SECTION 4. CONSEQUENTIAL DAMAGES FOR BREACH OF CONTRACT. § 45. Recoverable only when contemplated by the parties. [74] In an action founded upon a contract only such damages can be recovered as are the natural and proximate consequence of its breach; such as the law supposes the parties to it would have apprehended as following from its violation if at the time they made it they had bestowed proper attention upon the subject and had full knowledge of all the facts. As otherwise expressed the damages which are recoverable must be incidental to the contract and be caused by its breach; such as may reasonably be supposed to have been in the contemplation of the parties at the time the contract was entered into. Direct damages are always recoverable and consequential losses must be compensated if it can be determined that the parties contracted with them in view. It is not in the least essential to the existence of this liability that an actual breach of the agreement should have been in the minds of the parties or either of them. For anything which amounts to a breach of contract, whether foreseen or unforeseen, the party who is responsible therefor must answer. Here an important distinction is to be noticed between the extent of responsibility for a tort and that for breach of contract. The wrong-doer is answerable for all the injurious consequences of his tortious act which, according to the usual course of events and general experience, were likely to ensue, and which, therefore, when the act was committed, he may reasonably be supposed to have foreseen and anticipated. But for breaches of contracts the parties are not chargeable with damages on this principle. Whatever foresight, at the time of a breach, the defaulting party may have of the probable consequences, he is not generally held for that reason to any greater responsi 1 Leonard v. New York, etc. T. Co., 41 N. Y. 544, 567; Smith v. Western U. T. Co., 83 Ky. 104. 2 Williams v. Barton, 13 La. 404; Jones v. George, 61 Tex. 345, 354; Howe v. North, 69 Mich. 272, 281. 3 Rhodes v. Baird, 16 Ohio St. 581; Brayton v. Chase, 3 Wis. 456; Bridges 4 Wilson v. Dunville, 6 L. R. Ire. 210; Hamilton v. Magill, 12 id. 186, 202. bility; he is liable only for the direct consequences of the breach, such as usually occur from the infraction of like contracts, and were within the contemplation of the parties when the contract was entered into as likely to result from its nonperformance. Those damages which arise upon the direct, 1 Hadley v. Baxendale, 9 Exch. 341; Candee v. Western U. T. Co., 34 Wis. 479; Pacific Exp. Co. v. Darnell, 62 Texas, 639; Thomas, etc. Manuf. Co. v. Wabash, etc. Ry. Co., 62 Wis. 642; Jones v. Nathrop, 7 Colo. 1; Smith v. Osborn, 143 Mass. 185: Frohesich v. Gammon, 28 Minn. 476; Western U. T. Co. v. Hall, 124 U. S. 444. The rule was very strictly applied in a case in which it was held that the vendor of diseased sheep who sold them without knowledge of their condition was not responsible for damages resulting to the vendee from their being placed with cattle, the vendor not being informed that this would be done. Weaver v. Penny, 17 Ill. App. 628. The last reason given is of doubtful cogency. See Packard v. Slack, 32 Vt. 9; Smith v. Green, 1 C. P. Div. 92, where it is said that one who sells diseased sheep may be charged with knowledge that the purchaser intends, or is almost certain, to put them with other sheep. See, also, vol. 2, ch. 14. An employee who quits the service of his employer in violation of his contract is not liable for the loss of property following his act through the inability of the master to procure other help. Riech v. Bolch, 68 Iowa, 526. A carrier who has not contracted to transport cattle received from a connecting carrier in the cars in which they came to his care and who has no notice that they are of a kind which it is unlawful to unload in the state in which they are received is not liable to the shipper because they were seized and sold to pay a fine for such unloading, although the shipper protested against it. McAlister v. Chicago, etc. R. Co., 74 Mo. 351. Barges were not returned to their owner at the time agreed; and on account of the delay were swept from their moorings by an extraordinary ice gorge and lost. "All that the defendants could foresee by ordinary forecast as a result of the breach of their contract to return the boats would be the expense to the plaintiff in taking them himself. They are liable for damages, the primary and immediate result of the breach of their contract, and not for those which arise from a conjunction of this fault with other circumstances that are of an extraordinary nature.” Jones v. Gilmore, 91 Pa. St. 310. See Parmalee v. Wilks, 22 Barb. 539, stated in § 