Bates Machine Co. v. Norton Iron Works , 113 Ky. 372 ( 1902 )

Opinion of the court by

JUDGE WHITE

Affirming.

This is an action tor damages arising- from a breach of contract by appellant, Bates Machine Company, to furnish to appellee, Norton Iron Works, machines to manufacture wire nails. Appellant is a foreign corporation, and when the action was filed an attachment was sued out, and the Ashland Steel Company was summoned as garnishee. That company answered, admitting an indebtedness of $2,500, which was. ordered to be paid into court. The appellant filed its answer, admitting the contract, and failure to deliver the machines contracted for, but pleads that such nonperformance was because of impossibility; that is, that the machines contracted for were to be used in the manufacture of wire nails, and that, after the contract was entered into, appellant discovered that the machine -would nqt make nails with such speed as to be profitable, and that for that reason appellant declined to make the machines, not being able to remedy the defect. This is practically the only defense offered. Appellant moved to discharge the attachment on the ground that there could be no attachment on a claim of unliquidated damages. This motion was overruled, and a trial was had resulting in a verdict and judgment' for $2,000. After reasons and motion for new trial had been overruled, this appeal is prosecuted.

Counsel urges, as a reason for reversal, the action of the court in refusing to instruct the jury to find for defendant if they should believe that the machine was so defective, either in plan or construction, that it was impossible for defendant, by the exercise of all the mechanical skill it possessed, or could obtain, to remedy so as to manufacture wire nails in such quantities and with such speed and of such quality as would sell readily on the market. As a further ground of reversal, complaint is made of the criterion of damage by which the jury were authorized to fix its verdict. The instruction reads: “If the jury believe from the evidence, on and prior to the 20th day of May, 1896, the plaintiff was engaged in the business of manufacturing and selling nails, had a plant with needful power and appliances to operate wire-nail machines in its said business, and a demand in its business for wire nails, such as the plaintiff in the use of wire-nail machines could manufacture and sell, and that the defendant knew these facts; and shall further believe from the evidence that the' plaintiff, on being advised that defendant could not, or would not, make or deliver the said wire-nail machines, and the plaintiff, by the use of diligence, was unable to purchase machines of like character and description in the market, with which to manufacture wire nails, and the defendant knew at the time of the purchase by the plaintiff that it purchased the machines with the view to their use in the manufacture of wire nails, and for sale of such nails at a profit, and such was in the contemplation of the parties at the time; and shall further believe from the evidence that, from the use of the said machines, the plaintiff could and would have realized a profit in the manufacture and sale of wire nails made with said machines, then such profit, if any, in an amount not exceeding $2,000, is the damage, if any, they shall find for the plaintiff under instruction No. 1.” Further complaint is made of the refusal to discharge the attachment on the face of the pleadings. The grounds of attachment set -out in the affidavit therefor are: Nonresidency, and that “defendant Bates Machine Co. is about to remove its property, to-wit, money and credits due it in this State, out of this 'State, not leaving enough therein to satisfy plaintiff’s claim in suit herein.”. Section 194 of the Civil Code of Practice provides: “The plaintiff may . . . have an attachment against the property of the defendant, including garnishees as provided in section 227. ... In an action for the recovery of money against (1) a defendant, who is a foreign corporation or nonresident of the State; or . . . (6) is about to remove, or has removed his property, or a material part thereof, out of this State, not leaving enough therein to satisfy the plaintiff’s claim, or the claims of said defendant’s creditors; or . . . (8) . . . But an attachment shall not be granted on - the ground that the defendant is a foreign corporation or a non-resident of the State, for any claim other than a debt or demand arising upon a contract, express or implied, or a judgment or award.” There are two grounds set up for--the attachment, — the one of nonresidency, anil the other under subsection 6. The affidavit states all facts requisite to obtain an attachment, unless it is prohibited by the clause quoted in subsection 8:

