Georgia Power and Light Co. v. Fruit Growers Express

• Decision Date: 20 February 1937
• Docket Number: 25816,25863.
• Citation: 190 S.E. 669,55 Ga.App. 520
• Parties: GEORGIA POWER & LIGHT CO. v. FRUIT GROWERS EXPRESS CO. FRUIT GROWERS EXPRESS CO. v. GEORGIA POWER & LIGHT CO.
• Court: Georgia Court of Appeals

190 S.E. 669

55 Ga.App. 520

GEORGIA POWER & LIGHT CO. v. FRUIT GROWERS EXPRESS CO.

FRUIT GROWERS EXPRESS CO. v. GEORGIA POWER & LIGHT CO.

Nos. 25816, 25863.

Court of Appeals of Georgia, First Division

February 20, 1937

Rehearings Denied March 18, 1937.

Syllabus by the Court.

1. "Damages are given as compensation for the injury sustained." "Damages recoverable for a breach of contract are such as arise naturally and according to the usual course of things from such breach, and such as the parties contemplated when the contract was made, as the probable result of its breach."

2. If the contract is for the sale of goods to be manufactured or otherwise procured by the seller, and the buyer refuses to accept, or gives notice that he intends to refuse acceptance so that the seller is excused from procuring and tendering the goods, he will be entitled to such damages as will put him in the same position as if he had been permitted to complete the contract. The law always seeks to give a remedy commensurate with the injury. The injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed.

3. When a right of action for breach of contract exists, compensatory damages will be given for the net amount of those losses caused and gains prevented by the defendant's breach, in excess of savings made possible.

Error from Superior Court, Ware County; M. D. Dickerson, Judge.

Action by the Georgia Power & Light Company against the Fruit Growers Express Company. To review the judgment, plaintiff brings error, and defendant files a cross-bill of exceptions.

Reversed on the main bill of exceptions, and affirmed on the cross-bill.

H. L McGlothlin and Cook & Harris, all of St. Petersburg, Fla and Wilson, Bennett & Pedrick, of Waycross, for plaintiff in error.

W. G Brantley, Jr., of Washington, D. C., and Memory & Memory, of Blackshear, for defendant in error.

GUERRY Judge.

The plaintiff in error, the Georgia Power & Light Company, brought suit against the Fruit Growers Express Company, defendant in error, to recover damage for the breach of a contract requiring and obligating the defendant in error to accept and pay for a minimum of 20,000 tons of ice during each year of 1932 and 1933 at a price fixed by the contract. The defendant admitted its failure to accept and pay for such ice, and raised only the issue as to the amount of damage to which the plaintiff was entitled. By agreement the matter was submitted to an auditor to pass on all questions of law and fact. To the report of the auditor both parties filed exceptions of law and exceptions of fact. The exceptions were heard by the judge without the intervention of a jury. All of the exceptions of the plaintiff, both of law and of fact, were overruled and the defendant's exceptions were sustained. The plaintiff assigns error on such ruling.

The contract sued on was made in July, 1926. Performance was to begin May 1, 1927. The contract required the plaintiff to build and maintain at Waycross, Ga., a plant fully equipped with modern appliances for the manufacture, storage, and distribution of ice, according to plans and specifications approved by the Fruit Growers Express Company. It was to have a daily manufacturing capacity of not less than 150 tons of ice and a storage capacity of not less than 6,000 tons. The plaintiff was also to construct buildings, runways, machinery, platforms, and other facilities necessary for the loading and handling of such ice and delivering same to defendant in its cars, and was to load said ice into cars of defendant at its own expense. The contract further provided that on six months' written notice the plaintiff was to enlarge its plant to sufficient size to meet all requirements of the defendant. The defendant agreed to take each calendar year during the continuation of said contract, which was to run for a period of fifteen years from May 1, 1927, a minimum of 20,000 tons of ice and pay therefor $3.25 per ton, which payments were to be made during each calendar year. During the calendar year 1932 the defendant accepted and paid for only 9,427 tons of ice, and failed and refused to pay for the minimum amount it had agreed to accept and pay for. In 1933 it accepted and paid for 8,300 tons, and failed and refused to accept or pay for the minimum number of tons agreed on. The plaintiff sued for the contract price of $3.25 per ton on the ice undelivered, less the cost of manufacture, including labor and materials and services incident to icing and re-icing cars in the manner provided in the contract, which amount was alleged and shown to be $1.29 per ton. The aggregate amount sued for was approximately $45,000.

