525 Main St. Corp. v. Eagle Roofing Co.

• Decision Date: 20 February 1961
• Docket Number: No. A--48,A--48
• Citation: 34 N.J. 251,168 A.2d 33
• Parties: 525 MAIN STREET CORP., Plaintiff-Appellant, v. EAGLE ROOFING CO., Inc., Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 251

34 N.J. 251

168 A.2d 33

525 MAIN STREET CORP., Plaintiff-Appellant, v. EAGLE ROOFING CO., Inc., Defendant-Respondent.

No. A--48.

Supreme Court of New Jersey.

Argued Nov. 21, 1960.

Decided Feb. 20, 1961.

Alvin Weiss, Newark, for appellant (Riker, Danzig, Marsh & Scherer, Newark, attorneys; Charles Danzig, of counsel; Alvin Weiss, Newark, on the brief).

Arthur E. Dienst, Hillsdale, for respondent.

The opinion of the court was delivered by

WEINTRAUB, C.J.

Under a written contract with plaintiff's assignor, defendant repaired a roof and gave a 5-year guarantee against leaks with a promise to repair during that period. The trial court found defendant breached its contract but awarded only the nominal sum of six cents. The Appellate Division affirmed, and we granted plaintiff's petition for certification. 33 N.J. 327, 164 A.2d 380 (1960).

The building, a large industrial structure, was erected in or about 1943. The contract here involved was made in 1955. During the negotiations defendant observed that leaks were caused by the emergence of nail heads through the felt and asphalt covering. The nails had been driven during the original construction of the building in order to hold sheathing boards to the rafters. For one reason or another, the nail heads worked their way through the roofing. In addition, defendant noticed the roof had settled near the drains causing water to accumulate. In that setting, the contract was made. Defendant's work proved effective for a period of about two years, following which nail heads again emerged in some abundance, and according to defendant, the areas around the drains again sagged with resulting pockets of water. Defendant made a number of repairs but after a period disputed the scope of its responsibility. Thereupon plaintiff engaged another contractor to do a new job, having apparently concluded that the incidence of leaks was too great to permit any other course.

As we have said, the trial court found defendant breached its guarantee and covenant to repair, a finding which is well supported by the evidence and which we see no reason to disturb.

Thus the sole issue is one of damages. Compensatory damages are designed 'to put the injured party in as good a position as he would have had if performance had been rendered as promised.' 5 Corbin, Contracts § 992, p. 5 (1951); 1 Restatement, Contracts § 329, comment a (1932); see Giumarra v. Harrington Heights, Inc., 33 N.J.Super. 178, 196, 109 A.2d 695 (App.Div. 1954), affirmed 18 N.J. 548, 114 A.2d 720 (1955). Although specific rules are formulated for sundry situations, they are subordinate to this broad purpose. Hence a given formula is improvidently invoked if it defeats a common sense solution.

Defendant urges the controlling rule of damages is the difference between the value of the entire building with the defective roof and the value of the building if the contract had been performed. Quite obviously this would be an awkward approach to the present controversy. In the first place, the roof is a sufficiently discrete item to permit a solution in terms of it alone rather than in terms of the total physical entity, i.e., the building. If a controversy revolved about a hubcap or automobile battery, one would hardly search for differences in value of the whole vehicle. That approach would be labored and unrewarding. Secondly, there is no apparent reason to deal with differences in value rather than the cost of remedying the broken promise.

Reference is made to Rempfer v. Deerfield Packing Corp., 4 N.J. 135, 72 A.2d 204 (1950), and Ciminelli v. Umland Bros., Inc., 236 App.Div. 154, 258 N.Y.S. 143 (App.Div.1932).

Rempfer involved tortious injury to realty. The court there said that while diminution in value is the measure of damages, the cost of repair is a proper element to consider in ascertaining the amount of that diminution (4 N.J., p. 147, 72 A.2d, p. 209). But a tortious injury cannot always be equated with a breached contract. In the former, the amount of the injury inflicted is the subject, whereas in the latter the claimant seeks the benefit of a promise he bought. See Annotation 123 A.L.R. 515, 519 (1939). Moreover Rempfer does not mean that if a porch railing were tortiously damaged, it would be necessary to think in terms of the value of the whole building. It would be otherwise if the owner of a wrecked Model-T Ford sought the cost of restoration. The answer rests in good sense rather than in a mechanical application of a single formula.

In Ciminelli, where damages were sought for improper performance of a roofing contract, the New York court held the measure of damages was the loss of value in terms of the total structure, with the costs of repair being merely evidential of the amount of the loss. It may be doubted the case remains authoritative in that state. See Bellizzi v. Huntley Estates, Inc., 3 N.Y.2d 112, 164 N.Y.S.2d 395, 143 N.E.2d 802 (Ct.App.1957); Annotation, 123 A.L.R. 515, 525 (1939). At any rate, the general rule with respect to building contracts is that the disappointed owner may recover the costs of completing the promised performance or making necessary repairs, unless under the facts it is impossible to do so or the cost of completion or repairs would constitute unreasonable economic waste, in which event reference would be made to the difference in value formula. 1 Restatement, Contracts § 346(1)(a) (1932); 5 Corbin, Contracts § 1089, p. 408 (1951); McCormick, Damages § 168, p. 648 (1935); 5 Williston, Contracts (rev. ed. 1937), § 1363, p. 3825; Annotation, 123 A.L.R. 515 (1939).

In the present case, the cost of repairs, or the cost of replacement if replacement is necessary to obtain the promised performance, is the appropriate approach without reference to the value of the building as an entity. See Van Dusen Aircraft Supplies, Inc. v. Terminal Const. Corp., 3 N.J. 321, 329, 70 A.2d 65 (1949); Drummond v. Hughes, 91 N.J.L. 563, 565, 104 A. 137 (E. & A. 1918); Brown v. Nevins, 84 N.J.L. 215, 86 A. 938 (Sup.Ct.1913); North Bergen Board of Education v. Jaeger, 67 N.J.L. 39, 50 A. 583 (Sup.Ct.1901).

Here defendant, for the sum of $9,800, agreed to do delineated work, which it guaranteed and agreed to repair in the following terms:

'This work is guaranteed for a period of (5) five years from the date of completion against any and all leaks or defects due to natural causes and repairs shall be made during the period of this guarantee without cost to us (plaintiff's assignor).'

Since the purpose of a damage award is to give the claimant the benefit of the broken promise, we must first identify that benefit. The question is whether the parties bargained (1) for a 5-year result or (2) for work of greater expectable life but supported by a guarantee for a portion of that period. If roof work were involved with a life expectancy exceeding the period of the guarantee, the measure of damages might not be confined by the unexpired portion of the guarantee. Here,...