Credit Counsellors Inc. v. Jones

No. 13137
I N T E SUPREME C U T O THE STATE O MONTANA
H OR F F
CREDIT COUNSELLORS, I N C . , a corporation,
plaintiff,
-VS -
FRED JONES d l b / a ROCKING J. MOTEL, and
MRS. FRED JONES, h i s w i f e ,
Defendants.
. MOTEL,
- - - - - - - - - - - - - - - - - I - - - - - - - - - - - - - - - - - - - - - -
HARRIET JONES d /b /a ROCKING J
and FRED JONES, SR. ,
Third P a r t y P l a i n t i f f s and Respondents,
-vs -
PETROLANE STEELGAS, I N C . , a corporation,
Third P a r t y Defendant and Appellant.
Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t ,
Honorable Truman Bradford, Judge p r e s i d i n g .
:
Counsel of ~ e c o r d
For Appellant :
S. M. Swanberg argued, Great F a l l s , Montana
For Respondents :
Church, H a r r i s , Johnson & Williams, Great F a l l s ,
Montana
Milton 0. Wordal argued, Great F a l l s , Montana
- -
Submitted : December 2 , 1975
Decided : F ' B
L LJ . -6
Filed :
M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e
Court.
This i s an a p p e a l from a judgment e n t e r e d i n t h e d i s t r i c t
c o u r t , Cascade County, i n an a c t i o n on an account. The judgment
allowed p l a i n t i f f t h e amount asked f o r i n i t s complaint, and de-
fendants t h e sum of $2,825.58 f o r damages s u f f e r e d a s s e t f o r t h
i n t h e i r c r o s s complaint.
Defendants and t h i r d p a r t y p l a i n t i f f s , Fred Jones, Sr.
and H a r r i e t Jones, d / b / a Rocking J. Motel, h e r e i n a f t e r r e f e r r e d
t o a s Jones, contracted with Petrolane Steelgas Inc., herein-
a f t e r r e f e r r e d t o a s P e t r o l a n e , i n J u l y 1969 f o r t h e purchase and
i n s t a l l a t i o n of 5 P e e r l e s s Propane Gas-Fired w a l l h e a t e r s f o r
t h e sum o f $809.47, i n c l u d i n g i n s t a l l a t i o n . I n addition, they
signed a l e a s e f o r a propane s t o r a g e t a n k t o s t o r e t h e f u e l f o r
t h e h e a t e r s which provided f o r a r e n t a l of $35 per y e a r . The
h e a t e r s were i n s t a l l e d i n c a b i n s of t h e Rocking J. Motel which i s
owned and operated by Jones i n Monarch, Montana.
Soon a f t e r t h e h e a t e r s were i n s t a l l e d by a r e p r e s e n t a t i v e
of P e t r o l a n e , t o g e t h e r w i t h t h e s t o r a g e t a n k and t h e n e c e s s a r y
p i p i n g t o connect t h e c a b i n s , Jones experienced problems i n t h e
o p e r a t i o n of t h e h e a t e r s . Occupants of t h e c a b i n s complained they
could n o t c o n t r o l t h e l e v e l of h e a t produced by t h e h e a t e r s , t h e
odor of gas and t h e i n a b i l i t y t o keep t h e h e a t e r s l i g h t e d . Petro-
l a n e made numerous e f f o r t s t o remedy t h e d e f e c t s , i n c l u d i n g a t l e a s t
t e n round t r i p s o f over 100 miles each, f o r which no charge was
made. The problems continued i n s p i t e of ~ e t r o l a n e ' se f f o r t s .
Jones continued t o use t h e h e a t e r s and P e t r o l a n e p e r i o d i c -
a l l y d e l i v e r e d propane g a s a s t h e needs r e q u i r e d . Jones t e s t i f i e d
t h a t on one occasion t h e motel was c l o s e d f o r a month. Fred Jones
t e s t i f i e d t h a t he l o s t some 300 g a l l o n s of propane due t o leakage
i n the line.
- 2 -
Throughout t h e p e r i o d from July 1969 u n t i l Noverriber
1972, when J o n e s o r d e r e d t h e h e a t e r s removed, J o n e s r e f u s e d
t o pay f o r t h e h e a t e r s u n t i l t h e y were o p e r a t i n g i n a s a t i s f a c t o r y
manner. J o n e s d i d make p e r i o d i c payments f o r g a s d e l i v e r e d by
Petrolane. P e t r o l a n e a r g u e s t h e h e a t e r s were removed b e c a u s e
t h e y were n o t p a i d f o r by J o n e s .
