Page v. Hancock

HUGHES, Justice.

Appellee, J. B. Hancock, sued appellants, Plolland Page and W. L. Googins, for the recovery of $3,887.50, paid as part of the purchase price for a tractor and equipment, and for damages for breach of appellants’ oral contract to deliver such tractor and equipment.

Trial was to a jury and upon its verdict judgment was rendered for appellee for the recovery of said sum and for $5,000 for loss of profits, as damages.

Separate briefs have been filed by appellants. Neither appellant questions the judgment in so far as recovery of the $3,887.50, down payment, is concerned, and as to this the judgment is affirmed.

Both appellants complain of the $5,000 judgment for lost profits. These contentions must be sustained.

Appellee testified that he was not presently engaged in any kind of business; that he had never owned a tractor, never operated one, and had never seen one operated. That he had never figured the cost of operating a tractor, nor what the gross revenue from such operation would be, except as to what other persons had told him. That he would not be able to operate the tractor himself, but would have to employ someone to run it for him. That he had in mind a man who would run the tractor, but that since this person had 'never operated a tractor he would have to employ someone to teach him.

Loss of anticipated profits from a new and unestablished business is not recoverable. The rule is stated in Southwest Battery Corporation v. Owen, 131 Tex. 423, 115 S.W.2d 1097, 1099, as follows : “The rule denying a recovery where the facts show that such profits claimed are too uncertain or speculative, or wheye the enterprise is new or unestablished, is still enforced, on the ground that the profits which might have been made from such business are not susceptible of being established by proof to that degree of certainty which the law demands.”

The above rule is not inconsistent with the general measure of damages for breach of contract relied upon by appellee, but is merely an application of such rule in specific cases.

In support of the judgment for lost profits appellee cites the following cases:

Watkins v. Junker, 90 Tex. 584, 38 S.W. 1129. The recovery in this case was not for lost profits, but for expenses which the plaintiff had incurred in reliance upon the contract.

Sun Manufacturing Co. v. Egbert & Guthrie, 37 Tex.Civ.App. 297, 84 S.W. 667 (error refused). In this case defendant was sued for breach of a contract to build and deliver a number of new type machines which plaintiff intended to re-sell. Damages were allowed for loss of profits on sales which plaintiff would have made if the motors had been delivered; he having received from various persons orders and offers for such motors, which had to be rejected because of defendant’s default.

Mudge & McLean v. Adams, 37 Tex.Civ.App. 186, 83 S.W. 722. Defendant in this case agreed to display plaintiff’s counter cabinet and register in his hotel, knowing that plaintiff intended to profit by selling advertising space therein. Recovery of lost profits was allowed; the court holding they were capable of certain ascertainment. That the business was new and unestablished was not discussed.

National Bank v. M. M. Pittman, Tex.Com.App., 265 S.W. 1024, 36 A.L.R. 1405. In this case the bank was sued for breach of its contract to lend plaintiff $14,000. The lower court awarded as damages the profits that would have been made with this money in buying and selling wheat. This judgment was reversed because the evidence showed that the wheat was to be purchased for manufacturing purposes and not for the purpose of re-sale.

Grand Prairie Gravel Co. v. Joe B. Wills Co., Tex.Civ.App., 188 S.W. 680 (error refused). This suit was for breach of contract to furnish plaintiff gravel, plaintiff being in the business of re-selling gravel. Loss of profits was allowed, the record showing that plaintiff had been in such business for more than a year; that it was well established and making a profit.

Where property is purchased for re-sale and the seller is aware of such fact, the rule seems to be the profits which would have been made from such re-sale are recoverable where they can be proved with reasonable certainty.

Appellee in this case did not intend to re-sell the tractor.

The above authorities, for the reasons stated, are not considered applicable to the facts of this case.

Our holding that lost profits are not recoverable does not mean that substantial damages may not be recovered. Texas Power & Light Co. v. Roberts, Tex.Civ.App., 187 S.W. 225.

The correct measure of damages, applicable to the facts of this case, is stated in Restatement of the Law of Contracts, page 515, as follows: “Where the evidence does not afford a sufficient basis for a direct estimation 'of profits, but the breach is one that prevents the use and operation of property from which profits would have been made, damages may be measured by the rental value of the property or by interest on the value of the property.” See also the following Texas cases: Gulf C. & S. F. R. Co. v. Compton, Tex.Civ.App., 38 S.W. 220; Texas & P. R. Co. v. Hassell, 23 Tex.Civ.App. 681, 58 S.W. 54; Constitution Indemnity Co. of Philadelphia v. Armbrust, Tex.Civ.App., 25 S.W.2d 176 (error refused) ; and Davis v. Mrs. Baird’s Bakery, Tex.Civ.App., 30 S.W.2d 809.

While appellee sued for rental value this issue was not submitted to the jury.

In view of another trial we call attention to the case of Brown v. Spector, Tex.Civ.App., 70 S.W.2d 478, and authorities there stated, to the effect that the proper method of proving rental value of property detained for a long period of time is not by the day, week or month, but for the entire period of time during which use of the property has been withheld.

We will also consider assignments of appellants pertaining to the introduction in evidence of pleadings in other law suits involving transactions between one or both appellants and third parties.

Appellants filed sworn pleadings denying the existence of a partnership between them and denying that appellant Googins was the agent of appellant Page. In view of these pleadings, appellee was entitled to offer in evidence transactions similar to the one involved in this case, if not too remote, participated in by appellants and third parties, and bearing on the issues thus raised. 2 Tex.Jur., page 512. However, we suggest that if these transactions can be proved without the introduction of the • pleadings in those cases, that this should be done. Appellee would then have the benefit of the evidence, and appellants would not be prejudiced by the fact that they are shown to be involved in numerous other law suits.

We are unable to agree with appellee’s contention that these pleadings were admissible under the theory that they show inconsistent positions taken by appellants in those cases with the positions taken by them here. In none of those cases did appellants allege or admit a partnership or the relationship of principal and agent.

The trial court admitted these pleadings on the issues of partnership and agency. If these issues are not made upon another trial, then they will not be admissible for any purpose.

Appellant Googins makes separate assignment to the effect that no valid contract was shown between appellants and appellee for the reason that appellee had the right to the return of his money upon request.

Upon conflicting evidence this issue was submitted to the jury and it found that no such right existed. Even so, this agreement, if made, does not destroy the mutuality of the contract, but is simply an option contracted for, which may or may not, be exercised. Thomas v. Western Indemnity Co., 112 Tex. 132, 246 S.W. 345.

The above conclusions make unnecessary the consideration of appellants’ other assignments which pertain to matters which will not likely arise upon another trial.

That portion of the judgment awarding appellee the sum of $3,887.50, with 6% interest from December 4, 1944, against appellants, jointly and severally, is affirmed; the remainder is reversed and remanded.

Affirmed in part; reversed and remanded in part.