David Fox & Sons, Inc. v. King Poultry Co.

• Decision Date: 11 July 1968
• Citation: 292 N.Y.S.2d 21,30 A.D.2d 789
• Court: New York Supreme Court — Appellate Division
• Parties: DAVID FOX & SONS, INC. and D. Fox Sales Corp., Plaintiffs-Respondents, v. KING POULTRY CO. Inc., William J. Melnick, Jerome S. Tepper and Sam Leibowitz, Defendants-Appellants.

Page 21

292 N.Y.S.2d 21

30 A.D.2d 789

DAVID FOX & SONS, INC. and D. Fox Sales Corp., Plaintiffs-Respondents, v. KING POULTRY CO. Inc., William J. Melnick, Jerome S. Tepper and Sam Leibowitz, Defendants-Appellants.

Supreme Court, Appellate Division, First Department.

July 11, 1968.

M. J. Winsten, New York City, for plaintiffs-respondents.

I. N. Wilpon, Brooklyn, for defendants-appellants.

Before BOTEIN, P.J., and EAGER, CAPOZZOLI, McGIVERN and MACKEN, JJ.

PER CURIAM.

The judgment is modified, on the law and the facts, and without costs or disbursements to any party, to the extent of reducing said judgment to the amount of $7,125.07, reflecting the net profit per pound as the measure of loss, as set forth in the Referee's report; this sum is in addition to the $891.99, properly allowed by the Referee; and otherwise affirmed. Despite the extensiveness of the record, we do not regard the plaintiffs' proof on the score of damages to be fully satisfactory. The difficulty is inherent in the present case, where the situation is so commingled that, contemporaneously the plaintiffs were selling to the same customers as were being serviced by the defendants, and others, in the hurly-burly world of New York's wholesale poultry business. Yet, we do find 'there has been some evidence tending to show that the defendant's wrongful acts have caused the plaintiff to suffer a commensurate decrease of profits'. Michel Cosmetics, Inc. v. Tsirkas, 282 N.Y. 195, 202, 26 N.E.2d 16, 19. This, against the backdrop of the flouted injunction, does merit an award of damages to the plaintiffs. However, Special Term's computation of damages on the basis of plaintiffs' gross profit is not well taken. Neither is the almost exclusive reliance of plaintiffs' counsel on the case of Conviser v. J. C. Brownstone & Co., 209 App.Div. 584, 205 N.Y.S. 82 (2d Dept. May 9, 1924). In the case of Bates Chevrolet Corp. v. Haven Chevrolet, Inc., a finding by a Referee disallowing overhead expenses was unanimously overruled by this court (16 A.D.2d 917, 229 N.Y.S.2d 168), in a memorandum opinion citing Cutter v. Gudebrod Bros. Co., 190 N.Y. 252, 83 N.E. 16 and Tremaine v. Hitchcock & Co., 23 Wall. (90 U.S.) 518, 23 L.Ed. 97, both classic authorities for the proposition that net profit is the proper rule of damages, and that general expenses must first be deducted from gross profits. And the determination of this court was in turn unanimously affirmed by the Court of Appeals, 13 N.Y.2d 644, 240 N.Y.S.2d 759, 191 N.E.2d 290. It is worthy of note that the overruled Referee in the Bates case (supra) cited the Conviser case (supra) as authority for his view.

All concur except EAGER and MACKEN, JJ., who dissent in the following memorandum by EAGER, J.

EAGER, Justice (dissenting):

The determination of the majority contravenes well settled principles of law and is unsupported by the cases cited. The decision of Bates Chevrolet Corp. v. Haven Chevrolet, 16 A.D.2d 917, 229 N.Y.S.2d 168, affd. 13 N.Y.2d 644, 240 N.Y.S.2d 759, 191 N.E.2d 290, is distinguishable on several grounds as indicated by the record in that case. Particularly, it is noted that the evidence there was held to have established that the plaintiff would have incurred expense of $75 in delivering and handling each car and truck wrongfully sold by defendants to plaintiff's customers and that the referee there had failed to allow a deduction for such expense. Here, however, as stated at Special Term, 'plaintiffs established by clear, undisputed proof that they could have made the sales involved herein without any increase in their operational or overhead expenses, save a nominal increase in their telephone bill. Defendants have in no manner whatsoever refuted this testimony. In view thereof, the allocation (by the Referee) of a proportionate share of the overhead expenses to the prohibited sales involved herein was completely unwarranted and plaintiffs' damages thereon should have been computed on the basis of its gross profit.'

Cutter v. Gudebrod Brothers Co., 190 N.Y. 252, 83 N.E. 16, and Tremaine v. Hitchcock & Co., 23 Wall. (U.S.) 518, 23 L.Ed. 97, cited by the majority, both dealt with an award to the plaintiff of profits made by defendant and were not concerned with measuring damages by determining the profits which plaintiff would have realized if it had made the diverted sales.

Where, as here, the wrongful sales were made by defendants to plaintiffs' customers, they are entitled to recover 'the amount of loss sustained by it, including...