Howard v. Stillwell & Bierce Manufacturing Co.

139 U.S. 199 (1891)

HOWARD
v.
STILLWELL AND BIERCE MANUFACTURING COMPANY.

No. 180.

Supreme Court of United States.

Argued January 30, 1891. Decided March 16, 1891. ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF TEXAS.

Mr. William Hallett Phillips for plaintiffs in error.

Mr. John Johns for defendant in error.

MR. JUSTICE LAMAR, after stating the case, delivered the opinion of the court.

The errors assigned are as follows: "(1) There was error in sustaining the exception to that part of defendants' plea which sought the recovery of profits, and in rejecting defendants' offer of evidence in support of the plea. (2) The court erred in overruling the defendants' motion to suppress the deposition of Odell."

We will consider these assignments in the reverse order in which they are stated. The points made against the deposition of Odell by counsel for plaintiffs in error are, that it was not taken under any provision of the Revised Statutes of the United States, and that section 914, Revised Statutes, relating to the adoption by the federal courts of the forms and modes of proceeding in civil causes in the state courts, has no application to the present inquiry. It will be observed that these points do not relate to the competency of the witness whose deposition was taken, or to the admissibility of the evidence given in it, but are based solely on objections as to the form of the commission and the manner of taking the deposition. The record shows that the cause was at issue May 20, 1886. The commission to take the deposition of the witness Odell was signed January 4, 1887. Notice of the issuing of the commission was served on the defendants, and they filed cross-interrogatories in the premises, at the same time making the following waiver: "We waive copy of interrogatories and consent that commission may issue upon the original, direct and cross-interrogatories. (Signed) Lindsley & McCormick, att'ys for defendants." As already stated, the deposition was filed in the case on the 22d of January, 1887, and opened, at the request of the attorney for the plaintiff, on the 5th of February, following. The motion to suppress the deposition was not made until the 8th of February, when the case came on for trial. In our opinion, the motion in this instance was too late. The counsel for defendants by waiving copy of the interrogatories, when notice of them was served upon them, and consenting to the issue of the commission, and practically uniting with plaintiff's counsel in executing it, by adding their own cross-interrogatories, and withholding the objections until after the trial had begun, must be considered as having waived such objections. It is the settled rule of this court that the failure of a party to note objections to depositions, of the kind in question, when they are taken, or to present them by a motion to suppress, or by some other notice before the trial is begun, will be held to be a waiver of the objections. Whilst the law requires due diligence in both parties, it will not permit one of them to be entrapped by the acquiescence of the opposite party in an informality which he springs during the progress of the trial, when it is not possible to retake the deposition. Shutte v. Thompson, 15 Wall. 151, 158 et seq.; Mechanics' Bank of Alexandria v. Seton, 1 Pet. 299, 307; Winans v. New York and Erie Railroad, 21 How. 88, 100; York Company v. Central Railroad, 3 Wall. 107, 113; Doane v. Glenn, 21 Wall. 33, 35; Buddicum v. Kirk, 3 Cranch, 293, 297; Rich v. Lambert, 12 How. 347, 354.

The remaining assignment of error, which relates to the striking out of so much of the defendants' plea as sought a recovery of profits, and the refusal of the court to allow any evidence to be introduced in support of it, needs no extended consideration. The question raised by it is, whether the anticipated profits of the defendants resulting from grinding wheat into flour and selling the same, had the mill been completed at the date specified in the contract, can be recovered by way of damages for delay in putting up the mill machinery.

The authorities both in the United States and England are agreed that, as a general rule, subject to certain well-established qualifications, the anticipated profits prevented by the breach of a contract are not recoverable in the way of damages for such breach; but in the application of this principle the same uniformity in the decisions does not exist. In some cases of almost exact analogy, in the facts, the adjudications of the courts in the different States are directly opposite. The grounds upon which the general rule of excluding profits, in estimating damages, rests, are (1) that in the greater number of cases such expected profits are too dependent upon numerous, uncertain and changing contingencies to constitute a definite and trustworthy measure of actual damages; (2) because such loss of profits is ordinarily remote and not, as a matter of course, the direct and immediate result of the non-fulfilment of the contract; (3) and because most frequently the engagement to pay such loss of profits, in case of default in the performance, is not a part of the contract itself, nor can it be implied from its nature and terms. Sedgwick on Damages, (7th ed.,) vol. 1, p. 108; The Schooner Lively, 1 Gallison, 315, 325, per Mr. Justice Story; The Anna Maria, 2 Wheat. 327; The Amiable Nancy, 3 Wheat. 546; La Amistad de Rues, 5 Wheat. 385; Smith v. Condry, 1 How. 28; Parish v. United States, 100 U.S. 500, 507; Bulkley v. United States, 19 Wall. 37. But it is equally well settled that the profits which would have been realized had the contract been performed, and which have been prevented by its breach, are included in the damages to be recovered in every case where such profits are not open to the objection of uncertainty or of remoteness, or where from the express or implied terms of the contract itself, or the special circumstances under which it was made, it may be reasonably presumed that they were within the intent and mutual understanding of both parties at the time it was entered into. United States v. Behan, 110 U.S. 338, 345, 346, 347; Western Union Tel. Co. v. Hall, 124 U.S. 444, 454, 456; Philadelphia, Wilmington & Baltimore Railroad Co. v. Howard, 13 How. 307.