37, ante. For the breach of a contract to repair a tool, the loss of the material on hand when it ought to have been repaired may be recovered for; but not the profits which might have been made by working up such material with the tool, they being unusual, considering the value of the implement, and notice not having been given him who was to repair it. Sitton v. Macdonald, 25 S. C. 68. The immediate result of the breach of a contract not to engage in the hotel business within the limits of a designated city during the time plaintiff was the proprietor of a certain hotel therein, the agreement being part of the consideration for its purchase, is the diversion of patron necessary and immediate effects are always recoverable, because every person is supposed to foresee and intend the direct and natural results of his acts; those which ensue in the ordinary course of things, considering the particular nature and age therefrom; depreciation in the value of the hotel property is secondary; this last cannot be recovered for unless specially claimed. Lashus v. Chamberlain, 5 Utah, 140. Compare Burckhardt v. Burckhardt, 42 Ohio St. 474, in which it was held that one who purchased the real estate, personal property, firm name and good-will of a partnership business might prove as an element of his damage the value of the property with and without the good-will and trade-mark, and the difference in such value might, in the absence of more specific proof, be taken as the measure of damages. The Utah court remark of this case that it appears to stand alone. The code of Georgia, expressing the rule deduced from the decisions of the court therein (Coweta Falls Manuf. Co. v. Rogers, 19 Ga. 417; Cooper v. Young, 22 id. 269; Red v. Augusta, 25 id. 386), provides that "remote or consequential damages are not allowed, unless they can be traced solely to the breach of the contract or are capable of exact computation, such as the profits which are the immediate fruit of the contract and are independent of any collateral enterprise entered into in contemplation of the contract." Sec. 2944. Under this provision it has been held that the purchaser of a saw-mill and outfit cannot recover against his vendor, who furnished machinery of a quality inferior to that called for by the contract, damages sustained from abandoning the business in which he had been engaged and in getting ready to use the mill, improvements made to carry on the business of running the mill, loss of profits, purchase of material, payments made for help, nor for his personal services. The measure of his damages was the difference between the value of the machinery contracted for and the value of that in fact delivered at the time of delivery, or such difference as ascertained by a resale within a reasonable time thereafter. Willingham v. Hooven, 74 Ga. 233, 248. Damages from injury to grain because of the failure of a warranted machine to work to the capacity specified, and which was sold with the understanding that it was to be used in securing a large crop, were held not recoverable; they could not be fairly considered such as would naturally arise from the breach of the contract or to have been contemplated by the parties as a probable result. Wilson v. Reedy, 32 Minn. 256; Osborne v. Poket, 33 id. 10; Brayton v. Chase, 3 Wis. 456. These cases carry the rule to the extreme. The Wisconsin case is probably overruled by cases referred to in Thomas, etc. Manuf. Co. v. Wabash, etc. Ry. Co., 62 Wis. 642, 650. Contra, Smeed v. Foord, 1 E. & E. 602. See vol. 2, ch. 14. If seed of a particular grain is sold to a farmer and as the result of its being impure because of the presence of seeds of foul and noxious weeds, though no injury results to the crop, the vendor is liable for damage to the farm by sowing it. McMullen v. Free, 13 Ont. 57. The breach of a contract to furnish articles to be used in completing a building does not make the contractor liable for the loss of the rent, no ex subject-matter of the contract. It is conclusively presumed that a party violating his contract contemplates the damages which directly ensue from the breach. There are fixed rules for measuring damages of a pecuniary nature, which apply to trinsic facts being alleged. Liljengren F. & L. Co. v. Mead, 42 Minn. 420. Though the breach of a contract to furnish guards for the shops and work-houses in a prison enables an incendiary to set fire to the building, and the loss resulting is the direct and immediate consequence of the fire, it was not, in legal contemplation, of the failure to provide a watch. Tennessee v. Ward, 9 Heisk. 