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Theodore Sedgwick.

A treatise on the measure of damages, or, An inquiry into the principles which govern the amount of pecuniary compensation awarded by courts of justice (Volume 2) online

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Court of the United States.

On principle it seems perfectly clear that the repudiator of
a contract cannot under any circumstances call upon the other
party to make forward contracts for his benefit, merely for
the purpos'e of lessening or seeming to lessen the direct loss of
profits of the contract.

If, however, the plaintiff would be entitled to consequential
damages by reason of the fact that he had given notice to
the other party, or that the contract itself is notice, that in
case of breach consequential damages would happen, then it
is quite true that if notice of repudiation is given and is ac-
cepted as a breach he should take steps to avoid such conse-
quential damages. If, for instance, the plaintiff makes a con-
tract for the purchase of goods for future delivery, giving
notice of a profitable contract of resale, and the seller repu-
diates before the time for performance, the buyer, if he accepts
the repudiation as a breach, must buy elsewhere, if he can,
to avoid the consequential loss of the resale; if he could buy
elsewhere and fails to do so he cannot charge the defendant
with the loss of the resale.



1258 DAMAGES IN ACTIONS ON CONTRACTS § 636g

IV. — Prospective Damages

§ 636g. Entire and divisible contracts.

A question of interest and importance is sometimes pre-
sented in regard to prospective damages, or damages which
accrue after the suit is brought. In the case of continuing
agreements, or agreements to do specified acts at certain
successive periods,* it has been doubted whether the damage
should be assessed as at the time of the first breach, or whether
the whole period of the contract is to be gone through, and
an estimate made of the damages sustained, with reference
to each period fixed for performance. This, again, depends,
to a certain extent, on another question, whether the con-
tract will admit of more than one action being brought on it,
or whether the first recovery is conclusive of the plaintiff's
rights. It is an ancient rule of our law that one action only
can be maintained for the breach of an entire contract; and a
judgment obtained by the plaintiff in one suit may be pleaded
in bar of any second proceeding ;^^^** if a plaintiff recover
compensation for part of a single cause of action, it satisfies
the whole.^^'' But a recovery of nominal damages for the
infringement of a right will not bar a suit for actual damages
sustained after the bringing of the first suit; and in the case
of severable contracts, successive suits for actual damages
may be brought from time to time as the damages are sus-
tained, and in each suit the party may recover such damages
as he has sustained before its commencement not barred by
a previous recovery. ^'^'^

When a continuing contract is broken, and suit is brought
before the completion of the term, damages are generally
recoverable only for breaches suffered up to the date of the
writ; ^-'^ but all damages, prospective as well as past, arising

^" M assachusetls : Jiii(]p,cr V. Tilcomb, J. L. 13; Veghtc v. Hoagland, 29 N. J.

15 Pick. 409, 20 Am. Dcf. Oil. L. 125.

New York: liciKlcniuglc v. Cocks, 19 '^-^ McConncl v. Kibbc, .'33 111. 175.

Wond. 207, 32 Am. Dec. 448. ""^ Kansas: Kansas & C. P. Ry. v.

England: Rudder v. Price, 1 H. Bl. Curry, 6 Kan. App. 561, 51 Pac. 576

547. (to issue annual pass).

"^ ConncrHc.id: Marlhorouuli v. Sis- MassachnKclls: Fay ^- Ouynon, 131

eon, 31 Conn. 332. Mass. 31.

