Howe Machine Co. v. Bryson

Adams, J.

The defendants introduced evidence tending to establish the breach of the contract by Stebbins & Co., as set úp in the answer; that they had failed to supply a large number of machines which defendants could have sold, and proof was also introduced tending to show that defendants for about eight months had devoted their whole time to the business, canvassing the county for the sale of machines and introducing them to the attention and favor of the people; that they had rented a room, purchased a team and made other preparations for the prosecution of the busidess; that during the whole time they were making almost constant applications for machines, and a number were supplied them, but insufficient to meet the demand of the market, and that Stebbins & Co. made promises and held out inducements for them to believe that a sufficient number would be sent them to supply the demand created by their efforts to recommend them to the public.

Upon this evidence the court gave the jury the following instructions:

“The verbal contract alleged in the defendants’ counterclaim is a contract of employment, and if you find from the evidence that it has been sufficiently proved and that J. A. Stebbins & Co. broke the contract on their part, and that the defendants were necessarily idle, because of such breach and suffered injury thereby, then for féuch breach you should allow defendants such damages as would make them whole for such breach, and in considering the value of the time which defendants were necessarily idle, you must take into consideration in this case the fitness of defendants for the services contracted for, the preparations and appliances which they had and had made to sell the machines, the market demand for such machiues in this county; and, from all the evidence and circumstances as shown in evidence, you will determine the value of the time lost by defendants by reason of the breach of the contract by Stebbins & Co.

“As the contract alleged is one for the entire services of defendants, including the team, and as there is no agreement alleged that Stebbins & Co. were to pay for the keeping of the team or rent of room or for advertising, you cannot allow' the defendants therefor.

“Under the contract as alleged, the defendants would be., bound to furnish the team, their keeping, and to pay for the room rent and for advertising, and their compensation for all these things was covered by the discount price which defendants were to have from the retail price of the machines sold.”

The giving of the foregoing instructions is assigned as error.

It was held by the District Court that the defendants are entitled to recover the value of the time during which they were necessarily idle. In directing the jury, however, as to how they should arrive at the value of such time we think the court erred.

On this point the court said: “In considering the value of the time which defendants were necessarily idle you must take into consideration the fitness of the defendants for the services contracted for, the preparations and appliances which they had made to sell the machines, and the market demand for such machines in this county.”

It is evident from the foregoing that the court considered that the value of defendants’ time was to be estimated with reference to the profits which they might have made under the contract if it had not been broken. The court does not, to be sure, expressly say that the value of the time which defendants lost would be the profits which they might have made, but if the market demand for the machines was to be considered in arriving at the value of the time, such demand was to affect its estimate; to .what extent the court does not say. We are of the opinion that the defendants’ damages were either the loss of profits which they might have made or the value of the time during which they were idle, estimated without reference to the profits, with their reasonable expenditures added. We know of no way of estimating loss of time with reference to the profits which might have been made without making the loss of profits the real ground of the damages. If a book-keeper is induced to discontinue his ordinary business by reason of being employed to sell goods upon commission, and the goods are not furnished and he loses time while holding himself in readiness, his damages are either the reasonable value of such a book-keeper’s time, or the net profits which might have been made if the contract had not been broken. They are certainly far from identical and we know of no middle ground between the two. The fact that the value of defendants’ time might not be susceptible of'as definite estimation as that of a book-keeper, or other person engaged in some well defined industry in general demand, can make no difference.

The real question in this case, then, is: Are the defendants entitled to recover for loss of time, or loss of profits? "We are of the opinion that they are entitled to recover for loss of time. To this should be added, to be sure, their reasonable expenditures. . , '

We would not be understood as holding that where a person is employed to sell goods on commission and the employer fails to furnish the goods, the person employed may not recover for loss of profits which he might have made if the goods had been furnished. If the quantity to be furnished was a definite amount and the demand was practically unlimited, possibly he might be allowed to recover for loss of profits.

