No. 87-115
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
GRANT R. McPHERSON,
Plaintiff and Appellant,
-vs-
STANLEY SCHLEMMER and LYNDA
SCHLEMMER,
Defendants and Respondents.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and for the County of Lake,
The Honorable Robert Holter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Douglas J. Wold and Martin R. Studer argued; McCurdy,
Wold, Peterson & Fischer, Polson, Montana
For Respondent:
Charles E. McNeil and Gary L. Graham argued; ~arlington,
Lohn & Robinson, Missoula, Montana
For Amicus Curiae:
Gene Todd, pro set Montana Embryo Transplant Center,
Belgrade, Montana
Gerald Kitto, pro set Gallatin Embryonics, Belgrade,
Montana
Holland & Hart, American Salers Assoc., Billings,
Montana
Submitted: November 3, 1987
Decided: January 8, 1988
Filed: JA,N48 /9+8
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Two of Mr. McPherson's Salers breeder cows were killed
when they wandered onto a highway from their pasture on the
Schlemmers' property. Mr. McPherson prevailed in this negli-
gence action against the Schlemmers after a jury trial in the
Twentieth Judicial District, Lake County. He appeals two of
the District Court's rulings on damages. We reverse in part,
affirm in part, and remand.
The issues are:
1. Did the District Court err by denying Mr.
McPherson's motion for a new trial on the issue of damages
for lost profits from his embryo production business as a
result of the deaths of his two exotic cows?
2. Did the District Court err by denying Mr.
McPherson's motion to amend the judgment to include prejudg-
ment interest?
The case was submitted to us on an agreed statement of
facts, without transcript or exhibits. Our recitation of the
facts is therefore limited. Plaintiff Grant McPherson raises
pure-blood Salers cattle in the Flathead Valley. His busi-
ness involves the production and sale of Salers embryos from
donor cows. The embryos are sold for implantation into
commercial grade surrogate mother cows.
During the spring of 1983, Mr. McPherson entered into an
agreement with the Schlemmers whereby some of the Salers
donor cows were pastured on the Schlemmers' property. In
April 1983, two of these cows wandered from their pasture and
were struck and killed on a highway.
Mr. McPherson brought suit alleging that the Schlemmers
negligently failed to keep their pasture gate closed. The
Schlemmers denied liability. In his complaint, Mr. McPherson
sought to recover damages for the cows' fair market value,
for lost profits caused by the interruption of his embryo
production business, and for incidental losses. However, the
District Court disallowed proof of lost profits. The jury
found the Schlemrners 70% liable and set damages at $101,500
for the fair market value of the cows plus incidental damag-
es. Mr. McPhersonls net judgment was $71,050 plus interest
from the date of the verdict.
Fol-lowing return of the jury verdict, Mr. McPherson
sought an award of prejudgment interest, which was denied by
the court. Mr. McPherson then filed motions for a new trial
and to amend the judgment. The court denied both motions and
Mr. McPherson now appeals. He asks this Court to award him
prejudgment interest and to grant a new trial at which he may
present evidence of his lost profits.
I
Did the District Court err by denying Mr. McPherson's
motion for a new trial on the issue of damages for lost
profits from his embryo production business as a result of
the deaths of his two exotic cows?
This matter was originally raised in a motion in limine.
The District Court ruled that it would admit proof of the
fair market value of the cows for breeding purposes, but
would not admit proof of loss of use, lost profits, or loss
of production of embryos, "because to do so would permit
double recovery of damages." The court stated it would allow
proof of the "special atributes [sic] of the Salers Cattle
for breeding purposes, which is what makes them worth far
more than the average cow." It ruled, however, that "to then
permit stacking of calf crop after calf crop would unjustly
double damages and would be based upon speculation." The
court denied Mr. McPherson's motion for a new trial on the
issue of damages r'or lost profits, without further
explanation.
The measure of damages in a tort case is the amount
which will compensate the plaintiff for all the detriment
proximately caused by the defendant's wrongful act. Section
27-1-317, MCA. The Schlemrners argue that Mr. McPherson has
received full compensation for his damages by the award of
the fair market value of his breeder cows. Mr. McPherson
contends that he was unable to replace the cows immediately
and that the award of funds to replace them after trial
nearly four years later does not compensate him for lost
sales of calves and embryos in the meantime. His offer of
proof alleged that each cow would produce one calf per year
and a yearly average of twelve embryos which would result in
live births. He offered to prove lost profits of between
$215,791 and $443,371 from April 1983 to December 1985, plus
additional lost profits to date of trial.
