Wells v. National Life Ass'n of Hartford

99 F. 222, 53 L.R.A. 33, 1900 U.S. App. LEXIS 4132
CourtCourt of Appeals for the Fifth Circuit
DecidedJanuary 9, 1900
DocketNo. 812
StatusPublished
Cited by31 cases

This text of 99 F. 222 (Wells v. National Life Ass'n of Hartford) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wells v. National Life Ass'n of Hartford, 99 F. 222, 53 L.R.A. 33, 1900 U.S. App. LEXIS 4132 (5th Cir. 1900).

Opinion

McCORMICK, Circuit Judge

(after stating the facts as above). The rulings of the trial court, and the errors assigned thereon, present substantially two questions: (1) Can the plaintiff join in one action for damages for breach of the contract a claim for the loss of anticipated profits with the claim to recover his losses for actual outlay and expenditures? (2). Are the anticipated profits for the loss of which he claims damages in this case too remote to sustain an action? Conforming to the practice and pleadings in the state of Texas, the plaintiff’s case is presented by a petition setting up fully all the facts on which he bases his claims for damage.

The first of the questions above stated seems to us to be answered by the reasoning and review of authorities in the opinion of the court in the case of U. S. v. Behan, lift U. S. 338, 4 Sup. Ct. 81, 28 L. Ed. 168. Adopting substantially the language of the very learned judge who delivered that opinion, without quoting with literal accuracy, we observe that he therein says:

When a party injured by the stoppage of a contract elects to go for damages for the breach thereof, the first and most obvious damage to be shown is the amount which he has been induced to expend on the faith of the contract, including a fair allowance for his own time and services. “Unless there is some artificial rule of law which has taken the place of natural justice in relation to the measure of damages, it would seem to be quite clear that the claimant ought at least to be made whole for losses and expenditures. If he chooses to go further, and claim for the loss of anticipated profits, he may do so, subject to the rules of law as to the character of profits which may be thus claimed. It does not lie, however, in the mouth of the party who has voluntarily and wrongfully put an end to the contract, to say that the party injured has not been damaged, at least to the amount of what he has been induced fairly and in good faith to lay out and expend, including his own services. * * * At least, it does not lie in the mouth of the party in fault to say this unless he can show that the expenses of the party injured have been extravagant and unnecessary for the purpose of carrying out the contract. ♦ * * The claim for profits, if not sustained by proof, ought not to preclude a recovery for the claim for losses sustained by outlay and expenses. In a proceeding like the present, in which the claimant sets up by way of petition a plain statement of the facts, without technical formality, and prays relief either in a general manner, or in an alternative or cumulative form, thé court ought not to hold the claimant to strict technical rules of pleading, but should give to his statement a liberal interpretation, and afford him sueh relief as he may show himself substantially entitled to, if within the fair scope of the claim as exhibited by the facts set forth in the petition.”

In tbe case of Dennis v. Maxfield, 10 Allen, 138, wbicb presented a question closely analogous to tbe one we are now discussing, it is '. said in tbe opinion by tbe chief justice:

“The breach of-the contract by the defendants has created only one cause of . action in favor of . the plaintiff. His compensation for this breach necessarily . embraces all thát-.hé is entitled to recover under the contract Indeed, his right [229]*229to recover anything — as well that which was earned before as that. which would have been earned if he had not been discharged — depends on the question whether he has performed his part of the contract. A party cannot sever a claim for damages arising under one contract so as to make two distinct and substantive causes of action.”

The second question presents more difficulty. We quote again from U. S. v. Behan, supra:

“The claimant was not hound to go for profits, even though he counted for . them in his petition. He might stop upon a showing of losses. The two heads of damage are distinct, though closely related. When profits are sought, a recovery for outlay is included, and something more. That something more is the profits. If the outlay equals or exceeds the amount to be received, of course th-re can be no profits.”

it is clear that the plaintiff and the defendant, in entering into the contract which is made the basis of this action, each had in contemplation not only the outlay of expenses and personal service to be contributed by the plaintiff, but, and equally, the earning of profits from the per cent, on the premiums to be allowed the plaintiff as his sole compensation for his expenditures and service. As was said in the case of Dennis v. Maxfiold, supra:

“These earnings or profits were therefore within the direct contemplation of the parties when the contract was entered into. They are undoubtedly in their nature contingent and speculative, and difficult of ascertainment; but, being made by express agreement of tbe parties of the essence of the contract, we do not see how they can be excluded in ascertaining the compensation to which the plaintiff is entitled. Would it be a good bar to a claim for damages for breach of articles of co-partnership that the profits of the contemplated business were uncertain, contingent, and difficult of proof, and could it be held for this reason that no recovery could be had in case of a breach of such a com tract? Or, in an action on a policy of insurance on profits, would it be a valid defense, in the event of loss, to say that no damages could he claimed or proved, because the subject of insurance was merely speculative, and the data on which the profits must be calculated were necessarily inadequate and insufficient to constitute a safe basis on which to rest a claim for indemnity? The answer is that in such cases the parties, having by their contract adopted a contingent, uncertain, and speculative measure of damages, must abide by it, and courts and juries must approximate as nearly as possible to the truth in endeavoring- to ascertain the amount which a party may be eniitled to recover on such a contract in the event of a breach. If this is not the rule of law, we do not see that there is any alternative short of declaring- that where parties negotiate for compensation or indemnity in the form of an agreement for profits, or a share of them, no recovery can be had on such a contract in a court of law,- — a proposition which is manifestly absurd.”

In the case of Bagley v. Smith, 10 N. Y. 489, in which claim for damages for loss of profits by the wrongful dissolution of a partnership was sought, the judge who delivered the opinion of the court said: ’

‘‘The object of commercial partnership is profit.. This is the motive upon which men enter into the relation. The only legitimate beneficial consequence of continuing a partnership is the making of profits. Tbe most direct and legitimate injurious consequence which can follow upon an unauthorized dissolution of a partnership is the loss of profits. Unless that loss can be made up to the injured party, it is idle to say that any obligation is imposed by a contract to continue a partnership for a fixed period. The loss of profits is one of the common grounds, and the amount of profits lost one of the common measures of the damages to he given upon a breach of contract.” . '

[230]*230In Insurance Co. v. Nexsen, 84 Ind.

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Bluebook (online)
99 F. 222, 53 L.R.A. 33, 1900 U.S. App. LEXIS 4132, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wells-v-national-life-assn-of-hartford-ca5-1900.