Harper Furniture Co. v. Southern Express Co.

• Decision Date: 29 May 1908
• Citation: 62 S.E. 145,148 N.C. 87
• Parties: HARPER FURNITURE CO. v. SOUTHERN EXPRESS CO.
• Court: North Carolina Supreme Court

62 S.E. 145

148 N.C. 87

HARPER FURNITURE CO. v. SOUTHERN EXPRESS CO.

Supreme Court of North Carolina

May 29, 1908

Appeal from Superior Court, Caldwell County; Ward, Judge.

Action by the Harper Furniture Company against the Southern Express Company. From a judgment of nonsuit, plaintiff appeals. Reversed, and new trial awarded.

Walker and Brown, JJ., dissenting.

The current profits of a going manufacturing concern are, as a general rule, too uncertain to form the basis of an award of damages for breach of contract affecting the operation of the plant; the correct rule in such cases being that the damages shall be ascertained on the basis of interest on the invested capital which is unproductive for the time, with the addition, under certain circumstances, of the pay of employees rendered idle thereby, and hence, in an action by a manufacturing company for damages for the failure of a carrier to deliver machinery, whereby the plaintiff's factory was necessarily closed, the amount of profits which the mill could have realized during the delay was properly excluded.

See 144 N.C. 639, 57 S.E. 458.

There was evidence tending to show: That plaintiff was a firm engaged in the manufacture of furniture, having their mill at Lenoir, N. C.; that on or about the 21st of October, 1905 the Erie City Iron Works of Erie City, Pa., shipped to plaintiff, as consignee, at Lenoir, N. C., an engine shaft of a given kind, weighing something like 650 pounds; that pursuant to the order of plaintiff company, the shipment was made by express over a line of connecting carriers, between the two points, including the defendant, and the shaft was delivered at Lenoir, N. C., by defendant company on November 9, 1905, and indicating a wrongful delay in the shipment of something like two weeks. There was further evidence tending to show that the furniture factory of plaintiff company, for which the engine shaft had been ordered, was necessarily closed down during the time of wrongful delay, and that by reason of this loss of time in operating the factory the plaintiff company suffered damages to the amount of $200 and more, arising from wages paid idle hands and other costs incident to the delay, and interest on the amount of capital invested in the mill and unproductive during said time. The character, capacity, and amount invested in the mill were shown as data for estimating the damage suffered, and it was proved that the full product of the mill had been already sold for the period and at a profit. It was further shown that, as soon as it was disclosed that the shipment was delayed, plaintiff company immediately duplicated the order and both shafts were delivered at the same time, November 9th. Plaintiff offered to show the amount of profit which the mill could have realized during the time of delay, but the evidence was held to be incompetent. Plaintiff excepted. At the close of the testimony, the court intimated an opinion that on the evidence, if believed, only nominal damages could be recovered, and, in deference to this intimation, plaintiff submitted to a nonsuit and appealed.

Jones & Whisnant, for appellant.

W. C. Newland, for appellee.

HOKE J.

The decisions of this state are to the effect that the current profits of a going manufacturing enterprise, which are dependent on the varying cost of labor and material and the fluctuations of the market value of the product, as a general rule, are too uncertain to form the basis of an award of damages in breaches of contract affecting the operation of the plant, and the better rule in such cases, when it appears that substantial damages are recoverable, is that such damages shall be ascertained on the basis of interest on the capital invested, which is unproductive for the time, with the addition, under certain circumstances, of the pay of hands idle and necessarily unemployed, and some other incidental expenses reasonably referable to the defendant's wrong, which may at times include an outlay in the reasonable effort to reduce or minimize the loss. No doubt, there are cases where the average rental value of a business building or a given machine may afford data for a correct measure of damages; but, in plants of the kind indicated, this rental value is so connected with or dependent upon the fluctuation of the markets that it has been considered with us as the safer rule in enterprises of the kind stated to adopt the interest of the capital invested and unproductive for the time with other incidental costs as the correct method of adjustment. The judge below therefore made a correct ruling in rejecting the evidence offered tending to show the current profits of the plaintiff's mill. Lumber Co. v. Iron Works, 130 N.C. 584, 41 S.E. 797; Sharpe v. Railroad, 130 N.C. 613, 41 S.E. 799; Rocky Mount Mills v. Railroad, 119 N.C. 693, 25 S.E. 854, 56 Am. St. Rep. 682; Foard v. Railroad, 53 N.C. 235, 78 Am. Dec. 277; Boyle v. Reeder, 23 N.C. 607.

