Midlands Transp. Co. v. Apple Lines, Inc.

Decision Date12 May 1972
Docket NumberNo. 38223,38223
Citation197 N.W.2d 646,188 Neb. 435
PartiesMIDLANDS TRANSPORTATION COMPANY, a Corporation, Appellee, v. APPLE LINES, INC., a Corporation, Appellant.
CourtNebraska Supreme Court

Syllabus by the Court

1. The amount recoverable for a breach of an agreement by the seller of a business not to engage in competition with the buyer is the loss which the latter has sustained, naturally resulting from the breach.

2. The general rule is that the party injured by a breach of contract is entitled to recover all of his damages, including gains prevented, as well as losses sustained, provided they are reasonably certain and such as might naturally be expected to follow the breach.

3. Plaintiff must not only show in a breach of contract case his right of recovery, but the elements and facts which compose the measure of his recovery, and not leave the jury to rove without guide or compass through the limitless fields of conjecture and speculation.

4. It is the duty of the district court to refrain from submitting to a jury the issue of damages when the evidence is such that it cannot determine such issue except by indulging in speculation and conjecture.

5. A contract restraining a person from establishing a business competitive with that of the other party to it is strictly construed and doubts are resolved against the latitudinarian construction thereof.

6. The mere leasing of personal property, without proof of other circumstances, by a covenantor to an existing competitor of a promisee, does not constitute a breach of a general covenant not to compete.

Stern, Harris, Feldman, Becker & Thompson, Omaha, for appellant.

Nelson, Harding, Marchetti, Leonard & Tate, Kermit A. Brashear, II, Omaha, for appellee.

Heard before WHITE, C.J., and BOSLAUGH, McCOWN, and CLINTON, JJ., and WARREN, District Judge.

WHITE, Chief Justice.

This is a suit on a promissory note, but the real issue presented is the sufficiency of the evidence to submit the questions of liability and damages to a jury for the alleged breach by the plaintiff of a covenant not to compete with the defendant. These issues were raised by the cross-petition of the defendant and the district court, holding that there was insufficient evidence to submit the case to a jury, directed a verdict for the plaintiff on the promissory note originally sued upon. We affirm the judgment of the district court.

The controversy here rose on an agreement by Apple Lines, Inc., hereinafter referred to as Apple, to purchase a portion of an I.C.C. Certificate of Public Convenience and Necessity held by Midlands Transportation Company, hereinafter referred to as Midlands. Apple paid $5,000 when the agreement was made, in May 1967, and executed a negotiable promissory note for $22,000 for the balance of the purchase price. Apple was a petroleum products carrier from Kansas City, Missouri, North to Omaha, Nebraska. The purchase of Midlands' authority was to make the return trip south to Kansas City more profitable by trucking malt beverages from Omaha south to the Kansas City area. After a period of operation on a grant of temporary authority, the I.C.C. approved the agreement and the transfer of the relevant portion of Midlands' certificate was made. Midlands also agreed that it would not compete with Apple in the transportation of any commodity in any area covered by the transferred authority for a period of 5 years from the date of the transfer.

Was there competent evidence to submit the issue of damages on Apple's cross-petition? The proper measure of damages with regard to breach of a covenant not to compete was established by this court in Gallagher v. Vogel, 157 Neb. 670, 61 N.W.2d 245 (1953), wherein it was said: 'Speaking broadly, the amount recoverable for breach of an agreement by the seller of a business not to engage in competition with the buyer is the loss which the latter has sustained, naturally resulting from the breach.

'The general rule is that the party injured by a breach of contract is entitled to recover all of his damages, including gains prevented, as well as losses sustained, provided they are certain and such as might naturally be expected to follow the breach. See Western Union Tel. Co. v. Wilhelm, 48 Neb. 910, 67 N.W. 870.' Admittedly, damages in such a case cannot be proved with mathematical certainty. There must be some basis for computation of either a general loss to the business or a loss of profits. Apparently, from the pleadings, the cross-petitioner, Apple, asserts both aspects in its theory of recovery. In a quite recent case, relied upon by Apple in its brief, this court said as follows as to the measure of damages in an action for the loss of goodwill: 'In an action at law for the loss of goodwill, the evidence must contain Sufficient data to enable a jury, with a reasonable degree of certainty and exactness, to estimate the actual damages.' (Emphasis supplied.) Frank H. Gibson, Inc. v. Omaha Coffee Co., 179 Neb. 169, 137 N.W.2d 701.