By a careful study of section 194, we conclude that an 'attachment maly issue against a foreign corporation or a nonresicjent defendant for any reason that would .justify an attachment against a resident defendant. That is, an attachment may be had against a foreign corporation or a nonresident defendant, if he is about to remove or has removed his property out of the State, not leaving enough to satisfy plaintiff’s claim, as provided in subsection 6; or if he has sold, conveyed or otherwise disposed of his property, with fraudulent intent to cheat, hinder or delay his creditors, as provided by subsection 7; or is about to so sell, convey or dispose of his property, as provided by subsection 8. In these cases an attachment may issue in an action for the recovery of money, regardless of whether it be claimed, for one reason or another, and also independent of the fact of citizenship of the defendant. ’ But 'as against a foreign corporation or a nonresident, the fact of non-residency alone authorizes an attachment, if the action be on a contract, or on a judgment or award. If the action against a nonresident or foreign corporation be not upon a contract, judgment, or award, there must be some ground stated that would justify an attachment against a resident defendant, or else it will not issue. In this case there is a ground stated that would justify an attachment against a resident defendant, if it be that money and credits due a foreign corporation by a debtor resident in this state has a situs here that can be removed out of this State. The property that is stated to be in this State, and which the defendant is about to remove, is money and credits due it in this State. In the case of Railroad Co. v. Sturn, 174 U. S., 710, 19 Sup. Ct., 797, 43 L. Ed., 1144, the supreme court held, after a careful review of the authorities, that a debt is property at the residence of the debtor, and was subject to attachment there. The court said: “The primary proposition [of counsel] is that the situs of a debt is at the domicile of a creditor, or, to state it nega-' tively, it is not at the domicile of the debtor. The proposition is supported by some cases; it is opposed by others. Its error proceeds, as we conceive, from confounding debt and credit, rights and remedies. The right of a creditor and the obligation of a debtor are correlative, but different, things, and the law, in adopting its remedies for or against either, must regard that difference. Of this there are many illustrations, and a proper and • accurate attention to it avoids misunderstanding. This court said,-by Justice Gray, in Wyman v. Halstead, 109 U. S., 654, 656, 3 Sup. Ct., 417, 418, 27 L. Ed., 1068: The general rule of law is well set-tied that for the purpose of founding administration all simple-contract debts are assets at the domicile of the debt- or.’ And this is not because of defective title in the creditor or in his administrator, but 'because the policy of the state of the debtor requires it to protect home creditors. Wilkins v. Ellett, 9 Wall., 740, 19 L. Ed., 586; Id., 108 U. S., 256, 2 Sup. Ct., 641, 27 L. Ed., 718. Debts can not be assets at the domicile of the debtor if their locality is fixed at the domicile of the creditor, and if the policy of the State of the debtor can protect home creditors through administration proceedings, the same policy can protect home creditors through attachment proceedings.” This case was approved and applied in the cases of King v. Cross, 175 U. S., 396, 20 Sup. Ct., 131, 44 L. Ed., 211, and in the very recent case of Rothschild v. Knight (decided March 3, 1902), 22 Sup. Ct., 391, 40 L. Ed., — . A full discussion of the question is found in section 125, Minor, Confl. Laws. We conclude therefore, that the grounds stated in the affidavit for attachment are sufficient to warrant its issual; that is, that the defendant was about' to remove' its property which was then in this State, without the State, not leaving sufficient to satisfy plaintiff’s claim. There was, therefore, no error in refusing to discharge the attachment.

The instructions asked by appellant, and which the court refused, and of which action complaint is made, in effect told the jury that appellant would not be liable for a breach of contract it was unable to fulfil. These instructions did not say that there was no liability if the contract was impossible of performance. This was not the contention of appellant. It is well known that machines are made that will manufacture wire nails. This is not denied. Rut appellant says, “'My machine will not make nails, or is not a pimctical machine for making wire nails, and I can not remedy the defect; therefore I will disregard my contract to furnish wire-naii machines.” The answer to this by the law is that you musit pay the damages resulting from your breach of contract. If the contract was impossible of performance by any person, the case might be different. Inability to perform is never a defense to an action for a breach of contract, unless that inability amounts to an impossibility. There was no error in refusing the instructions offered.

