R & I Electronics, Inc. v. Neuman

• Citation: 66 A.D.2d 836,411 N.Y.S.2d 401
• Court: New York Supreme Court Appellate Division
• Decision Date: 26 December 1978
• Parties: R & I ELECTRONICS, INC., Respondent-Appellant, v. Dr. Carl H. NEUMAN d/b/a Doctors Hospital, Appellant-Respondent.

Page 401

411 N.Y.S.2d 401

66 A.D.2d 836

R & I ELECTRONICS, INC., Respondent-Appellant, v. Dr. Carl H. NEUMAN d/b/a Doctors Hospital, Appellant-Respondent.

Supreme Court, Appellate Division, Second Department.

Dec. 26, 1978.

Morris Ehrlich, Forest Hills (Abraham Hecht, Forest Hills, of counsel), for appellant-respondent.

Alan Manning Miller, Carle Place, for respondent-appellant.

Before HOPKINS, J. P., and DAMIANI, RABIN and MARGETT, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for breach of contract, the parties cross-appeal from a judgment of the Supreme Court, Nassau County, entered June 8, 1977, which, after a nonjury trial, was in favor of the plaintiff in the principal amount of $74,104.52.

Judgment modified, on the law and the facts, by (1) reducing the award therein to $8,916, which shall represent a recovery as to the first cause of action, and (2) adding thereto a provision dismissing the second and third causes of action except as to the claim for loss of profits. As so modified, judgment affirmed, without costs or disbursements, and matter remitted to Trial Term for a new trial on the claim for loss of profits.

In this case the plaintiff entered into a contract with a hospital to install and maintain television sets which were to be rented to patients. This arrangement had existed for some time when in 1971 the individual defendant purchased the hospital. On June 1, 1972, the parties entered into a contract which provided that in return for a payment of a bonus of $10,000 to defendant and the continued repair and maintenance of the television sets, the plaintiff would be entitled to 60% Of the gross rentals thereof until the expiration of the contract on January 1, 1981. Trial Term found, and its finding is not challenged on appeal, that the defendant breached the contract in an effort to force plaintiff out of the hospital and replace its black and white sets with color television sets. Both parties challenge the amount of damages awarded by Trial Term.

Under its First cause of action, plaintiff sought to recover its 60% Share of television rentals collected by defendant but not paid over to plaintiff. The proof established that the breach occurred in the early days of July, 1974, when the defendant caused all of the plaintiff's televisions to be removed from the hospital and placed in storage. However, Trial Term only permitted recovery of rentals due and owing until April 18, 1974, the date upon which the action was commenced. The court should have granted plaintiff's motion to conform the pleadings to the proof and awarded plaintiff the sum of $8,916 as its 60% Share of the rentals collected but withheld up to July 8, 1974, with interest thereon from that date.

In its Second cause of action plaintiff sought to recover the $10,000 bonus paid to defendant at the time the contract in question was entered into. Trial Term allocated the bonus over the life of the contract and awarded to plaintiff the proportional share attributable to the period from the date of breach to the date of expiration of the contract. This was error. Damages awarded in a breach of contract action should place a plaintiff in the same position as it would have been if the agreement had not been violated. The court should look to the contract to determine what benefits plaintiff would have received if the contract had been fully performed. Viewed in this light, the $10,000 bonus was an inducement to enter into the contract. Had the contract been fully performed, no part of this money would have been returned to plaintiff. Accordingly, an award of lost profits under the third cause of action will make plaintiff whole and thus the second cause of action should have been dismissed.

The Third cause of action sought to recover damages for the cost of installation, the value of the equipment and loss of profits. Trial Term did not award damages for equipment because the defendant had removed the television sets from the hospital and had stored them for return to plaintiff. However, it awarded $28,662 as the depreciated value of the installations in the hospital which were not removable. In our opinion this award was error because the contract provided that the equipment and installations were to remain the property of the plaintiff during the life of the contract but were to...