New Jcrtic!/: Bak(;r v. Baker, 2.S N. Nchraskn: Wit (enherg v. Mollyncaux,



§ 636g ENTIRE AND DIVISIBLE CONTRACTS 1259

from such breaches must be recovered in such an action,
since no further action will lie for such breaches.^"

If, however, there has been such a breach of the contract
as to destroy the whole purpose of it, so that no future per-
formance is possible if the object of the agreement is to be
preserved, entire damages may be recovered. ^'^^ * The difficulty
is to determine in what cases the contract is entire. The
question was first presented on contracts to pay debts by
instalments. Debt was then the only form of action to recover
a sum certain; and it was held that on a bond or other con-
tract to pay divers sums on divers days, no action of debt
would lie until all the days were past.-^^^ So stood the law
until the reign of Elizabeth, when the decision in Slade's case
introduced the action of assumpsit into general practice. ^'^°
The rule was then modified as regards the action of assumpsit,
and in cases of money payable by instalments, the plaintiff
was allowed to proceed upon the first default; but it was still
held that the judgment was a full satisfaction, and the plaintiff
therefore recovered damages for all the prospective breaches.^"
This latter rule in regard to assumpsit was further modified
by a decision made in the reign of Charles II, when, in an
action on an award to pay several sums at several times, the
court held that an action might be brought for each sum
when due, and that the plaintiff should recover damages ac-
cordingly, and have a new action as the other sums became

59 Neb. 203, 80 N. W. 824 (not to use Michigan: Mott v. Penoyar, 153

property sold as a hotel for two years). Mich. 273, 116 N. W. 1110.

N^ew York: Wharton v. Winch, 140 New Hampshire: Lamoreau.x v. Rolfe,

N. Y. 287, 35 N. E. 589; Cummins v. 36 N. H. 33.

Hanson, 10 Daly, 493 (to board with New York: Howard v. Daly, 61 N.

plaintiff for a term). Y. 362, 19 Am. Rep. 285.

'" Florida: Griffing Bros. Co. v. North Carolina: Wilkinson v. Dun-

Winfield, 53 Fla. 589, 43 So. 687. bar, 149 N. C. 20, 62 S. E. 748.

Illinois: Crabtree v. Hagenbaugh, Vermont: Royalton v. Royalton &

25 111. 233, 79 Am. Dec. 324. W. T. Co., 14 Vt. 311 ; Remelee v. Hall,

368 Maine: Sutherland v. Wyer, 67 31 Vt. 582, 76 Am. Dec. 140.

Me. 64. 369 Fitzh. Nat. B. 131; Taylor v. Fos-

Massachusetts: Amos v. Oakley, 131 ter, Cro. Eliz. 807; Milles v. Milles,

Mass. 413; Parker v. Russell, 133 Mass. Cro. Car. 241.

74; R. H. White Co. v. Jerome H. ^eo 4 Co. 926.

Remick & Co., 198 Mass. 41, 84 N. E. ««i Beckwith v. Nott, Cro. Jac. 504.
113.



1260 DAMAGES IN ACTIONS ON CONTRACTS § 636h

due, toties quoties.^^- The rule in debt, however, appears to
have remained unaltered. ^^^ So stands the matter in regard
to agreements for the payment of money at specific future
periods. In New York the rule which enforces the indivisibility
of entire demands has been applied to open accounts for goods
sold; and it has been held that the whole of such an account
must be recovered, if at all, in one suit.^^^ But in Massachusetts
the doctrine of this case has been denied. ^^^ **

In any case of continuing contract, an absolute refusal by
one party to go on with the contract when the time has ar-
rived for him to perform, or after part performance, consti-
tutes an entire breach of the contract. ^^^ If there is an entire
breach, all damages prospective as well as past, must be
recovered in the one action; the plaintiff, failing to obtain en-
tire damages in his first suit, cannot maintain a later action.^"

§ 63 6h. Contract to repair.

* The question becomes more complicated when we approach
the consideration of agreements to do specific acts at various
periods. In a case in New York,^^^ where the defendant had
covenanted with the plaintiff to keep a certain gate in repair,
and to use common care in shutting it when passing and re-
passing, it was held that if the gate was left unrepaired or open,
the defendant would be responsible in an action on the cove-
nant, and that the true measure of damages would be the
amount of the plaintiff's loss by the breach proved; that for
every second breach a fresh action would lie; that a refusal to
rebuild the gate did not amount to a total and final breach of

**2 Cooke V. Whorwood, 2 Saund. 337. New Hampshire: Lamonvuix v. Rolfe,

»» Rudder v. Price, 1 H. Bl. ,547. 36 N. H. 33.

