Seaman v. U.S. Steel Corp.

• Decision Date: 07 March 1979
• Citation: 166 N.J.Super. 467,400 A.2d 90
• Parties: , 26 UCC Rep.Serv. 80 Lawrence SEAMAN and Alan Seaman, t/a Seaman Marine Co., Plaintiffs-Respondents, v. UNITED STATES STEEL CORPORATION and Bushwick Iron and Steel Company, Inc., Defendants-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 467

166 N.J.Super. 467

400 A.2d 90, 26 UCC Rep.Serv. 80

Lawrence SEAMAN and Alan Seaman, t/a Seaman Marine Co. Plaintiffs-Respondents, v. UNITED STATES STEEL CORPORATION and Bushwick Iron and Steel Company, Inc., Defendants-Appellants.

Superior Court of New Jersey, Appellate Division.

Argued Jan. 9, 1979.

Decided March 7, 1979.

William S. Tucker, Jr., Newark, for defendants-appellants (Stryker, Tams & Dill, Newark, attorneys; Stephen D. Cuyler and Alice S. Thiele, Newark, on the brief).

Frederick L. Bernstein, Hackensack, for plaintiffs-respondents (Wittman, Anzalone, Bernstein, Dunn & Lubin, Hackensack, attorneys).

Before Judges LYNCH, CRANE and HORN.

The opinion of the court was delivered by

HORN, J. A. D.

Defendants United States Steel Corporation (U.S. Steel) and Bushwick Iron and Steel Company, Inc. (Bushwick) appeal from a judgment for $85,000 entered against them on the verdict of a jury following an extended trial. The sole issue submitted to the jury by reason of defendants' admissions of liability was the amount of damages to which plaintiffs were entitled.

The essential facts giving rise to the action are not in dispute. ¹ Since about 1962 plaintiffs Lawrence and Alan Seaman, partners in Seaman Marine Co., were in the general marine business, specializing in marine salvage in West New York, New Jersey. This work consists of raising and removing sunken obstructions in waterways. Plaintiffs also engaged in ancillary activities such as selling marine equipment, I. e., barges, tugboats, cranes, tanks, winches and equipment anchors, and constructing and assembling various pieces of marine equipment.

In 1971 they decided to construct a floating crane of 100-ton capacity. A typical land crane was to be permanently affixed to the flat top of some type of barge or tanker. Plaintiffs purchased a tanker ² and acquired a crane base and a separate arm or boom. Adaptations were made to each to fit them together and thereby to fabricate a floating crane barge.

The boom was 122 feet in length. Work was required to fit the boom to the crane base, because the boom was of a different manufacture from that of the base. Then the crane was to be fitted to the barge. In order to affix the boom to the crane base it was necessary to procure steel to fabricate a "heel plate" which would provide a strong linkage of the two. Plaintiffs had determined that the purchase of two seven-inch plates of steel would be the basis for an ideal design. Alan located a seemingly appropriate single seven-inch plate weighing about 500 pounds at the Brooklyn premises of Bushwick.

Plaintiffs went to Bushwick to view the plates. They had a general discussion with Bushwick concerning pieces they were going to have made for the boom, the specifications for the steel and whether or not Bushwick was going to rough-cut it for them. Bushwick told plaintiffs that the steel was A36 plate. Plaintiffs explained to Bushwick the purpose for which they were buying the steel, but Bishwick stated that they were not sure if plaintiffs could use it for that purpose because Bushwick did not know the exact bearing quality. So Bushwick suggested that plaintiffs call U.S. Steel.

Plaintiffs called and explained to U.S. Steel the purpose for which they were buying the plates. U.S. Steel said that the pieces were acceptable for that purpose and were actually a better quality steel. It was then agreed that plaintiffs would purchase the plates as long as U.S. Steel supplied a certificate bearing the qualifying chemical analysis of the properties of the steel. ³ Plaintiffs paid Bushwick $410.45 for the steel.

Plaintiffs sought to affix the boom to the crane base by means of the heel plate fashioned from the steel supplied by defendants, but encountered various difficulties. After defendants were notified of the problem it was ascertained and admitted by a representative of U.S. Steel that the steel as supplied did not have the properties as certified.

Plaintiffs instituted this action against both defendants, sounding in tort and breach of contract. At the inception of the trial defendants admitted liability, on the assumption that the damages would be the same under either theory. As stated, the case was tried only as to damages, with the resultant award to plaintiffs.

Defendants contend: (1) the trial judge erred in submitting the issue of lost profits to the jury; (2) his charge on lost profits was erroneous; (3) since there was no proof adduced by plaintiffs that defendants either were notified of or could have reasonably foreseen the consequential damages claimed, the judge erred in permitting the jury to consider awarding such damages, and (4) the judge erred in failing to charge on mitigation of damages. We consider (1), (2) and (3) together, since the facts and applicable law as to each are substantially identical.

The provisions of the Uniform Commercial Code (Code), N.J.S.A. 12A:1-101 Et seq., apply. N.J.S.A. 12A:2-714 sets forth the extent of a buyer's damages for breach in regard to accepted goods. Under that statute a buyer may recover: (1) any loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable; (2) the difference between the value of the goods accepted and the goods as warranted, and (3) in proper cases, any incidental and consequential damages under N.J.S.A. 12A:2-715. Incidental and consequential damages under § 715 are stated to be as follows:

(1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

(2) Consequential damages resulting from the seller's breach include

(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and

(b) injury to person or property proximately resulting from any breach of warranty.

Damages consisting of loss of profits come within the category of consequential damages. N.J.S.A. 12A:2-715(2) accords with prior New Jersey case law as exemplified in Pope v. Ferguson, 82 N.J.L. 566, 572-573, 83 A. 353 (E. & A. 1911), although "consequential damages" are referred to therein and in some other New Jersey cases as "special" damages. Marko v. Sears, Roebuck and Co., 24 N.J.Super. 295, 303, 94 A.2d 348 (App.Div.1953). See, also, the use of the term "special damages" in the Uniform Sales Act, N.J.S.A. 46:30-76, which was repealed upon the enactment of the Code in New Jersey in 1961. The Code rule as stated in § 715(2) and our pre-Code cases in effect follow the holding of Hadley v. Baxendale, 156 Eng.Rep. 145, 9 Exch. 341 (1854). See Patco Products, Inc. v. Wilson, 5 N.J. 543, 76 A.2d 677 (1950); Pope v. Ferguson, supra; Marcus & Co., Inc. v. K.L.G. Baking Co., Inc., 122 N.J.L. 202, 3 A.2d 627 (E. & A. 1938); New Jersey Study Comment following N.J.S.A. 12A:2-715.

In the instant case, while defendants knew the general purpose for which plaintiffs required the steel, I. e., to fashion the heel plate, the evidence does not disclose that defendants at the time of the purchase of the steel had reason to know of any loss which might result to plaintiffs from the latter's general or particular requirements and needs. Plaintiffs did not tell defendants that they contemplated any particular contract or work which required the use of the floating crane. As noted by defendants, at the time of the purchase plaintiffs had no timetable for completion of the floating crane. Defendants had no reason to know at the time of contracting that plaintiffs might suffer a loss of profits if there was a breach of the contract. Nor was there any evidence that would have permitted a jury to find that the parties at the time of the purchase of the steel reasonably foresaw such possible losses. Had they known, they might have refused to sell the plate without some assurance that they would not be responsible beyond a stipulated sum.

In the face of this lack of knowledge plaintiffs introduced testimony of loss of profits allegedly resulting from their inability to bid on an Army contract which required the use of the crane and, alternatively, loss of rental value of the floating crane at $25,000 a month. The judge at the close of plaintiffs' evidence struck out the testimony as to the loss of potential profits from the Army contract, on the ground that they were too speculative, but refused to strike the testimony as to the rental value. The size of the verdict undoubtedly was a consequence of the proof as to rental value.

Rich v. Bongiovanni, 4 N.J.Super. 243, 66 A.2d 888 (App.Div.1949), furnishes an illustration of where consequential damages were held...