Guetzkow Bros. Co. v. Andrews

• Decision Date: 28 January 1896
• Citation: 66 N.W. 119,92 Wis. 214
• Parties: GUETZKOW BROS. CO. v. ANDREWS ET AL.
• Court: Wisconsin Supreme Court

92 Wis. 214

66 N.W. 119

GUETZKOW BROS. CO.

v.ANDREWS ET AL.

Supreme Court of Wisconsin.

Jan. 28, 1896.

Appeal from superior court, Milwaukee county; R. N. Austin, Judge.

Action by Guetzkow Bros. Company against A. H. Andrews & Co. for the price of goods sold and delivered. From a judgment for plaintiff, defendants appeal. Affirmed.

This case was brought by plaintiff to recover $1,978, alleged to be due from the defendants for show cases and other articles manufactured for them, which articles they had contracted to furnish exhibitors at the World's Fair. The answer of defendants contained a denial of liability, and set up as a defense that the articles were not constructed or furnished according to the contract, and were not reasonably worth the contract price, or as much as the payments that had been made. They counterclaimed for the amount of the overpayments, and also for damages, claiming as such damages the loss of profits they would have made if plaintiff had fully complied with the contract, and placing such damages at the difference between the price they agreed to pay plaintiff, and the amount they were to receive from the exhibitors; the advance being from 100 to 150 per cent. The case was tried by a referee, who found that the goods were all manufactured and furnished substantially in accordance with the contract, except in some small particulars, for which a rebate of the purchase price was allowed. The evidence shows that the goods were manufactured for a special purpose, that there was no market price for such goods, and that plaintiff knew, when it contracted with defendants, that they were under contract to furnish the goods to exhibitors at the World's Fair, and that the contract was made by them with plaintiff to enable them to carry out the contract previously made by them with such exhibitors. The findings of the referee were confirmed by the court, and judgment was entered in plaintiff's favor, from which this appeal was taken.Cary & Cary and Sylvester & Scheiber, for appellants.

Eschweiler & Carpenter, for respondent.

MARSHALL, J. (after stating the facts).

There is no controversy but that the findings of fact warrant the judgment that was entered, and it seems clear that, waiving the question of whether they are supported by the evidence, in respect to the determination that the contract between the parties was substantially complied with, appellants are not entitled to prevail on this appeal, unless the rule for which they contend--that is, that they are entitled to recover the loss of profits, amounting to from 100 to 150 per cent.--should have been adopted by the trial court. The evidence was taken on appellants' theory, but at the close of the trial was stricken out; the referee holding that the rule contended for would not be applied to the case. He said: “The decided weight of authority is in favor of the exclusion from consideration, on the question of damages, the profits the original contractor might have made under his contract; that such damages--possible profits--are uncertain, speculative, and too remote to affect the plaintiff, and the testimony in relation to the same should be excluded.” Looking at this ruling in the light of the evidence and appellants' contention, we assume the court did not hold, or intend to hold, that lost profits are not recoverable in a proper case, but that the rule contended for by appellants could not be applied, and that the evidence did not tend to establish damages under any other rule. On this subject the learned counsel for appellants say: “We say, frankly, that if, in the light of the facts of this case, the referee decided that proposition correctly, the judgment should be affirmed.” So we may properly consider this subject at the outset in determining the case, and, in doing so, shall take into consideration the evidence that was stricken out. If, notwithstanding such evidence, the court could not, on the whole case, have allowed loss of profits as damages, then the error in striking out such evidence, if it was error, did not prejudice appellants; hence, does not constitute reversible error. There is no controversy but that the difference between the contract price for the goods to appellants and what they were to receive was unusually large. To say that such increased price to the exhibitors was extraordinary, in a superlative degree, would be fully justified. It also appears beyond controversy that respondent's officers knew, when the contract was made with appellants, that the goods were intended for a special purpose. They had reason to know that there was no established market price for such goods. They knew that defendants were under contract to furnish the goods to the exhibitors, but it does not appear that they had any notice of the contract price such exhibitors were to pay; and it is in the light of these facts that we must determine the question presented. As stated, in effect, by this court in Wright v. Mulvaney, 78 Wis. 89, 46 N. W. 1045. it is sometimes difficult to determine when the rule of prospective profits should be applied, and when not, and such determination must be largely governed by the special circumstances in each particular case; and, as often said by this court, in terms or in effect, such profits are at best conjectural and uncertain, and, when allowed, are likely to, or necessarily do, operate unjustly and oppressively. Wright v. Mulvaney, supra; Milling Co. v. Howitt, 86 Wis. 270, 56 N. W. 784;Bierbach v. Rubber Co., 54 Wis. 208, 11 N. W. 514;Anderson v. Sloane, 72 Wis. 566, 40 N. W. 214. Therefore, before the rule should be applied to any given case, such case should be brought clearly within the authorities on the subject, leaving no reasonable controversy in respect to it. To be sure, in this case, the element of uncertainty, as the term is commonly used, was in some respects not present, because the contract between the appellants and the exhibitors relieved it in a measure of that difficulty; but uncertainty still remained, quite prejudicial to respondent, in that it was not known to its officers, at the time of the making of the contract, that the price appellants were to obtain from the exhibitors would yield an extraordinary profit. Where there has been a previous sale, or where there has not, the fundamental principle to be observed is that the damages for the breach complained of must be confined to such as may be fairly considered to arise, according to the usual course of things, from such breach, or such as may reasonably be supposed to have been in contemplation of the parties at the time of making the contract as the probable result of the breach of it. Hadley v. Baxendale, 9 Exch. 341; Cockburn v. Lumber Co., 54 Wis. 619, 12 N. W. 49. Hence, it is held that, in order to make applicable the special rule of damages,--that is, loss of profits,--it must be shown that the special circumstances, by reason of which the party invokes such application, were brought clearly home to the knowledge of both parties at the time the contract was made, and it is only applicable in so far as such circumstances were so brought home.

All rules for the assessment of damages for the breach of contracts are supposed to be founded upon principles of natural justice, the intention being to keep strictly within such principles. It is on that ground that the general rule established for the assessment of damages for the breach of an executory contract to sell and deliver property, i. e. the difference between the contract price and the market value at the time and place of the delivery, in order to work out natural justice in case of special circumstances, must necessarily be broadened out to fit such circumstances, but only when such special circumstances are shown to have been brought home to the knowledge of both parties at the making of the contract. The leading case of Hadley v. Baxendale, supra, states the rule applicable to a case of this kind, and it has been repeatedly approved by this court. It is thus stated, in the language of Anderson, B.: “Where two parties have made a contract, which one of them has broken, the damages which the other ought to receive in respect of...