'"* Guernsey i^. Carver, 8 Wend. (N. VermmU: Parker v. MeKannon, 76

Y.) 492, 24 Am. Dee. 00; Bendernagle Vt. 96, .56 Atl. 311.

f. CocLs, 19 Wend. (N. Y.)207, 32 Am. ^^'' Maine: Fales v. Ilemenway, 64

Dec. 448, n.; Clark v. Jones, 1 Denio Me. 373.

(N. Y.), 516, 43 Am. Dec. 706. Massachusetts: Parker v. Russell, 133

»" Badger v. Titcomb, 15 Piek. Mass. 74. f

(Maas.) 409. '"8 Crain v. Beach, 2 Barb. 120, and

'** Maine: Sutherland v. Wyer, 67 s. c. on appeal. Beach v. Crain, 2 N. Y.

Me. 64. 86; and sec, also, Fish v. Folley, 6

Mfissachusells: MuUaly v. Austin, 97 Hill (N. Y.), 54.
Mass. 30.



§ 636i TO SUPPORT 1261

the covenant, nor could the damages recovered in a suit brought
for one breach be presumed to have been given as a compensa-
tion for the non-performance of the covenant through all future
time, so as to bar further suits. ^^'^ ** In Keith v. Hinkston ^"^
it was held that on breach of a contract to keep a "switch or
spur" in good repair, and to furnish cars for transportation,
the plaintiff could only recover for the damage already sus-
tained. But it has been held that all the breaches which have
actually taken place must be embraced in the first suit; and
that even if they are not, a second suit will not lie for them.^^^

§ 63 6i. To support.

Where a contract has been made to support the plaintiff for
life, or a bond given conditioned to furnish the plaintiffs their
support during their natural lives, a complete failure to pro-
vide for the plaintiff according to the obligation, amounts to a
total breach and full and final damages may be recovered. ^'^
So where the plaintiff was induced to take care of a paralytic
old man till his death, by his promise to '^ provide for her, and
give her full and plenty after he was gone," she was allowed to
recover such a reasonable sum, ascertained by the annuity
tables or otherwise, as would provide her with an annuity which
would keep her in her condition of life, relieved from the ne-
cessity of work,^"^ or in other words, "such an amount as, with
its interest, will give a sufficient support for life, leaving noth-
ing at death." ^""^ In analogy with contracts to provide for
support, it has been held in Alabama that a refusal by a college
to permit the plaintiff to enjoy the benefit of a permanent

^^^ Ace, Phelps V. New Haven & N. 413; Parker v. Russell, 133 Mass.

Co., 43 Conn. 453. But contra, Erie 74.

& P. R. R. V. Johnson, 101 Pa. 555. New York: Schell v. Plumb, 55 N. Y.

3™ 9 Bush (Ky.), 283. 592; Shaffer v. Lee, 8 Barb. 413; Empie

"1 Bristowe V. Fairclough, 1 M. & G. v. Empie, 35 App. Div. 51, 54 N. Y.

143; Pinney v. Barnes, 17 Conn. 420; Supp. 402.

Colvin V. Corwin, 15 Wend. (N. Y.) Oregon: Tippin t'. Ward, 5 Ore. 450.

557; Bendernagle v. Cocks, 19 Wend. But unless the defendant's conduct

(N. Y.) 207. was such as to put an end entirely to

"2 Maine: Philbrook v. Burgess, 52 the contract, recovery can be had only

Me. 271, 83 Am. Dec. 509; Fales v. for a partial breach. Fay v. Guynon,

Hemenway, 64 Me. 373. 131 Mass. 31.