By its answer defendant denied that plaintiff could have manufactured the undelivered ice at the cost named in the petition, and that any damage resulted to plaintiff, and alleged that the profits lost by the plaintiff, if any, must be measured by applying to the number of tons of ice the defendant is alleged not to have purchased and received, the per ton profit, if any, the plaintiff would have realized had it manufactured and delivered the full amount agreed on under the contract; and that the difference between the total contract price and the complete cost of manufacturing and delivering the entire minimum amount would disclose the net profits. It was further alleged that the contract was an entire and indivisible contract for the purchase and sale, each year through out its life, of a minimum amount at a fixed price; that the profits lost by the plaintiff in the years 1932 and 1933, if any, must be measured by applying to the number of tons of ice which the defendant failed to accept and pay for in each of said years the per on profit, if any, that the plaintiff would have realized each year had it manufactured and delivered the ice called for under the contract. That the difference between the total contract price and the complete cost of manufacturing and delivering the entire 20,000 tons will disclose the net profit for each year and such profit can be determined only in that way.

The evidence of the plaintiff showed that the cost of the manufacture and delivery to the defendant of the undelivered ice would have amounted to $1.29 per ton, and that no other items of expense would have accrued. The plaintiff's evidence also disclosed the total cost to the plaintiff of the plant and the operating revenues and the operating expenses. Plaintiff did not include in this estimate of the cost of manufacture and delivery of the ice the cost of superintendence, insurance, taxes, maintenance of building and grounds, depreciation, etc., because it contends that such items would not be affected by the manufacture of additional tonnage, and that these amounts would not have been changed by the manufacture of the additional tonnage under the contract.

The defendant introduced a table of what he termed omitted costs incurred in the carrying on of the business by the plaintiff, which included maintenance of buildings and grounds, superintendence, ice inventory, taxes, insurance, and depreciation, which, if said items be included in the cost of manufacture, would amount to another $1.49 per ton, and that said sum and the $1.29, cost of labor, materials, and delivery represented the actual cost of manufacturing the ice, and that the difference between these two sums and the contract price, to wit, $3.25 per ton, was the damage per ton that plaintiff had suffered. It was shown by the evidence for plaintiff that these sums of maintenance, taxes, insurance, and depreciation would have been present whether the plant was operated or not.

The question for determination is: What is the proper measure of damages applying to the particular situation? This is the controlling issue. The auditor, in his findings which were approved by the court, found that the damage accruing to the plaintiff was the difference between the contract price of the ice not manufactured by the plaintiff or accepted by defendant and the manufacturing costs thereof, and that this manufacturing cost included not only the $1.29 per ton which was the amount which would have been expended by plaintiff in making the ice, but also the proportionate part of the overhead expense listed under the items cited above. The parties were in accord as to the number of tons of ice accepted and paid for by the defendant during each of the years 1932 and 1933.

Code, § 20-1402, provides that, "Damages are given as compensation for the injury sustained." Section 20-1407 provides: "Damages recoverable for a breach of contract are such as arise naturally and according to the usual course of things from such breach, and such as the parties contemplated, when the contract was made, as the probable result of its breach."

Defendant in error insists that in White & Hamilton Lumber Co. v Lynch, 159 Ga. 283, 125 S.E. 472, 44 A.L.R. 211, it was said that "where there is an anticipatory breach of the contract, and the seller accepts the tender of breach, bringing suit upon the anticipatory breach to recover damages for the refusal to accept other installments of lumber, not cut and tendered at the time of such breach, the measure of damages is the difference between the contract price and the cost of production." Defendant in error insists that included in the cost of production, in addition to the amount of $1.29 per ton of ice as alleged and shown by the plaintiff, are certain other items under the heads of superintendence, insurance of the property, taxes, depreciation, etc., which would make a total of $1.425 per ton more, and that the damage incurred by reason of the breach is the difference between the aggregate of these two items,...