But where a person employs another to sell on commission all the goods he can within a limited territory, especially if the goods are of that kind of which there is no regular consumption or demand, the case is quite different; and such is the present case.

The number of sewing machines of a particular kind which can be sold within a given county and within a given time, is very uncertain. New cases can be found where profits have 1 been disallowed as speculative in which the uncertainty is greater.

Griffin v. Colver, 16 N. Y., 490, is regarded as a somewhat leading case. The plaintiff agreed with defendant to furnish' a steam engine to drive certain machinery used for planing lumber, and failed to do so within the time agreed. Suit being brought by him to recover'for the engine, the defendant claimed damages for loss sustained by him by reason of his machinery being idle between the time the engine should have been furnished and the time it was furnished. He claimed that he was entitled to recover the amount of the net profits which would have been made if the engine had been furnished, as agreed. It was held, however, that such was not the proper measure of damages, but that he might recover a reasonable compensation for the investment in the machinery during the time the same was idle. The general doctrine is succinctly stated by Selden, J"., as follows: “It is a well established rule of the common law, that tiie damages to be recovered for a breach of contract must be shown with certainty, and not left to speculation or conjecture; and it is under this rule that profits are excluded from the estimate of damages in such cases, and not because there is anything in their nature which should, per se, prevent their allowance. Profits which would certainly have been realized but for the defendant’s default are recoverable; those which are speculative or contingent are not.” Yet the difficulty of determining what would have been the net profits of the planing mill was small compared with the difficulty of determining what profits the defendants in the present case would have made upon all the machines which they could have sold in the county of Mitchell, within the time in question.

If the demand for planed lumber had been limited to a territory, and such demand was less than the capacity of the mill, that case would have been somewhat like the present one.

In Blanchard v. Ely, 21 Wend., 342, plaintiff brought suit to recover for building a steamboat. The defendant showed that a part of the machinery was defective, and that by reason thereof he failed to make sevei’al trips with the boat which he would have made, and claimed to recover for loss of profits on those trips. It was held that such profits were too uncertain, and were accordingly disallowed. Yet, if we suppose that the boat could have been employed to its full capacity, the profits were not uncertain in any such sense as in the present case. An attempt is made by defendants to show how many sewing machines they could have sold, by showing how many they did sell during the time they were supplied with them.

But this basis of calculation is very unreliable. In a limited territory the more vigorous the canvass has been, the more nearly it is exhausted. The number of machines sold, if large, might be in inverse ratio to the number of those which could thereafter be sold. Yet no other basis of calculation is offered, and we know of none which is not equally unsatisfactory. It is certain that an inventory of the people in a county, who will buy a sewing machine of a particular kind, within a given time, cannot be taken.

In Masterton v. The Mayor, etc., of Brooklyn, 7 Hill, 61, damages were allowed for loss of profits, but the decision was put expressly upon the ground that the profits did not depend upon the fluctuations of the market, or the chances of business.

The appellees rely upon Richmond v. The Dubuque & Sioux City R. R. Co., 33 Iowa, 422. In that case the plaintiff sought to recover for storage on grain. He had erected an elevator at great expense for the purpose of storing grain for the defendant.

Afterwards the defendant made a different arrangement, whereby the grain shipped upon the road did not pass through the elevator. The evidence which was offered to show what the storage would have amounted to is not set out in the opinion, but the majority of the court thought that it was sufficient to show approximately what the storage would have been. If so, the plaintiffs were of course entitled to recover the amount of the net profits which would have been made.

We cannot regard that case as decisive of the present one, nor has any case been cited which to our mind holds the doctrine for which the appellees contend.

We are of the opinion, therefore, that while the district court whs correct in instructing the jury, that the defendants might recover for the value of the time which they los't, the court erred by instructing in the same connection, that the jury might take into consideration the market demand for the machines in the county. The value of the time which the defendants lost should have been estimated generally, and without reference to the profits which might have been made under the contract.

Reversed.