Testimony i n d i c a t e s t h a t d u r i n g t h e t h r e e y e a r s t h e r e
w a s a r u n n i n g a c c o u n t between t h e p a r t i e s c o v e r i n g t h e h e a t e r s ,
t h e i n s t a l l a t i o n , and t h e s t o r a g e t a n k and i n s t a l l a t i o n o f i t .
Evidence r e v e a l e d t h a t J o n e s p a i d P e t r o l a n e a p p r o x i m a t e l y $1,390
on t h i s r u n n i n g a c c o u n t f o r g a s d e l i v e r e d p l u s t a n k r e n t a l , and
t h a t J o n e s was g i v e n a c r e d i t of $375 a t t h e t i m e t h e h e a t e r s were
removed. ~ e t r o l a n e ' se v i d e n c e i n d i c a t e d t h a t f o l l o w i n g t h e c r e d i t ,
t h e account balance owed by J o n e s was $764.70, c o n s i s t i n g o f
t h e s e amounts:
Unpaid p o r t i o n f o r h e a t e r s and i n s t a l l a t i o n $434.47
One v e a r t a n k r e n t a l 35.00
propane g a s d e l i v e r e d 295.23
Total $164. i 0 .
When J o n e s r e f u s e d t o pay t h e a c c o u n t P e t r o l a n e t u r n e d
t h e account over t o p l a i n t i f f C r e d i t Counsellors, Inc. f o r
collection. J o n e s d e n i e s h e owed t h e sum a l l e g e d due b e c a u s e of
t h e f a u l t y o p e r a t i o n of t h e h e a t e r s and t h e l o s s o f b u s i n e s s
suffered.
Fred J o n e s t e s t i f i e d t h a t h e r e p l a c e d t h e g a s h e a t e r s
w i t h 220 v o l t b a s e b o a r d e l e c t r i c h e a t e r s and t h e y p r o v i d e d a d e q u a t e
h e a t , and t h e r e was no s u b s t a n t i a l i n c r e a s e i n t h e c o s t o f h e a t
f o r t h e motel. H e f u r t h e r t e s t i f i e d t h a t during t h e period the
g a s h e a t e r s were i n t h e c a b i n s he l o s t numerous m o t e l g u e s t s due
t o t h e d e f e c t i v e h e a t e r s , and t h a t t h e s m e l l o f g a s alarmed t h e
guests. Schedules from ones ' income t a x r e t u r n s were i n t r o d u c e d
i n t o e v i d e n c e t o show t h e g r o s s and n e t income f i g u r e s f o r t h e
m o t e l ' s o p e r a t i o n d u r i n g t h e y e a r s 1969 t o 1972, t h e y e a r s t h e
g a s h e a t e r s were i n o p e r a t i o n .
Year Gross Net
.-
. Expense
For t h e two y e a r s a f t e r t h e gas h e a t e r s were removed
and t h e e l e c t r i c h e a t e r s i n s t a l l e d t h e t a x r e t u r n s i n d i c a t e d :
Year Gross -
Net
O t h e b a s i s of t h e above f a c t s and f i g u r e s , t h e t r i a l
n
c o u r t concluded:
"I. The JONESES f a i l e d t o r e j e c t t h e f a u l t y gas
h e a t e r s w i t h i n a r e a s o n a b l e time and a r e t h e r e f o r e
o b l i g a t e d under t h e i r c o n t r a c t f o r t h e purchase and
i n s t a l l a t i o n of t h e h e a t e r s and f o r t h e unpaid p o r t i o n
of t h e account r e l a t i n g t o d e l i v e r i e s of propane g a s and
t o s t o r a g e tank r e n t a l . JONESES owe t o P l a i n t i f f ,
CREDIT COUNSELLORS, I N C . , t h e account balance of SEVEN
HUNDRED SIXTY-FOUR DOLLARS AND SEVENTY CENTS ($764.70)
t o g e t h e r w i t h i n t e r e s t thereon a t t h e r a t e of SIX PER
CENT (6%) p e r annum from and a f t e r November 1, 1972,
t h e approximate d a t e of t h e removal of t h e f a u l t y
h e a t e r s by PETROLANE.