Massachusetts: Canada v. Canada, 6 '" Thompson i'. Stevens, 71 Pa. 161.

Cush. 15; Amos v. Oakley, 131 Mass. "4 Freeman v. Fogg, 82 Me. 408.



1262 DAMAGES IN ACTIONS ON CONTRACTS § 636 j

scholarship which he had purchased, by denying him the right
to appoint a pupil, is a total breach. ^^^

§ 63 6j. Fluctuations in value during contract: Masterton v.
The Mayor.

There is another class of cases, namely, where the contract
covers a long space of time, and during that period the services
and commodities which enter into the cost of performance have
fluctuated in value. Thus in a case in New York, which we have
already had occasion to notice in reference to another branch
of this subject, ^'^ the plaintiff, in 1836, agreed to furnish and
deliver marble to build a city hall, at successive periods in five
successive years. In 1837 the defendants refused to receive
any more. The suit was brought before, but the trial did not
take place till after the period for performance had elapsed,
and it was shown that the difference between the cost of the
marble and the contract price, which was the measure of dam-
ages, had fluctuated considerably in the five years. On this
state of facts the circuit judge charged, that "in fixing dam-
ages to be allowed the plaintiffs, the jury were to take things
as they were at the time the work was suspended, and not allow
for any increased benefit they would have received from the
subsequent fall of wages or subsequent circumstances." And of
this opinion was the majority of the court, on a motion for a
new trial. Nelson, C. J., who delivered the leading opinion,
said:

"It has been argued that, inasmuch as the furnishing of the
marble would have run through a period of five years— of which
about one year and a half only had expired at the time of the
suspension — the benefits which the party might have realized
from the execution of the contract must necessarily be specu-
lative and conjectural; the court and jury having no certain
data upon which to make the estimate. If it were necessary to
make the estimate upon any such basis, the argument would
be decisive of the present claim; but in my judgment no such
necessity exists. Where the contract, as in this case, is broken
before the arrival of the time for full performance, and the op-

"' Howard ColleRo v. Tunicr, 71 Ala. "" MaHt.crlon r-. Mayor of Brooklyn,

429, 46 Am. Hep. 320. 7 Hill (N. Y.), 01, 42 Am. Dec. 38.



§ 636j FLUCTUATIONS IN VALUE 12G3

posite party elects to consider it in that light, the market price
on the day of the breach is to govern in the assessment of damages.
In other words, the damages are to be settled and ascertained ac-
cording to the existing state of the market at the time the cause of
action arose, and not at the time fixed for full performance. The
basis upon which to estimate the damages, therefore, is just as
fixed and easily ascertained in cases like the present as in ac-
tions predicated upon a failure to perform at the day."

And Bronson, J., said:

"There may have been fluctuations in the prices of labor
and materials between the day of the breach and the time when
the contract was to have been fully performed, and this makes
the question upon which my brethren are not agreed. I concur
in opinion with the chief justice, that such fluctuations in prices
should not be taken into the account in ascertaining the amount
of damages, but that the court and jury should be governed
entirely by the state of things which existed at the time the
contract was broken. This is the most plain and simple rule;
it will best preserve the analogies of the law, and will be as
likely as any other to do substantial justice to both parties."

Beardsley, J., however, dissented on this point, saying:

"The plaintiffs were not bound to wait till the period had
elapsed for the complete performance of the agreement, nor to
make successive offers of performance, in order to recover all
their damages. They might regard the contract as broken up
so far as to absolve them from making further efforts to per-
form, and give them a right to recover full damages as for a
total breach. I am not prepared to say that the plaintiffs might
not have brought successive suits on this covenant, had they
from time to time made repeated offers to perform on their part,
which were refused by the defendants; but this the plaintiffs
were not bound to do. There can be no serious difficulty in
assessing damages according to the principles which have been
stated. The contract was made in 1836, and, according to the
testimony, about five years would have been a reasonable time
for its execution. That time has gone by. The expense of exe-
cuting the contract must necessarily depend upon the prices of
labor and materials. If prices fluctuated during the period in
question, that may be shown by testimony. In this respect



1264 DAMAGES IN ACTIONS ON CONTRACTS § 636]

there is no need of resorting to conjecture; for all the data
necessary to form a correct estimate of the entire expense of
executing the contract can now be furnished by witnesses.

