanded for a new trial, in accordance with the principle for ascertaining the damages for breach of the contract, stated in this opinion.

There was a motion made by the plaintiff, after trial and verdict, to have fees and expenses of non-resident witnesses taxed in the costs to follow the judgment, according to a statement filed. The decision upon a question of costs when independent of the main questions in litigation, is not ordinarily a subject of appeal. Here, the question of costs in the court below will be reopened upon the reversal of the judgment by this court; but the same question may recur upon a future trial. The question, as to the extent of allowance for the attendance of non-resident witnesses, seems to have been very fully and carefully examined by the learned justice in the court below; and while there is considerable diversity of opinion and practice upon the subject, in the different judicial circuits of the United States, we think the result reached by the justice below is correct, and well supported by the statutes to which he refers. His conclusion, therefore, ought not to be disturbed.

Judgment reversed, with costs to appellant in this court, and came remanded for new trial.