Fair market value generally includes a component for
present valuation of future profits. However, it does not
follow that in every situation an award of the fair market
value of an animal compensates its owner for all lost profits
from the use of the animal. In Snyder v. Bio-lab, Inc.
(1978), 405 N.Y.S.2d 596, the court was faced with a claim
similar to that raised by Mr. McPherson. In that case,
plaintiff's dairy cows were injured and had to be destroyed
after use of defendant's defective teat dip. The court
reasoned that ordinarily, fair market value at the time of
loss will be the measure of damages applied. It then demon-
strated circumstances under which an additional amount should
be awarded. The court stated:
As with personal property generally, the
measure of damages for injury to, or destruction
of, an animal is the amount which will compensate
the owner for the loss and thus return him, mone-
tarily, to the status he was in before the loss.
Where the animal has a market value, the market
value at the time of the loss, or the difference in
market value before and after injury will generally
be the measure applied. Any special value, partic-
ular qualities, or capabilities are generally
considered as factors making up market value. For
example, when an owner has received the market
value of an animal, he will have been compensated
for any use he might have made of the animal for
breeding purposes. The market value may be en-
hanced because the animal is carrying unborn young,
but the young have no value apart from the mother.
Also, the loss of produce of an animal is an item
of consideration in determining market value,
rather than a separate item of damage. The high
production rate of a slaughtered cow is to be
considered as a particular quality along with
breed, age, condition and other factors in comput-
ing the animal's market value.
In addition, plaintiffs are entitled to recov-
er the loss of profit for the time period required
to replace the slaughtered cows with cows of equal
quality.
The fair market value of the slaughtered cows
does not adequately compensate the plaintiffs for
their loss. They are entitled to the profit that
the 3 9 cows, the best milk producers in the herd,
would have generated until replacement cows of
equal quality were available. Proof establishes
that replacement cows of comparable quality were
available in the market 3 months subsequent to the
accident. ..
Snyder, 405 N.Y.S.2d at 5 9 7 - 9 8 . Although that court stated
that the value of produce of an animal is a component of the
animal's market value, the court also allowed as damages
profits which would have been earned from the sale of milk in
the time between the accident and the reasonable date of
replacement of the animals.
In a similar case, the Supreme Court of Missouri ruled
that "the limiting circumstance is that there may be no
recovery for future milk and calf production of a cow which
has been disposed of, after a replacement of comparable
capacity has been or could have been acquired." Missouri
Farmers Ass'n. v. Kempker (Mo.banc 1987), 726 S.W.2d 723,
726. In a case in which laying chickens had to be destroyed
after using defendant's self-feeding system, the Supreme
Court of Utah held that plaintiff's damages included both the
market value of the chickens destroyed and the lost profits
"for the period in which there was a loss of use before the
replacements could prudently be obtained. . . . " Park v.
Moorman Mfg. Co. (Utah 1952), 241 P.2d 914, 921-22. See also
Kintner v. Claverack Rural Elec. Co-op., Inc. (~a.Super.
1984), 478 A.2d 858.
In contrast to the foregoing cases, the lower court
held, based on Covey v. Western Tank Lines (Wash. 1950), 218
P.2d 322, that to allow damages for lost profits in addition
to the fair market value of the animals which were destroyed
would permit double recovery of damages. We do not choose to
affirm the lower court and the theory set forth by the Wash-
ington Court in Covey.
We adopt the theory of damages set forth in Snyder. We
conclude that the award to Mr. McPherson of the fair market
value of his cows did not compensate him for profits lost
between the date the cows were killed and the date they
reasonably could have been replaced, which would be the date
replacement cows of comparable quality were available in the
marketplace. We hold that in addition to the fair market
value of the cows, Mr. McPherson is entitled to his lost
profits for that period of time.
As additional guidance on remand, the District Court
should refer to Graham v. Clarks Fork Nat. Bank (Mont. 1981),
631 P.2d 718, 38 St.Rep. 1140, aff'd after remand, 663 P.2d
320 (1983). In that case, plaintiff's planned artificial
insemination program was interrupted by "lowbrow" bulls. The
Court allowed damages for one generation of future purebred
calves. Citing prior caselaw, the Court stated that "future
damages need only be reasonably certain, and not absolutely
certain." Graham, 631 P.2d at 721. As also discussed in
Baden v. Curtiss Breeding Service (D.Mont. 1974), 380 F.Supp.
243, when the many variables in projecting future "crops" of
animals make the damages too uncertain, they cannot be recov-
ered. While these cases are not directly on point with the
present case, they do point out a second limitation on future
damages.
We remand this matter to the District Court to give Mr.