The remaining question is the measure of damages. This state of facts is presented: Appellee was in business, and, among other things, engaged in making cut nails, which were sold on the market, and to jobbers and wholesale .dealers. The customers of appellee were asking about wire nails, and were offering to buy wire nails. Appellee could not furnish such nails, because it did not have the machines to make wire nails. Under these circumstances the contract was made with appellant to furnish machines to make wire nails. After the contract was made and appellee had purchased wire and prepared to make- wire nails, appellant refused to furnish the machines, and appellee’s customers purchased wire nails of other dealers. There is no claim for damage for loss in materials bought by appellee, but the claim is for profits necessarily lost by a failure to have the wire-nail machines to make the wire nails. It is shown that when appellant refused to comply with its contract the appellee was then unable to purchase wire-nail machines from any other person; caused, possibly, by a combination of the nail makers. It is thus evident that appellee’s position is not so advantageous in its business relation as it would have been if the wire-nail machines had been furnished according to contract. Appellee has been injured because of appellant’s failure to comply with the contract. What is the criterion of recovery? Appellee insists that it is the reasonable profits it would have, made out of the wire-nail business. This theory the trial court held to be the law. Appellant insists that this measure of recovery is too uncertain and indefinite. In the case of Cordage Co. v. Luthy, 98 Ky., 586 (17 R., 1126) (33 S. W., 835), this court approved an instruction which an- . thorized the jury to fix the damages by the profits that Luthy & Co. would have made in the resale of twine. The instruction told the jury that if by the use of reasonable diligence appellee (Lulhy) were unable to purchase twine of the same character and-description in the market, and if the defendants (Cordage Co.) knew at the time of purchase by plaintiffs that they purchased same with a view to a resale, and that the profits anticipated thereon were, in the contemplation of both parties, the motive which induced plaintiffs to make the purchase, then the measure of damages is the difference between the contract price of the twine, plus the freight thereon, and the price at which it could have been sold for by plaintiffs at their place of business. In short, the recovery was authorized for the profits that could have been made pn a resale. This same rule was laid down in New Market Co. v. Embry (20 R., 1130) 48 S. W., 980, where the contract broken was a failure to furnish slop to feed cattle. The measure of damage was the profits that would have been made in fattening the cat-tie. In the case of Telephone Co. v. Wisdom (23 R., 97) (62 S. W., 529,) the court said where there was a breach of contract to furnish telephone service as agreed: “As a matter of law, there is, I think, no doubt that the plaintiff may recover prospective profits for the whole contract period. In other words, he is entitled to the full benefit of his contract. But the difficulty is, and ever must be in cases of this bind, to reach this value with reasonable approximate certainty. This damage, in the very nature of the case, must be more or less speculative and uncertain,, land this must be known to the parties to such contracts. And, while such damages are recoverable, any verdict or-judgment for such damage must be based on existing facts.” Other cases might be cited, but these recent cases are sufficient to show that where profits from a resale, or from the use of an article contracted for, are in contemplation of the parties, and induce the contract to be made, such profits are to be considered as the measure of damage for a breach of that contract. In the case at bar it is clearly shown that appellee wanted the machines to manufacture wire nails to sell to the trade, and that when appellant failed or refused to supply the machines.the appellee was unable to buy such machines elsewhere. It is also shown that, if appeliee had obtained the nail machines, it would' have sold nails to its customers in such quantities as to realize the amount of profit allowed by the jury here. In our opinion, the criterion of recovery as given by the court in the instruction quoted above was proper.

Finding no error, the judgment is affirmed, with damages.