"If the cause had been brought to trial before the time for
completing the contract expired, it would have been impracti-
cable to make an accurate assessment of the damages. This is
no reason, however, why the injured party should not have his
damages, although the difficulty in making a just assessment in
such a case has been deemed a sufficient ground for decreeing
specific performance. No rule which will be absolutely certain
to do justice between the parties can be laid down for such a
case. Some time must be taken arbitrarily, at which prices
are to be ascertained and estimated, and the day of the breach
of the contract, or of the commencement of the suit, should
perhaps be adopted under such circumstances. But we need
not, in the present case, express any opinion on that point. No
conjectural estimate is required to ascertain what would have
been the expense of a complete execution of this contract; but
the state of the market in respect to prices is now susceptible of
expUcit and intelligible proof; and where that is so, it seems
to me unsuitable to adopt an arbitrary period, especially as
the estimate of damages must, in any event, be somewhat con-
jectural." '^"'

So in a case in Alabama, ^^^ where the plaintiff had agreed to
let the defendants have all the pine timber on his lands, suitable
for good lumber, the defendants to saw it into lumber, sell
it as soon as they could, and pay the plaintiff one-fifth of the
gross proceeds of the lumber sold and collected by them, it
was held that for the breach of this contract by the defendant
in not sawing all the lumber, but one action lay, in which, not-
withstanding the period allowed for the performance had not
expired at the time of the breach, he was entitled to the dam-
ages resulting from the prospective as well as the actual failure,
to be assessed on the basis of value at the time of the breach.

In Shaffer v. Lee,^^** Hand, J., said of the case of Masterton v.

'" Thf rule laid ilown by the major- "» Fail v. McRec, 36 Ala. 61.

ify of thf court was followed in New ""8 Barb. (N. Y.) 412.

York AH. R. R. v. Story, 6 Barb.
(N. Y.) 419.



§ 636k Goodrich v. hubbard 1265

The Mayor, "As I understand the opinions dehvered, all the
judges considered the plaintiff entitled to recover entire and
final damages for the non-fulfilment." And it is to be noticed
that this was the only question actually before the court for
decision. That part of the charge in the trial court quoted
above was favorable to the defendant, and as the plaintiff did
not except to it, the question of its correctness, upon which, as
we have seen, the judges differed in opinion, was not directly
involved in the decision.

The dictum of the majority of the judges in Masterton v.
The Mayor has been followed in a few States only,^^° and ap-
pears not to represent the present law in New York.^^^

§ 636k. Goodrich v. Hubbard.

The contract may be sued upon either after the time for its
performance has expired, or while it is still running. In the case
just cited the plaintiff sued at once on breach. In a Michigan
case ^^- a logging contract provided that the logger should haul
the logs during the winter next ensuing if the weather should
permit; if the weather should be unfavorable, the contract was
to be continued to another winter. Owing to the weather, the
logger postponed what remained undone the first winter; but
the defendants prevented complete performance by removing
the logs before the next winter. In the ensuing winter the
logger could have delivered the logs for half the contract rate,
being much less than it would have cost him the first winter. It
was held that he was entitled to recover the difference between
the contract price and what it would have cost him to deliver
the logs during the second winter. ^^^ In this Michigan case the

380 Alabama: Fail v. McRee, 36 Ala. 'si Windmuller v. Pope, 107 N. Y.

61, supra. 674, 14 N. E. 436; Todd v. Gamble, 148

Florida: Sullivan v. McMillan, 26 N. Y. 382, 42 N. E. 982; St. Regis P.