Cases illustrating various phases of this rule are numerous. One of the leading ones applicable to the case in question is Hadley v. Baxendale, decided in the Court of Exchequer at Hilary term, 1854, 9 Exch. 341, 354, 356. In that case the plaintiffs, who were the owners of a flour-mill, sent a broken iron shaft to the office of the defendants, who were common carriers, to be conveyed by them to a manufacturer of such machinery, the broken shaft to serve as a model or pattern for the new one. The clerk of the defendants in their office was told that the mill was stopped, that the shaft must be delivered immediately and that a special entry should be made, if necessary, to hasten its delivery. The delivery of the broken shaft to the manufacturer was delayed an unreasonable length of time, in consequence of which the plaintiff did not receive the new shaft for some days after the time it ought to have been received, and they were, therefore, unable to work their mill from want of the new shaft, thereby incurring a loss of profits. It was held, however, that such loss of profits could not be recovered as damages in an action against the defendants as common carriers. Baron Alderson, in delivering the opinion of the court, laid down the rule of law as follows: "Now, we think the proper rule in such a case as the present is this: 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. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated... . It follows, therefore, that the loss of profits here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract. For such loss would neither have flowed naturally from the breach of this contract in the great multitude of such cases occurring under ordinary circumstances, nor were the special circumstances, which, perhaps, would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants."

That case has been cited with approval and commented on by many of the courts of this country and by text-writers as well. The general principles of it, we believe, are recognized and enforced, in most, if not all, of the several States. A large number of the cases are referred to in Sedgwick on the Measure of Damages, vol. 1, 66-76, and 5 Encyclopædia of Law, pp. 13, 15, 32-4, and we shall attempt no extended review of them. We shall content ourselves with a reference to a few of the leading ones most nearly similar to the one before us.

Pennypacker v. Jones, 106 Penn. St. 237, 242, was very much like the present case. In that case the plaintiffs, who owned and operated a flour-mill in Philadelphia, entered into a contract with the defendants by certain of the terms of which the defendants were to place in their mill, within a specified time, machinery of a certain capacity, to make flour of a high grade. The machines when furnished were found not to make a high grade of flour, and to be incapable of producing the stipulated number of barrels per day. In an action for damages by the plaintiff for breach of the contract, it was held that the loss of possible profits, which might have been made if the mill had run properly, was not a proper subject of damages, for the reason that such damages were too remote and speculative. In delivering the opinion of the court, Mr. Justice Green used this language: "It was no part of this contract that the plaintiffs should make profits, or even have the opportunity of doing so, by carrying on a business with the machinery which the defendants agreed to erect. It is not like the sale of chattels or of land, where the difference between the contract value and the actual or market value of the property sold represents directly and immediately the measure of the party's loss or gain in the transaction. There the possible profit is the very object of the contract, and is necessarily in the contemplation of the parties. But when a machinist furnishes machinery to a mill owner it is no part of his engagement that a profitable business shall be carried on with the machinery furnished. Of course if it is defective he is responsible for the damage resulting directly from such defect; but that is a very different thing from the uncertain, remote and speculative profits which may or may not be made in the business to be done."

In Callaway Mining and Manufacturing Co. v. Clark, 32 Missouri, 305, which was an action for the seizure and detention of a steamboat by an attachment which was discharged, it was held that the measure of damages was only the actual damage sustained by the seizure, and that the jury could not be permitted to speculate as to what might or might not have been the earnings of the boat during the period of seizure.

Blanchard v. Ely, 21 Wend. 342, was an action for the price of a steamboat. The defence was that part of the machinery of the boat was unsound and imperfect, whereby considerable delay was caused; and that the loss of the probable profits that would have been made upon the trips that might have been run during the time the vessel was delayed on account of the imperfections in its construction, might be recouped in the action for the price of the boat. But the court held that such contingent profits could not be allowed. See also Olmstead v. Burke, 25 Illinois, 86; Winne v. Kelley, 34 Iowa, 339; Howe Machine Co. v. Bryson, 44 Iowa, 159; Freeman v. Clute, 3 Barb. 424; Griffin v. Colver, 16 N.Y. 489; Wakeman v. Wheeler & Wilson Mfg. Co., 101 N.Y. 205; Brown v. Smith, 12 Cush. 366; Boyd v. Brown, 17 Pick. 453; Willingham v. Hooven, 74 Georgia, 233; Georgia Railroad v. Hayden, 71 Georgia, 518; Bridges v. Lanham, 14 Nebraska, 369; Houston & Texas Cent. Ry. Co. v. Hill, 63 Texas, 381; Smith v. Condry, 1 How. 28.

The principles announced by the above cited authorities lead to the conclusion that the court did not err in striking out that part of the defendants' plea which sought to recover $12,000 as the profits expected to be derived from the sale of the flour which they would have manufactured, and in excluding the evidence offered in support of the claim therein set up. Tested by them, such losses were, in our opinion, rather remote and speculative than direct and immediate, resulting from the breach alleged. There was no stipulation in the contract that the defendants should make profits on flour from the wheat ground up by the machinery which the plaintiff contracted to furnish and erect in the mill. Nor were there any special circumstances attending the transaction from which an understanding between the parties could be inferred that the plaintiff was to make good any loss of profits incurred by a delay in furnishing and putting up such machinery, according to the terms of the contract.

We see no error in the judgment of the court below prejudicial to the plaintiffs in error, and it is

Affirmed.