Acme Delivery Service, Inc. v. Samsonite Corp.

• Decision Date: 23 May 1983
• Docket Number: No. 82SC75,82SC75
• Citation: 663 P.2d 621
• Parties: ACME DELIVERY SERVICE, INC., Petitioner, v. SAMSONITE CORPORATION, Respondent.
• Court: Colorado Supreme Court

Page 621

663 P.2d 621

ACME DELIVERY SERVICE, INC., Petitioner, v. SAMSONITE CORPORATION, Respondent.

No. 82SC75.

Supreme Court of Colorado En Banc.

May 23, 1983.

Montgomery Little Young Campbell & McGrew, P.C., Richard L. Murray, Jr., Englewood, for petitioner.

Nelson & Harding, John S. Finn, Denver, for respondent.

ROVIRA, Justice.

We granted certiorari to review a decision of the court of appeals modifying a judgment in a breach of contract action. Samsonite Corp. v. Acme Delivery Service, Inc. (81CA0452, announced December 10, 1981, not selected for official publication). We reverse.

The facts are not in dispute. In February of 1979, Acme Delivery Service, Inc. (carrier or petitioner), received from Samsonite Corporation (shipper or respondent) 715 pieces of luggage to be transported to the warehouse of the consignee, May D & F Company. The luggage was taken instead to a dump, where it was discarded. Of the 715 pieces of luggage, 637 were "lost or destroyed," and the remaining 78 were returned to Samsonite.

The invoice price--the amount to be paid by May D & F to Samsonite--was $15,364.90. The cost of manufacturing the 637 pieces of luggage was $8,603.23. Samsonite provided replacement luggage to May D & F for the luggage lost or destroyed by Acme.

Samsonite then brought an action for breach of contract against Acme, seeking as damages the invoice price of the luggage together with interest from the date of loss. Acme admitted liability but argued that the correct measure of damages was the cost of manufacturing the luggage.

Both parties filed motions for summary judgment. The trial court granted Acme's motion in the amount of $8,603.23, holding that Samsonite's "full actual loss" was the cost of producing the unsold merchandise. Later it entered an order awarding Samsonite moratory interest at the statutory rate from the date of loss until the date of judgment, as well as post-judgment interest at the statutory rate. Final judgment was entered on April 2, 1981.

On March 31, 1981, prior to final judgment, Acme filed a C.R.C.P. 59(b) motion to amend the judgment to exclude pre-judgment interest. On April 24, prior to a ruling on the motion, Samsonite filed a notice of appeal. On May 19, Acme filed its notice of appeal and contemporaneously moved to withdraw its motion to amend. The motion to withdraw the Rule 59(b) motion was granted on May 26.

The court of appeals determined that the trial court erred in using the cost of manufacture instead of the invoice price as the measure of damages. It also concluded that Acme's notice of appeal was not timely filed and therefore the court could not consider the appeal from the award of pre-judgment interest.

There are three questions before us: (1) whether manufacturer's cost or invoice price is the appropriate measure of damages in this case; (2) whether Acme's notice of appeal was timely filed; and (3) if so, whether the trial court properly awarded moratory interest from the date of loss until the date of judgment.

I.

It is undisputed that the standard for assessing damages is that the carrier is liable for the "full actual loss." See Sutherland v. Ringsby Truck Lines, Inc., 37 Colo.App. 333, 549 P.2d 784 (1976); Chicago Milwaukee & St. Paul Ry. Co. v. McCaull-Dinsmore Co., 253 U.S. 97, 40 S.Ct. 504, 64 L.Ed. 801 (1920); Polaroid Corp. v. Schuster's Express, Inc., 484 F.2d 349 (1st Cir.1973); Gore Products, Inc. v. Texas & N.O.R. Co., 34 So.2d 418 (La.App.1948); Meletio Sea Food Co. v. Gordons Transports, 191 S.W.2d 983 (Mo.App.1946). ¹

Samsonite argues that the fair measure of compensation is the invoice price, because when Samsonite manufactured the 637 suitcases that were lost, it did so with the expectation that it would earn its normal profit on each one. It did earn its normal profit on the replacement group of 637 suitcases, but, viewed as a whole, it earned profit on only 637 of 1,274 pieces of luggage. Therefore, Samsonite argues, it has lost its expected profit on 637 pieces of luggage, and that lost profit should be considered part of the "full actual loss."