McPherson the opportunity to present his evidence on the
theory that the cows were not immediately replaceable. If
the evidence shows that the cows could not reasonably be
replaced immediately, then Mr. McPherson must be allowed to
present to a finder of fact his evidence of reasonably cer-
tain lost profits from sale of embryos and calves between the
time the cows were killed and the time they could reasonably
have been replaced.
I1
Did the District Court err by denying Mr. McPherson's
motion to amend the judgment to include prejudgment interest?
The three criteria for prejudgment interest, as set out
in Safeco Ins. Co. v. Lovely Agency (Mont. 1985), 697 P.2d
1354, 1356, 42 St.Rep. 509, 511-12, are that 1) there is an
underlying monetary obligation, 2) the amount of damages is
certain or capable of being made certain by calculation, and
3) the plaintiff's right to recover damages vests on a par-
ticular day. Mr. McPherson argues that his right to prejudg-
ment interest is not defeated by the fact that liability was
contested or by the fact that negligence was apportioned by
the jury. He says it would be inequitable to compound his
loss by denying prejudgment interest.
We conclude that the three-part standard for prejudgment
interest is not met. Since liability was contested, no
monetary obligation existed until the jury determined the
degree of comparative negligence. If the jury had found Mr.
McPherson 50% negligent or more, there would have been no
monetary obligation on the part of the Schlemmers. The
uncertainty of the amount of damages is shown by the differ-
ences between what Mr. McPherson claimed in his complaint,
what he claimed at trial, and what the jury awarded. Final-
ly, the right to recover vested only on the date of the jury
verdict, not on an earlier date certain. We affirm the
District Court's refusal to award prejudgment interest.
Reversed and remanded for further procsedings cI the
n
issue of lost profits.
We Concur: //
4
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- ,
Chief Justice
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Justices
Mr. Justice L. C. Gulbrandson, concurring and dissenting.
I concur with the affirmance of the District Court's
refusal to award prejudgment interest but I disagree with the
remand for determination of lost profits from the plaintiff's
embryo production business.
The trial judge issued the following order prior to
trial:
The Court will admit proof of the fair
market value of the Plaintiff's Salers
Cattle for breeding purposes and such
incidental damage as occurred. The Court
will not admit proof of loss of use, lost
profits or loss of production of embryos
and calves because to do so would permit
double recovery of damages. The
Plaintiff will be permitted proof of the
special attributes of the Salers Cattle
for breeding purposes, which is what
makes them worth far more than the
average cow. But to then permit stacking
of calf crop after calf crop would
unjustly double damages and would be
based upon speculation.
Covey v. western-~ank Line, (wash) 218
P2d 322: State v. Morison, (Colo) 365 P2d
- -
266. There are apparently no' Montana
cases defining the measure of damage for
the outright killing of breeding stock.
In compliance with that order, the plaintiff was
allowed. to present expert testimony as to the embryo
production and implantation process, although plaintiff was
prevented from introducing testimony as to monetary lost
profits. The jury, in returning a market value of $101,500
for the two Salers cows, must have considered their special
attributes for breeding purposes. The judgment in the amount
of $71,050, computed on the basis of plaintiff's 30 percent
negligence, has been satisfied and is not the subject of this
appeal. To now remand this case to a different jury on the
issue of lost profits from the date of accident to the date
of availability of replacement cows seems to be a subversion
of the jury process. It appears to me that, if this Court is
determined to adopt the factory theory of embryo production,
this matter should be remanded for trial on all issues, so
that there can be no duplication of damages by two separate
juries.
An additional ground for my disagreement is that the
appellant has, in effect, conceded that comparable cows were
available immediately, but is contending that because of
financial circumstances he could not replace them until after
the judgment in this case was satisfied.
The following is a quote from appellant's brief, pages
16 and 17:
McPherson is a businessman. He purchased
assets and placed them in production,
expecting revenues from embryo sales to
repay him the purchase price and yield a
profit. When the Schlemmers caused the
loss of his assets, they incurred
liability for the fair market value of
those assets. If they had paid McPherson
immediatelv. hecould have rewlaced them
without interrupting productioA, --
and been
fully compensated - - - detriment
for all the
--
- suffered. However, the Schlemmers did
he
not pav McPherson until reauired to do so
2 the jury's verdict. .,
prevented McPherson from
hat delay
producing
embryos, and thereby caused him to lose
~rofitshe should have received from his
L
investment in the cows. (Emphasis
added. )
Instead of adopting the New York trial court opinion of
Snyder, supra, as authority, I would affirm the District
Court's reliance on Covey, supra.
In my opinion the District Court did not manifestly
abuse its discretion and I would affirm the order denying a
new trial on the issue of lost profits and the order denying
prejudgment interest.
Justic