The case of McGinnis v. Hardgrove, 163 Mo.App. 20, 145 S.W. 512 (1912), was concerned with an action against a seller for violation of an agreement not to compete in a livery business. Plaintiff testified that his gross receipts amounted to $8 to $10 a day before defendant began to compete but that subsequent to such competition his gross receipts amounted to only $4 or $5 a day. There was no evidence as to plaintiff's business expense except the fact that he merely paid expenses when his gross receipts diminished. With language extremely applicable to the instant situation the court discussed the plaintiff's burden in such an instance: 'Plaintiff must not only show in such a case his right of recovery, but the elements and facts which compose the measure of his recovery, and not leave the jury to rove without guide or compass through the limitless fields of conjecture and speculation.'

Summarizing these authorities the more precise question before us is not whether there is any competent evidence in the record to show that the damages are capable of mathematically exact measurement, but whether there is sufficient evidence and data to enable the trier of fact, the jury, with a reasonable degree of certainty and exactness to estimate the actual damages. Turning to the record we find that there is evidence that Midlands' gross income from the operation of the malt beverage authority was approximated, but that there is no competent evidence anywhere in the record as to Apple's gross income from said operation either prior to or after the effects of the alleged breach of the contract not to compete. The damage which Midlands' was allegedly responsible for was based primarily on the loss of a major user of Midlands' services soon after the sale to Apple. Without producing any records or books of the company, Apple's general manager testified that the loss of this customer reduced Apple's gross income 'about $650 per week' from sometime near the end of 1967 until the trial date of June 3, 1971. However, the record shows that the same witness went on to testify that Apple had continued to operate under the beverage authority with other customers and had made a profit, but due to the destruction of the company records in an untimely fire, he could not testify as to the amount or the extent of the profits from the whole malt beverage operation. There was also evidence that Apple invested in new refrigerated trailer units. There is no evidence of pecuniary loss, no dollar figures to show any degree of loss on this investment, and none at all to show any direct connection with the claimed loss of the one customer due to the breach of the covenant not to compete. Summarizing, the only competent evidence in terms of dollars is that Apple realized approximately $650 gross per week from servicing the Schatz account and that it spent approximately $80,000 for the acquisition of new refrigerated trailer units to be utilized Generally in its common carrier business. More precisely, and in accordance with the trial court's finding on this issue, the record is...

To continue reading

Request your trial
22 cases
  • Gary's Implement v. BRIDGEPORT TRACTOR, No. S-03-941
    • United States
    • Supreme Court of Nebraska
    • July 29, 2005
    ...also, Neb. U.C.C. § 3-305(a) (Reissue 2001) (discussing defenses to negotiable instruments). Indeed, in Midlands Transp. Co. v. Apple Lines, Inc., 188 Neb. 435, 197 N.W.2d 646 (1972), although the obligor challenged enforcement of a promissory note in a "cross-petition" and the obligor's ev......
  • World Radio Laboratories, Inc. v. Coopers & Lybrand, A-93-739
    • United States
    • Court of Appeals of Nebraska
    • September 12, 1995
    ...237 N.W.2d 92 (1975)). See, also, Quad-States, Inc. v. Vande Mheen, 220 Neb. 161, 368 N.W.2d 795 (1985); Midlands Transp. Co. v. Apple Lines, Inc., 188 Neb. 435, 197 N.W.2d 646 (1972). " 'Notwithstanding absence of a request for a specific instruction, a trial court must instruct a jury on ......
  • In re Andress, Bankruptcy No. 05-11919-M.
    • United States
    • United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Northern District of Oklahoma
    • June 28, 2006
    ...of damages is the impairment of good will and the plaintiff's lost profits.") (citations omitted). 38. Midlands Transp. Co. v. Apple Lines, Inc., 188 Neb. 435, 197 N.W.2d 646, 648 (1972) (quoting McGinnis v. Hardgrove, 163 Mo.App. 20, 145 S.W. 512 (1912)). 39. See, e.g., Hi-Qual Roofing & S......
  • Bass v. Boetel & Co., 39112
    • United States
    • Supreme Court of Nebraska
    • May 2, 1974
    ...a directed verdict without reference to the claimed error. The following is the pertinent Nebraska Law. In Midlands Transp. Co. v. Apple Lines, Inc., 188 Neb. 435, 197 N.W.2d 646, we said: 'Summarizing these authorities the more precise question before us is not whether there is any compete......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT