King Logging Co., Inc. v. Scalzo

• Decision Date: 16 February 1977
• Docket Number: No. 1934--II,1934--II
• Citation: 561 P.2d 206,16 Wn.App. 918
• Parties: KING LOGGING COMPANY, INC., a Washington Corporation, Appellant, v. Robert J. SCALZO et al., Respondents, and Cross-Appellants.
• Court: Washington Court of Appeals

Page 918

16 Wn.App. 918

561 P.2d 206

KING LOGGING COMPANY, INC., a Washington Corporation, Appellant, v. Robert J. SCALZO et al., Respondents, and Cross-Appellants.

No. 1934--II.

Court of Appeals of Washington, Division 2.

Feb. 16, 1977.

Dennis J. LaPorte, Tacoma, for appellant.

Romney Robert Brain, Moschetto & Alfieri, Seattle, for respondents and cross-appellants.

REED, Judge.

Plaintiff, King Logging Company, appeals from that portion of a Pierce County Superior Court judgment which denied its recovery of profits allegedly lost during the period of necessary repairs to a log yarder negligently damaged by defendants. Defendants cross-appeal from the award of damages for repair costs. We affirm in part and reverse in part.

In September 1972 plaintiff owned a Madill log yarder, a specialized piece of equipment weighing several tons and having a value of approximately $105,000. Plaintiff, who had contracts with Weyerhaeuser Company to remove timber which had already been felled on two different sites on Weyerhaeuser lands in Pierce County, intended to employ the yarder at the higher of the two sites to insure removal before weather conditions became too severe. It was then to be moved to the lower site and worked in conjunction with smaller equipment until the season ended.

Defendants Scalzo were engaged in heavy equipment hauling for the general public, were registered as common carriers with the Public Service Commission, held themselves out as such and charged rates approved by the commission. Defendant company had hauled the Madill yarder for plaintiff on two or three previous occasions, utilizing a specially designed tractor and lowboy trailer. On September 19, 1972, plaintiff's representative, Bud King, contacted Victor Scalzo by telephone and requested the yarder be transported a distance of approximately 25 miles over Weyerhaeuser roads to the upper site. Scalzo was not told of the Weyerhaeuser contracts nor of plaintiff's particular dependence upon the Madill yarder in order to complete them. In fact, he was not interested in the reasons for the haul, but only in road characteristics. Scalzo testified he declined to accept the job after King described the roads to be traversed. According to Scalzo, King called again and after further discussion about the nature of the roads, Scalzo agreed to make the haul. However, after conferring with his driver, Vaughn Burk, Scalzo still had reservations about the roads and called King for reassurance. He again agreed to make the haul and arranged that Burk would meet King on September 22, 1972. On that date Burk drove the tractor-trailer to the yarder's location, where it was loaded on the trailer, and was returning with it over the same road he had just traveled when the yarder fell from the trailer on a curve. It sustained extensive damage, and could not be repaired until some time in March 1973.

Plaintiff brought suit alleging defendants negligently damaged the yarder, thereby preventing plaintiff from removing several million board feet of logs from the Weyerhaeuser property. Plaintiff sought to recover the repaid costs of $14,104.69 and additional damages of $29,657.76 for loss of profits. ¹ Plaintiff offered evidence of the gross income lost and what the cost of operating the yarder with its crew would have been until plaintiff was forced to shut down by weather conditions in December 1972. Plaintiff also offered evidence that it attempted to procure substitute equipment during the period of repair, but was unable to do so because of the heavy demands of the Japanese log market that year. The trial court found defendants were negligent and awarded plaintiff its repair cost of $14,104.69 but denied any recovery for the loss of 'contract expectancies' or net profits. Plaintiffs appeal, assigning error to the trial court's finding of fact that such 'consequential damages' were not within the contemplation of the parties when the contract was made and that, in any event, plaintiff had assumed the risk or responsibility for such damages. Defendants cross-appeal, assigning error to further findings that defendant was acting in its capacity of common carrier in hauling the yarder and that it had failed to exercise reasonable care.

For the sake of clarity, we will first dispose of defendants' contentions. Defendants challenge the sufficiency of the evidence to support the trial court's finding of negligence. This was a factual determination to be made by the trial court on conflicting testimony, and we will not disturb that finding if there is substantial evidence to support it. Jacobs v. Brock,73 Wash.2d 234, 437 P.2d 920 (1968). We find there was such evidence. The trial judge personally viewed the equipment and the roadway over which it was being hauled and heard expert testimony as to how the accident occurred. There is adequate support for the conclusion defendants' driver failed to exercise ordinary care in that he negotiated the curve too sharply; this caused the lowboy to dig a corner into the ground, snapping the tie-down chains and tipping the load.

