Thunderbird Metallurgical, Inc. v. Arizona Testing Laboratories, 1

• Decision Date: 02 February 1967
• Docket Number: CA-CIV,No. 1,1
• Citation: 5 Ariz.App. 48,423 P.2d 124
• Court: Arizona Court of Appeals
• Parties: THUNDERBIRD METALLURGICAL INC., an Arizona corporation, Appellant, v. ARIZONA TESTING LABORATORIES, a division of Claude E. McLean & Son Laboratories, Inc., a corporation et al., Appellees. 250.

Page 124

423 P.2d 124

5 Ariz.App. 48

THUNDERBIRD METALLURGICAL INC., an Arizona corporation, Appellant, v. ARIZONA TESTING LABORATORIES, a division of Claude E. McLean & Son Laboratories, Inc., a corporation et al., Appellees.

No. 1 CA-CIV 250.

Court of Appeals of Arizona.

Feb. 2, 1967.

Rehearing Denied Feb. 24, 1967.

Review Denied March 21, 1967.

Hughes & Hughes, by John C. Hughes, Phoenix, for appellant.

Powers & Rehnquist, by William H. Rehnquist, Phoenix, for appellees.

DONOFRIO, Judge.

This appeal is taken by plaintiff from a judgment of the Superior Court in favor of the defendants.

Plaintiff is an Arizona corporation formed to remill manganese tailings. The defendant corporation is an engineering consultant which plaintiff employed in June of 1960. As part of the preparation for beginning operations, defendant was to make a report on manganese tailings at the Ambrosia Mill near Aguila, Arizona. A first report which was accurate to plus or minus 25 percent was found unsatisfactory by some investors in the plaintiff corporation, so two employees of the defendant, one of whom was an engineer, returned to the area to make a more accurate survey. A written report stated accurate to plus or minus 5 percent was submitted to the plaintiff, as follows,

'The survey of the pile indicates that there are 80,827 cubic yards of--1/8 tailings in the open stockpile. There are an estimated 18,750 cubic yards stockpiled under the Eastern quarter of 1/8 tailings.'

Additional investment was made by the plaintiff, and in October of 1960 the mill began processing the tailings. At the end of January 1961, it was discovered that there was a shortage of the required minus 1/8 size tailings. Plaintiff bought ore outside, but was able to continue only until May when the mill was closed. Later the mill and equipment were sold.

Plaintiff brought an action alleging that defendant had agreed to determine the amount of a certain quality of tailings and that the statement of the amount of all tailings led the corporation to invest and lose. The defendant answered that '-1/8 fines' designated the location of piles to be measured and did not indicate quality. The Court made findings of fact and conclusions of law and gave judgment to the defendant.

The question presented by plaintiff is, 'Where findings of fact signed and approved by the trial court contain each and every ultimate fact necessary to sustain a finding for the plaintiff, is the Court justified in finding also that the plaintiff has failed to sustain the burden of proof?' Although plaintiff's assumption that the findings 'contain each and every ultimate fact necessary' May be justified in relation to the question of breach of contract, it is not justified on the question of damages. The question, therefore, is whether the Court was justified in finding that plaintiff had not carried the burden of proof 'on damages'.

In an action on a contract plaintiff has the burden of proof to show, 1) a contract, 2) a breach, and 3) damages. Clark v. Compania Ganadera de Cananea, S.A., 95 Ariz. 90, 387 P.2d 235 (1963).

Since the question of damages disposes of this appeal, we shall discuss only that point.

The damages which may be recovered in a contract action are those proximately caused by the breach or within the contemplation of the parties to the contract. Jacob v. Miner, 67 Ariz. 109, 191 P.2d 734 (1948). The finding number 15 was,

'The Court finds that Thunderbird has not carried the burden of proof.'

This finding applies to damages as well as other issues. The Court's conclusion of law number 3 is,

'Plaintiff suffered no compensable damages as a result of any breach of duty or breach of contract on the part of the defendant Claude E. McLean & Son Laboratories.'

Two of the three incorporators testified that the corporation planned to use the mill, not only at the Ambrosia site, but also at two other tailings locations; in fact, the depreciation schedules on the mill were set on the three locations and a five-year life. However, plaintiff was unable to obtain those locations. The Court could have found that the loss occurred because the capital expense could not be amortized over three operations.

In June 20, 1960, ten days before the Arizona Testing Lab report, the...