Acme, on the other hand, argues that Samsonite would be compensated for its full actual loss by recovery of the cost of manufacture, that is, the replacement cost. If Samsonite is allowed to recover its invoice cost, it would be granted a double profit and would be in a better position than if the loss had never occurred.

The court of appeals held that its opinion in Sutherland v. Ringsby Truck Lines, Inc., supra, was dispositive of the damages issue. In Sutherland, a shipper sought recovery from a carrier for loss of a shipment of equipment. The equipment had been purchased by the shipper at auction in Utah for $15 and was to be shipped to its place of business in Denver. The replacement cost of the goods in Denver was $22,678.30. Both parties agreed that the standard to be applied was "full actual loss." The trial court held that the shipper was entitled to recover the $15 cost of the goods, as that figure reflected its out-of-pocket loss. The court of appeals reversed, holding that replacement cost (less expenses saved) was the proper measure of damages. The court noted that if the contract had been performed, the shipper would have had the equipment available at his place of business in Denver, and that use of a cost figure would deprive the shipper of the benefit of the bargain he struck in Utah.

The reasoning of Sutherland is not controlling here. First, the replacement cost was far higher than the original cost. Here, it was stipulated that the replacement cost and the original cost of manufacture were the same. Second, the shipper would have been worse off after the loss of the shipment if he were awarded only $15. There was no way for the shipper to duplicate the bargain he made in Utah, and, consequently, only the replacement cost (as measured by the value of the goods at destination) would compensate for the full actual loss.

Other courts have reached differing results when considering the question of what constitutes "full actual loss." Much of the conflict is more apparent than real, however, as the results are often dictated by the peculiar facts of the cases.

In Polaroid Corp. v. Schuster's Express, Inc., supra, the court held that the shipper was entitled to recover its price to its dealer rather than merely its costs of manufacture to compensate for the hijacking of a shipment of photographic equipment. Although questioning the idea that an award of replacement cost would ever adequately compensate for the loss of a shipment, the court held that, in any event, special circumstances of the case militated against an award of only replacement cost. There was strong reason to believe that the hijacked goods would ultimately compete with the manufacturer and that sales would therefore be lost. ²

Meletio Sea Food Co. v. Gordons Transports, supra, presented facts similar to those in the case at hand. The carrier was transporting a mixture to be used for breading fish and meats when part of the shipment was contaminated by turpentine and rendered unfit for human consumption. The question was whether the shipper could recover its cost or the invoice price. In rejecting a mechanistic use of the invoice price as the measure of damages, the court stated:

"It is to be noted, however, that the test of market value, whether considered independently or in its relation to a contract price, is at best but a convenient means of determining the extent of the loss; and it may therefore be discarded, and other more accurate means resorted to, if, for special reasons, or under the circumstances of the particular case, it is not exact, or is otherwise inapplicable. As already pointed out, the federal act gives only a right of recovery for actual loss, and in that respect conforms to the basic principle of the law of damages, which contemplates that the remedy provided in a given case shall only afford compensation for whatever injury is actually sustained."

191 S.W.2d at 985. It also said that by awarding the cost price, "the matter stands precisely as though there had been no damage to the original shipment." Id. at 986.

On similar facts, the court in Gore Products, Inc. v. Texas & N.O.R. Co., supra, reached the opposite result. The carrier broke a container of medicine, which was replaced from inventory by the shipper. The court rejected the carrier's reliance upon Meletio, stating that there were no "special circumstances" to warrant use of the cost of manufacture rather than the invoice price as the measure of damages. The court raised the question of what would happen if a second, third, or fourth container had been destroyed, and asked, "Could plaintiff be required to continue to manufacture goods for the defendant at cost?" 34 So.2d at 422. It is not clear why the court felt compelled to raise hypothetical situations when it had already implied that "special circumstances" might be considered.

Samsonite raises a similar argument, quoting the following passage from a treatise on the subject:

"If the [Meletio ] decision is accepted in its literal sense, a manufacturer could be forced to operate its plants for months without profit whatever in order to replace at cost goods lost or damaged by a carrier, and conceivably the manufacturer could be forced into bankruptcy while operating its facilities for the benefit of carriers. The law certainly never contemplated a result of this nature and the aforementioned decision is contrary to the general law on this subject."

Miller, Freight Loss and Damage Claims 300 (4th ed. 1974).

Little attention need be directed to this argument. It is certainly an...