We need not directly address Scalzo's next contention that the trial court erred in concluding it was acting as a common carrier in the haul rather than as a contract carrier. As we have noted, the trial court properly found defendants failed to exercise ordinary care in transporting plaintiff's yarder. Thus, defendants failed to exercise even that degree of care required of the ordinary bailee for mutual benefit. Althoff v. System Garages, Inc., 59 Wash.2d 860, 371 P.2d 48 (1962); Ramsden v. Grimshaw, 23 Wash.2d 864, 162 P.2d 901 (1945); Sporsem v. First Nat'l Bank, 133 Wash. 199, 233 P. 641 (1925). As a common carrier defendants would have been held to the highest degree of care consistent with the trade, Conqer v. Cordes Towing Service, Inc., 58 Wash.2d 876, 365 P.2d 20 (1961), McCurdy v. Union Pac. RR Co., 68 Wash.2d 457, 413 P.2d 617 (1966). They cannot complain of a liability founded on their failure to exercise a lesser degree of care.

Plaintiff challenges the trial court's finding of fact No. 8, which reads in relevant part that:

(T)he plaintiff agreed to assume the risks of loss resulting from an accident of a consequential nature but not for the costs of repair resulting from any negligence of defendant.

and finding of fact No. 10 that:

In fact plaintiff led defendant to believe at the time the contract was entered into that if an accident occurred, plaintiff would assume all such consequential damages and in reliance thereon, defendant agreed to make the haul. . . . In fact, defendant did not want to make the haul anyway but was induced to make the haul by plaintiff and his representation that plaintiff would assume the risks of an accident.

These contested findings are based entirely upon Victor Scalzo's testimony that, 'On the second call, I said that I would not be liable.' Plaintiff did not object nor ask that the answer be stricken, apparently being taken by surprise. Defendants had not pled any such defense and, although Scalzo had previously been deposed for discovery purposes, he had never mentioned this attempt to limit liability. Scalzo admitted King did not respond to the statement, if he heard it at all.

It has long been the rule in this state that any attempt by a bailee for mutual benefit to disclaim or limit its liability for its own negligent acts contravenes public policy and will not be enforced. Althoff v. System Garages, Inc., supra; Ramsden v. Grimshaw, supra; Sporsem v. First Nat'l Bank, supra. So, in the instant case, Scalzo's apparent attempt to impose such a limitation or condition as a term of the agreement even if heard or assented to, could have no such effect.

Even if defendants could lawfully limit their liability for their own negligent acts, such a nebulous and ambiguous phrase cannot be construed to mean that defendants agreed to pay only repair costs and that plaintiff would bear any other losses sustained as a result of negligence in the haul. Scalzo's statement fails to provide sufficient support for the trial court's challenged findings.

We now address the principal issue of whether plaintiff may recover for a proven loss of profits resulting from its inability to remove the Weyerhaeuser timber by the end of the season. The trial court has satisfied that plaintiff sufficiently proved net losses of $29,657.76, but refused to award it these additional sums, deeming them 'consequential' or special in nature, and not within the contemplation of the parties at the time they contracted. The trial court appears to have relied for its decision on the landmark rule of Hadley v. Baxendale, 9 Ex. 341, 156 English Rptr, 145 (1854).

The rule of Hadley v. Baxendale, supra, governing the recovery of damages for breach of contract is still followed in substance in most states, including Washington, and was recently paraphrased in Larsen v. Walton Plywood Co., 65 Wash.2d 1, at page 6, 390 P.2d 677, at page 681 (1964) as follows:

(1) damages for breach of contract in this state can be recovered only for such losses as were reasonably foreseeable by the party to be charged, at the time the contract was made. Lewis v. Jensen, 39 Wash.2d 301, 235 P.2d 312; (2) if the injury was not foreseeable, then it must specifically be shown that the defendant had special knowledge of the risk he was undertaking. Dally v. Isaacson, 40 Wash.2d 574, 245 P.2d 200.

The expression of the rule in the Restatement of Contracts § 330, p. 509 (1932), is approved in Larsen and reads as follows:

In awarding damages, compensation is given for only those injuries that the defendant had reason to foresee as a probable result of his breach when the contract was made. If the injury is one that follows the breach in the usual course of events, there is sufficient reason for the defendant to foresee it; otherwise, it must be shown specifically that the defendant had reason to know the...