Randles v. Nickum & Kelly S. & G. Co.

• Citation: 169 Or. 284,127 P.2d 347
• Parties: RANDLES ET AL. <I>v.</I> NICKUM & KELLY SAND & GRAVEL CO.
• Decision Date: 07 July 1942
• Court: Oregon Supreme Court

169 Or. 284

127 P.2d 347

RANDLES ET AL.

v. NICKUM & KELLY SAND & GRAVEL CO.

Supreme Court of Oregon.

Argued March 14, 1942.

Reversed July 7, 1942.

Rehearing denied September 8, 1942.

Damages — Anticipated profits

1. Anticipated profits are a proper element of damages in a tort action if the loss is the direct and necessary result of defendant's acts and the profits can be shown with a reasonable degree of certainty.

Damages — Anticipated profits

2. The rule that damages which are uncertain or contingent cannot be recovered does not embrace an uncertainty as to the value of the benefit or gain to be derived from the performance of the contract, but an uncertainty or contingency as to whether such gain or benefit would be derived at all.

Evidence — Damages — Profits

3. In action for damages arising out of the conversion of a stock of lumber, testimony of plaintiffs that loss of the lumber deprived them of a profit of $1,600 on two houses which they contracted to build at a fixed price was erroneously admitted, since such testimony was a mere estimate and opinion unsupported by facts where there was no other evidence relating thereto and no testimony that plaintiffs had ever made a profit under similar contracts.

Evidence — Judicial notice

4. The court will take judicial notice that the business of building houses for an agreed price is highly speculative in nature.

Damages — Evidence — Profits

5. To recover anticipated profits as damages, absolute certainty that there would have been profits, or certainty as to their amount, is not required but it is essential that plaintiff present such evidence as might reasonably be expected to be available under the circumstances.

Damages — Loss of profits — Speculation

6. The proof of loss of profits as basis for recovery thereof must pass the realm of conjecture, speculation or opinion not founded on facts and must consist of actual facts from which a reasonable accurate conclusion regarding cause and the amount can logically be drawn.

Damages — Conversion — Loss of profits

7. In action for damages arising out of the conversion of the stock of lumber, testimony of plaintiff that loss of the lumber deprived them of a profit on two houses which they contracted to

build at an agreed price was erroneously admitted where plaintiffs failed to establish that the conversion and not their own hopeless financial condition was the proximate cause of failure to complete the houses.

Appeal and error — Damages — Anticipated profits

8. In action for damages arising out of conversion of lumber wherein allowing the jury to consider loss of anticipated profits as an element of damages was error because of failure of proof and such item of special damages was not segregated in the verdict, supreme court would not disregard error and affirm judgment, on ground that value of lumber alone exceeded amount of verdict where evidence was in conflict as to such value.

                  Loss of anticipated profits as damages, note, 28 A.L.R. 1510
                32 A.L.R. 126, 135. See, also, 15 Am. Jur. 558
                  25 C.J.S., Damages, § 116
                

Before KELLY, Chief Justice, and BAILEY, LUSK, ROSSMAN and BRAND, Associate Justices.

Appeal from Circuit Court, Multnomah County.

IRVING RAND, Judge pro tem.

Action by S.W. Randles, and another, against Nickum & Kelly Sand & Gravel Company for damages arising out of the conversion of a stock of lumber. From a judgment for plaintiff, defendant appeals.

REVERSED. REHEARING DENIED.

Harry Lehrer, of Portland (Cookingham & Hanley, of Portland, on the brief), for appellant.

Archie M. Hall, of Portland (Moulton & Davis, of Portland, on the brief), for respondents.

LUSK, J.

The plaintiffs recovered a judgment based on the verdict of a jury in an action for damages, both general and special, arising out of the conversion of a stock of lumber. The defendant has appealed and assigns as error rulings of the trial court admitting evidence respecting loss of anticipated profits and submitting to the jury the question of the right of the plaintiffs to recover damages on account thereof.

The plaintiffs were engaged in the business of manufacturing finished lumber at Vancouver, Washington, and of building houses in Portland, Oregon. About May 1, 1939, they rented space in the defendant's warehouse in Portland for the purpose of storing lumber to be used in their building operations. There is substantial evidence that on December 21, 1939, the defendant converted this stock of lumber by denying to the plaintiffs access to the portion of the warehouse which they had rented. The plaintiffs alleged in their complaint and attempted to prove that they were prevented by this wrongful act from completing the performance of several contracts for the construction of houses, on each of which they would have made a substantial profit. The trial judge withdrew from the jury consideration of profits thus anticipated on all the contracts except two, but as to these two submitted to the jury the question of whether the plaintiffs were entitled to recover damages not in excess of $1,600. The jury returned a verdict in favor of the plaintiff in the sum of $3,880 with no segregation as between general and special damages.

1, 2. The question for us to determine is whether the proof measures up to the requirements of the law governing the right to recover damages for anticipated profits in a tort action. The general rule is that such profits are a proper element of damage when the loss is the direct and necessary result of the defendant's acts and the profits can be shown with a reasonable degree of certainty. Damages which are speculative and contingent may not be recovered. Krause v Bell Potato Chip Co., 149 Or. 388, 394, 39 P. (2d) 363; Preble v. Hanna, 117 Or. 306, 244 P. 75; Anderson v. Columbia Contract Company, 94 Or. 171, 184 P. 240, 185 P. 231, 7 A.L.R. 653; McGinnis v. Studebaker Corp., 75 Or. 519, 522, 146 P. 825, 147 P. 525, L.R.A. 1916B, 868, Ann. Cas. 1917B, 1190; Fields v. Western Union Telegraph Co., 68 Or. 209, 217, 137 P. 200; Hoskins v. Scott, 52 Or. 271, 96 P. 1112; Blagen v. Thompson, 23 Or. 239, 254, 31 P. 647, 18 L.R.A. 315; Restatement, Torts, § 912d, illustration 7, p. 581; 15 Am. Jur., Damages, 571, § 155. As stated by Mr. Justice ROBERT S. BEAN in Blagen v. Thompson, supra:

"The rule that damages which are uncertain or contingent cannot be recovered, does not embrace an uncertainty as to the value of the benefit or gain to be derived from the performance of the contract, but an uncertainty or contingency as to whether such gain or benefit would be derived at all. It only applies to such damages as are not the certain result of the breach, and not to such as are the certain result but uncertain in amount."

3. We think that the rulings complained of were erroneous for two reasons.

First, the evidence that profits would have been made had the houses been completed is a mere estimate of the plaintiffs. They contracted to build the houses at an agreed price, and they testified that the cost of construction in each instance would have been about $800 less than the contract price, hence a profit of $800 on each house. This, they said, was the normal profit. They produced no supporting data from which the jury could have ascertained whether a profit of $800 or in any other amount would have been realized. There was no testimony that the plaintiffs had ever made a profit under similar contracts. One of the plaintiffs testified:

"Q. I assume that all jobs that you have taken have been profitable?

"A. Oh, no, sir.

"Q. And sometimes you make losses?

"A. Sure.

"Q. Of...