II
2. PETROLANE owes t o t h e JONESES t h e c o s t o f t h e l o s t
propane gas (300 g a l l o n s times $.235 e q u a l s $70.50) t o -
g e t h e r w i t h damages s u f f e r e d by t h e JONESES*due t o 3 t h e
f a u l t y o p e r a t i o n of t h e h e a t e r s . The Court concludes
t h a t t h e JONESES a r e e n t i t l e d t o r e c o v e r t h e amount of
t h e i r o p e r a t i n g l o s s f o r t h e f i r s t y e a r d u r i n g which t h e
h e a t e r s were i n s t a l l e d , 1969, i n t h e amount of TWO THOUS-
AND SEVEN HUNDRED FIFTY-FIVE DOLLARS AND EIGHT CENTS
($2,755.08), b u t t o have no recovery f o r t h e l o s s e s s u f -
f e r e d i n subsequent y e a r s because of t h e i r f a i l u r e t o
m i t i g a t e damages by removing t h e h e a t e r s a t t h e end of
t h e f i r s t year. I I
I n view of t h e f a c t t h i s cause i s being r e t u r n e d t o t h e
t r i a l c o u r t , we n o t e t h a t t h e above c o n c l u s i o n s of t h e t r i a l c o u r t
a r e , i n o u r opinion, c o n t r a d i c t o r y and would r e q u i r e ' r e v e r s a l because
of t h e s p e c u l a t i v e n a t u r e o f t h e damages found i n t h e counterclaim.
On a p p e a l t h i s Court i s asked t o c o n s i d e r whether t h e r e
was s u f f i c i e n t evidence t o allow t h e t r i a l c o u r t t o f i n d f o r Jones
on t h e counterclaim i n t h e amount of $2,825.58.
The above amount comprises a recovery f o r $70.50 f o r
l o s t propane gas and $2,755.08 f o r l o s s of b u s i n e s s i n t h e motel
d u r i n g t h e f i r s t y e a r , 1969-70, t h a t t h e h e a t e r s were i n s t a l l e d .
We f i n d , based on t h e e v i d e n c e introduced by J o n e s , t h a t t h i s
f i r s t y e a r ' s l o s s f i g u r e i s t o o s p e c u l a t i v e and t o o remote t o come
within t h e g e n e r a l r u l e a s s e t f o r t h i n H a r r i n g t o n v. Moore Land
Co., 59 Mont. 421, 423, 196 P. 975:
'I I
For t h e b r e a c h o f a n o b l i g a t i o n a r i s i n g from
c o n t r a c t , t h e measure o f damages, e x c e p t where
o t h e r w i s e e x p r e s s l y provided by t h i s Code, i s t h e
amount which w i l l compensate t h e p a r t y a g g r i e v e d
f o r a l l t h e d e t r i m e n t p r o x i m a t e l y caused t h e r e b y , o r
which i n t h e o r d i n a r y c o u r s e o f t h i n s would b e
Likely t o r e s u l t t h e r e f r o m . *** 'No damages c a n
be r e c o v e r e d f o r a b r e a c h o f c o n t r a c t which a r e n o t
c l e a r l y a s c e r t a i n a b l e i n b o t h t h e i r n a t u r e and o r i g i n . I 11
T h i s Court r e c e n t l y i n Lovely v. Burroughs C o r p o r a t i o n ,
165 Mont. 209, 527 P.2d 557, 562, 3 1 St.Rep. 824, 829, s p e a k i n g
t o the general rule, held:
"Damages may p r o p e r l y be awarded when t h e y s e r v e t o
compensate t h e p l a i n t i f f f o r d e t r i m e n t p r o x i m a t e l y
caused by t h e d e f e n d a n t . S e c t i o n 17-301, R.C.M. 1947.
B e f o r e an award can b e made, t h e damages must b e c l e a r l y
a s c e r t a i n a b l e i n b o t h t h e i r n a t u r e and o r i g i n . S e c t i o n
17-b302, R.C.M. 1947. Damages which a r e a m a t t e r of
mere s p e c u l a t i o n c a n n o t b e t h e b a s i s o f r e c o v e r y . Laas
v. Mont. Hwy.~omrn'n, 157 Mont. 121, 483 P.2d 699; Cruse
v . Clawson, 137 Mont. 439, 352 P.2d 989; J u r e c v. Raznik,
1.04 Mont. 45, 64 P.2d 1076."
The judgment i s r e v e r s e d and t h e c a u s e remanded f o r a
new t r i a l .
/
#
9 ' ~
Justices.
C"
Mr. J u s t i c e Gene B. Daly d i d n o t p a r t i c i p a t e i n t h i s Opinion.
L