Traylor v. Henkels & McCoy, Inc.

• Decision Date: 08 November 1978
• Docket Number: No. 12325,12325
• Citation: 99 Idaho 560,585 P.2d 970
• Parties: J. B. TRAYLOR, dba Traylor Construction Co., Plaintiff, Counter-Defendant, Respondent, and Cross-Appellant, v. HENKELS & McCOY, INC., a Foreign Corp., Defendant, Counter-Claimant, Appellant and Cross-Respondent, v. UNITED PACIFIC INSURANCE CO., a Foreign Corp., Defendant.
• Court: Idaho Supreme Court

Page 970

585 P.2d 970

99 Idaho 560

J. B. TRAYLOR, dba Traylor Construction Co., Plaintiff, Counter-Defendant, Respondent, and Cross-Appellant, v. HENKELS & McCOY, INC., a Foreign Corp., Defendant, Counter-Claimant, Appellant and Cross-Respondent, v. UNITED PACIFIC INSURANCE CO., a Foreign Corp., Defendant.

No. 12325.

Supreme Court of Idaho.

Nov. 8, 1978.

Dale G. Higer of Eberle, Berlin, Kading, Turnbow & Gillespie, Boise, for defendant, counter-claimant, appellant and cross-respondent.

W. Anthony Park of Park & Meuleman, Boise, for plaintiff, counter-defendant, respondent, and cross-appellant. SHEPARD, Chief Justice.

This is an appeal from a judgment in favor of plaintiff-respondent Traylor and against defendant-appellant Henkels & McCoy, Inc. in the amount of $103,171.14 which was entered following a jury trial and verdict. Traylor's suit sought damages for nonpayment of construction work performed by him for Henkels & McCoy and for consequential damages to his business caused by that nonpayment. Although Henkels & McCoy contested both liability and damages below, on appeal it is only contended that the damages awarded by the jury were excessive to the extent that they exceeded $39,963.22. We agree and reverse.

In 1974 Traylor submitted a bid to Henkels & McCoy for the cost of digging a trench in which a gas main would be installed. That bid included the cost of backfilling and cleanup work. Henkels & McCoy accepted Traylor's bid. Traylor's bid contained a "rock clause" providing that the contract did not cover the cost of moving any hard rock that might be encountered in the process of excavating the trench. Such rock was in fact encountered by Traylor who then informed Henkels & McCoy. Although the parties did not then agree as to how much Traylor would be paid for removal of the rock, they did agree that Traylor would undertake that work. It was understood that an agreement would be reached at a later time as to how much Traylor would be paid, but no such agreement ever was reached.

After Traylor had excavated the trench, including the removal of the hard rock, but before he completed the cleanup work, Henkels & McCoy became dissatisfied and removed him from the job. Henkels & McCoy completed the job at its own cost and asserted a counterclaim for those costs against Traylor. The jury found against Henkels & McCoy on the counterclaim and no appeal was taken from that determination.

Traylor submitted a bill for $24,831.41 for the additional work involved in removing the hard rock and another bill of $14,593.61 for "extras." The original basic contract price for the excavation of the trench was $34,938.00. Henkels & McCoy rejected both the bill for the rock work and the extras and further refused to pay the sum of $538.20 which was the remaining unpaid balance on the original basic contract.

Traylor sought damages first in the amount of $39,963.22, which comprised the amounts due for the rock work, the extras and the $538.20 unpaid balance on the original basic contract. Traylor sought additional damages for the loss of the good will of his business, loss of the value of his equipment and the loss of future profits as a consequence of the forced liquidation of his business. He asserted that these damages were caused by Henkels & McCoy's failure to pay on the first mentioned claims.

Traylor's action sought recovery on contract and quasi-contract theories. The jury returned a general verdict for $103,171.14 which Henkels & McCoy contends is excessive to the extent that it exceeds $39,963.22. Henkels & McCoy asserts that the balance of the verdict either reflects an improper award of consequential or special damages which may not be had on a contract claim or was the product of passion and prejudice by the jury. In either event, Henkels & McCoy asserts that it is entitled to a new trial on the issue of damages.

Idaho is in accord with the orthodox rule that contract damages are recoverable only for the direct consequence of a breach in absence of a special agreement to the contrary. Olson v. Quality-Pak, 93 Idaho 607, 469 P.2d 45 (1970); Lockwood Graders of Idaho, Inc. v. Neibaur, 80 Idaho 123, 326 P.2d 675 (1958). The rule was stated in Hadley v. Baxendale, 156 Eng.Rep. 145, 151 (Ex.1854), in the following manner:

"Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i. e., according to the usual course of things, from such breach of contract itself or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. ...