We are of opinion, however, that there was error in holding that, on the facts appearing from the evidence, the plaintiff could, in any event, recover only nominal damages. The plaintiff complains and offers evidence tending to show a breach of contract of carriage, and, as in other cases of breach of contract, it should ordinarily be allowed to recover the damages naturally incident to the breach, and which may be reasonably supposed to have been in the mind of the parties at the time the contract was made. Where the goods shipped have a market value, and there is nothing to indicate the specific purpose for which they were ordered, these damages are usually the difference in the market value of the goods at the time fixed for delivery and that when they were in fact delivered. We have so held at the present term in the case of Davidson Development Co. v. Railroad, and Lee v. Railroad, 136 N.C. 533, 48 S.E. 809, is to the same effect. When, however, the goods are ordered for a special purpose, or for present use, in a given way, and these facts are known to the carrier, he is responsible for the damages fairly attributable to the delay and in reference to the purpose or the use indicated, and it is not necessary always that those facts should be mentioned in the negotiations, or in express terms made a part of the contract; but, when they are known to the carrier, under such circumstances, or they are of such a character that the parties may be fairly supposed to have them in contemplation in making the contract, such special facts become relevant in determining the question of damages. Moore on Carriers, p. 425; Hutchinson on Carriers, § 1367.

In the citation from Hutchinson, after stating the general rule to be the difference in the market value of the goods, the author says: "But there may be circumstances under which the application of this rule would be inequitable. There may be, and frequently are, cases in which for special reasons the shipper may desire that the transportation of his goods may be hastened, and if, with a knowledge of these circumstances, the carrier should unreasonably delay the carriage, or if, having expressly contracted to carry them within a given time, or for a given purpose, he should negligently delay them beyond that time, or so as to defeat that purpose, the difference in the value of the goods at the time of their actual arrival and at the time when they should have been delivered may prove a very inadequate recompense to their owner."

The same principle is well stated by Bramley, L. J., in the case of Hydraulic Co. v. McHaffie et al., 4 Q. B. Div. [1878-79] 670, an action for damages for delay in constructing a machine, as follows: "The fact that a binding agreement has been arrived at does not of itself create a responsibility for all the injury following from a breach of it. The wrongdoer is prima facie only liable for the natural and ordinary consequences of the breach; but where, at the time of entering into the contract, both parties knew and contemplated that if a breach is committed some injury will occur in addition to the natural and ordinary consequences of the breach, the person committing the breach will be liable to give compensation or damages on the occurrence of the injury." This limitation on the general rule as to the amount of damages recoverable for wrongful delay in the shipment of goods, and being itself an application of the third rule laid down in the case of Hadley v. Baxendale, Woods, Mayne on Damages, p. 21, is frequently presented in case involving the making and shipments of machinery. In fact, these are the cases which usually call for the application of the principle stated. Many instances of such application are afforded in the decisions in our own state, as in Boyle v. Reeder, supra; Foard v. Railroad, supra; Rocky Mount Mills v. Railroad, 119 N.C. 693, 25 S.E. 854, 56 Am. St. Rep. 682; Sharpe v. Railroad, 130 N.C. 613, 41 S.E. 799. See, also, Mace v. Ramsey, 74 N.C. 11; Neal v. Hardware Co., 122 N.C. 104, 29 S.E. 96, 65 Am. St. Rep. 697. And well-considered cases in other jurisdictions are to like effect. Simpson v. Railway, 1 Q. B. Div. [1875-76] 274; Corey v. Iron Works, 3 L. R. [1867-68] 181; Gee v. Railroad, 6 Ex. Ch. [1860] 210; Dieelbinger v. Armstrong, 92 Q. B. [1873-74] 473; Railway v. Ragsdale, 46 Miss. 460; Griffin v. Clover, 16 N.Y. 489, 69 Am. Dec. 718; Priestly v. Railroad, 26 Ill. 205, 79 Am. Dec. 369; Railway v. Pritchard & Co., 77 Ga. 412, 1 S.E. 261, 4 Am. St. Rep. 92.

In Simpson's Case, supra, it appeared that plaintiff, a manufacturer of cattle spice and other substances, was in the habit of making an exhibit of samples of his goods in the grounds of certain cattle shows going on in different sections of the country. On the trial before Cockburn, C.J. at Spring...