Weiss v. Revenue Bldg. & Loan Ass'n

• Decision Date: 31 January 1936
• Docket Number: No. 54.,54.
• Citation: 182 A. 891
• Court: New Jersey Supreme Court
• Parties: WEISS v. REVENUE BUILDING & LOAN ASS'N.

182 A. 891

WEISS

v. REVENUE BUILDING & LOAN ASS'N.

No. 54.

Court of Errors and Appeals of New Jersey.

Jan. 31, 1936.

Appeal from Circuit Court, Essex County.

Action by Samuel M. Weiss against the Revenue Building & Loan Association. From a judgment for plaintiff, defendant appeals.

Reversed and remitted.

Schotland & Schotland, of Newark, for appellant.

Samuel Schwartz, of Newark, for respondent.

HEHER, Justice.

Plaintiff sued to recover damages claimed to have been the proximate result of defendant's breach of an undertaking to lease to him the building designated as numbers 22-24 West Kinney street, in the city of Newark, and was awarded a verdict for a substantial sum by the jury impaneled to try the issue. From the consequent judgment, defendant appeals.

The decisive question is whether the trial judge, in certain rulings on evidence and in his instructions, applied the correct principle for the admeasurement of the damages. Defendant denied the asserted breach, but none of the challenged rulings relates to that issue.

These are the essential facts: On January 30, 1934, defendant, by an indenture, leased to plaintiff, "for rooming house purposes," the adjoining building, Nos. 26-28 West Kinney street, and the equipment therein contained, for a term of three years from the ensuing February 1st, and, by a separate instrument delivered contemporaneously, granted to plaintiff an option, to be exercised within the period beginning April 1st and ending April 3, 1934, to lease the building first mentioned upon identical terms and conditions. These buildings each contained fifty-six rooms. Plaintiff took possession of the building thus leased, and devoted it to the business authorized by the lease. He exercised the option to lease the adjoining building within time, but defendant did not perform.

The rule of damages applied by the trial judge was "the difference between the actual value of the leasehold estate that should have been enjoyed by the plaintiff, and the agreed rental." More specifically, the jury were instructed that the plaintiff was entitled to recover "the value of his term," and that, in the appraisement, it was proper to "consider the use to which the property may be most advantageously put," and that, while the plaintiff was not entitled to an award of "those profits that he would have earned for the entire term," they were permitted, if not indeed required, to "consider what it is probable that this property would earn in determining what the term was worth to him."

In these instructions, and, by the same reasoning, in the related rulings on evidence to be adverted to hereafter, the trial judge fell into error.

Ordinarily, the prima facie measure of damages for the breach of a contract is the quantum of loss consequent thereon. The injured party is entitled to the value of the contract to him. It was this that he lost by the default of the other. Feldman v. Jacob Branfman & Son, Inc., 111 N.J.Law, 37, 166 A. 126. But this general rule is subject to two qualifications designed to confine within reasonable limits the appraisement of the, consequences of the default, viz.: First, the damages shall be those arising naturally, i. e., according to the usual course of things, from the breach of the contract, or such as may fairly and reasonably be supposed to have been in the contemplation of the parties to the contract at the time it was made, as the probable result of the breach; and, second, they must be the reasonably certain and definite consequences of the breach, as distinguished from mere quantative uncertainty. Wolcott v. Mount, 38 N.J.Law, 496, 20 Am, Rep. 425; United States v. Bchan, 110 U.S. 338, 4 S.Ct. 81, 28 L.Ed. 168; Witherbee v. Meyer, 155 N.Y. 446, 50 N.E. 58; Wakeman v. Wheeler & Wilson Manuf'g Co., 101 N.Y. 205, 4 N.E. 264, 54 Am.Rep. 676; Hadley v. Baxendale, 9 Exch. 341, 23 L.J.Exch. 179, 18 Jur. 358, 5 Eng.Rul.Cas. 502. This general principle seems to have had its genesis in the last cited case. There Baron Alderson declared that if special circumstances attending the making of the contract were communicated by the party asserting the breach to the one charged therewith, the reasonably contemplated damages resulting from the breach "would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so Known and communicated"; per contra, if the special circumstances were wholly unknown to the party guilty of the breach, he "could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract." This doctrine is grounded upon the right of the parties to make special provision for the damages in the event of a breach of a contract made under exceptional circumstances.

This is likewise the formula for the assessment of the damages ensuing from a breach of a contract to lease. In McCulloch v. Lake & Risley Co., 91 N.J.Law, 381, 103 A. 1000, Mr. Justice Swayze, speaking for our Supreme Court, declared it to be the settled rule that "the lessee is entitled to recover at least the value of his term." He expressed approval of the principle enunciated in Neal v. Jefferson, 212 Mass. 517, 99 N.E. 334, 335, 41 L.R.A. (N.S.) 387, Ann.Cas.1913D, 205: "Where a lessor has prevented the lessee from entering and occupying the leased premises, or where an owner of property has broken his agreement to give a lease thereof to a prospective tenant, the measure of damages in an action for this breach of contract, if no rent has been paid, and if nothing further appears, is the difference between the actual value of the leasehold estate that should have been enjoyed and the agreed rental that was to have been paid therefor." But, in the...