100, 133. This ruling is open to question. The agreement to maintain a guard, considered as a precaution contracted for to insure the safety of the plaintiff's property, was such as was apparently intended to prevent, among other things, the loss which occurred, and hence that loss may properly be considered as within the contemplation of the parties when they contracted as a consequence of a breach. Paducah L. Co. v. Paducah Water Supply Co., 89 Ky. 340. A warehouseman who agrees to store goods at a particular place is liable to the bailor for the loss of those intrusted to him and which are stored in another place and destroyed by fire, the latter having insured them at the place where the contract provided they were to be stored. If the destruction of the goods must have inevitably taken place in the event they had been stored as agreed, the bailee might have been released. Lilley v. Doubleday, 7 Q. B. Div. 510. A warehouseman who neglects to ship one bale of cotton out of a larger quantity is not liable for the cost of insurance for one day on the whole lot nor for the interest on money which was borrowed because of his refusal to so do, no notice having been given him of the liability of the owner for these expenses. Swift v. Eastern Warehouse Co., 86 Ala. 294. 1 Booth v. Spuyten Duyvil R. M. Co., 60 N. Y. 487; Hadley v. Baxendale, 9 Exch. 341. One who agrees to procure an assignment of a mortgage being foreclosed and then to forbear for a specified time to enable the promisee to enforce it, and who after procuring such assignment sells it to one who immediately proceeds to a sale and thereby extinguishes the promisee's interest in the mortgaged premises before the expiration of the agreed period of forbearance, is liable for the net value of the promisee's interest. Gallup v. Miller, 25 Hun, 298. 2 Whether the parties who entered into a contract had in mind the damages which might follow its breach or not does not in the least vary the question of their liability or the measure of recovery, under ordinary circumstances; this is governed by the injury proximately resulting. Collins v. Stephens, 58 Ala. 543; Dougherty v. American U. T. Có., 75 Ala. 168, 177; Cohn v. Norton, 57 Conn. 480, 492. A railroad company which violates its contract to fence its track laid through a farm is supposed to have contemplated that animals on the farm would be exposed to injury from its trains; that damage would be done by trespassing animals and pasturage injured. Louisville, etc. Ry. Co. v. Sumner, 106 Ind. 55; Same v. Power, 119 id. 269. [75] all persons without regard to their actual foresight of the particular elements. And this is also true of the direct damages from torts.1 3 46. Illustrations of liability under the rule. In an action to recover damages for the breach of a contract to harvest oats, where the petition stated that by reason of such breach the oats were entirely lost, the verdict given for their value was retained, the trial court having refused to instruct the jury that they were to be guided by the general rule of damages, namely, the difference between the contract price and what the labor would have cost, and having instructed them that the plaintiff was entitled upon proof of the case stated to recover the value if he took all reasonable precaution to prevent such loss. In a case in Pennsylvania 3 a party contracted with a manufacturer of bar iron to furnish pig iron in prescribed quantities at specified times; he made default, in consequence of which the manufacturer was obliged to get and use an inferior quality of iron in order to carry on his business, and thereby suffered loss with his customers. Sharswood, J., said: "When the vendor fails to comply with his contract the general rule for the measure of damages undoubtedly is the difference between the contract and the market price of the article at the time of the breach. This is for the evident reason that the vendee can go into the market and obtain the article contracted for at that price. But when the circumstances of the case are such that the vendee cannot thus supply himself the rule does not apply, for the reason of it ceases. . . . If an article of the same quality cannot be procured in the market its market price cannot be ascertained, and we are without the necessary data for the application of the general rule. This is a contingency which must be considered to have been within the contemplation of the parties, for they must be presumed to know whether such articles are of limited production or not. In such a case the true measure is the actual loss which the vendee sustains in his own manu 1 Eten v. Luyster, 60 N. Y. 252; Lowenstein v. Chappell, 30 Barb. 241; Horner v. Wood, 16 Barb. 389; ante, § 13. 2 Houser v. Pearce, 13 Kan. 104. See Prosser v. Jones, 41 Iowa, 674. 3 McHose v. Fulmer, 73 Pa. St. 365. 4 Bank of Montgomery v. Reese, 26 Pa. St. 143. |