Fla. 543, 8 So. 450. Co. v. Santa Clara L. Co., 173 N. Y.

Illinois: James H. Rice Co. v. Penn 149, 65 N. E. 967.

P. G. Co., 88 111. App. 407. ^82 Goodrich v. Hubbard, 51 Mich.

Louisiana: Seaton v. Second Munic- 62, 16 N. W. 232.

ipality, 3 La. Ann. 44. ^^^ Ace, Leo Austrian & Co. v.

The question was left open in Springer, 94 Mich. 343, 54 N. W. 50, 34

Nebraska: Nebraska Bridge S. & L. Co. Am. St. Rep. 350; Greenwood v. Davis,

V. Owen Conway & Sons, 127 la. 237, 106 Mich. 230, 64 N. W. 266.
103 N. W. 122.

80



1266 DAMAGES IN ACTIONS ON CONTRACTS § 6361

point at issue was whether the plaintiff's recovery must be the
contract price, less the cost of performance, during the first or
the second winter, because although the time of performance
was the second winter, the time when the defendants prevented
performance was earlier. The Supreme Court of Michigan
said: 384

" It is objected that the profits must be ascertained on the day
of the breach ; that to attempt to ascertain the damages in any
other way would be speculative, uncertain, and conjectural.
The case of Masterton v. Mayor of Brooklyn is cited as author-
ity, but an examination of that case shows that the court made
the market price on the day of the breach of the contract to
govern in assessment of damages to depend upon the opposite
party having elected to consider the contract broken before the
arrival of the time for full performance. The facts of this case
were somewhat exceptional, there being a claim for a breach of
a contract running through a period of five years, of which
about one year and a half only had expired, the court and jury
having no certain data upon which to estimate the profits for
the remaining three years and a half,^^^ That case is not ap-
plicable here, where the election of the plaintiff to consider the
contract broken before arrival of the time for its full perform-
ance does not appear; and upon the facts found it does appear
that there are certain data for estimating the damages found.
The consideration of profits cannot be separated in this case
from the circumstances under which the work was to be done,
and the prevention of which constitutes the breach making the
defendants liable.

' ' There is no element of uncertainty regarding the profits the
plaintiff would have realized from the performance of the con-
tract, and which must govern in the estimate of damages.
There are no contingencies modifying or taking the case out of
the rule laid down by this court in the case of Burrell v. New
York & Saginaw Solar Salt Co." ^se

§ 6361. Probable future expense of performing.

In a case in Vermont a similar rule was laid down. The de-

'"^ 51 Mich. 62, 70, per Slur- •'"'■' This sccins to be a mistake. See
wood, J. stiitoinont of the case above.

'""i 14 Mich. 34.



§ 636m GENERAL CONCLUSIONS 1267

fendants, a bridge company, had, in September, 1830, agreed
with the plaintiffs to keep a bridge in repair for twelve years,
on the plaintiffs paying twenty-five dollars every year. The
plaintiffs paid the annual sum until 1838, when the defendants
ceased to repair; and the judge charged at the trial, that the
jury "should limit their inquiries to the time when both the
parties ceased in fact to act under the contract." But on mo-
tion for a new trial the court said: "The rule of damages in
this case should have been, to give the plaintiffs the difference
between what they were to pay the defendants, and the prob-
able expense of performing the contract, and thus assess the
entire damages for the remaining twelve years." ^^^

In Roper v. Johnson ^^^ the defendant agreed to deliver coal
to the plaintiff for a certain price during the months of May,
June, July, and August. In June, the defendants refused to
deliver any more coal; suit was brought in July, and the trial
took place in August, before the expiration of the time for per-
formance. The price of coal was continually rising. A verdict
was found, based on the actual price of coal to the time of
trial, and a probable further rise in price during the remainder of
August. This verdict was sustained by the Court of Common
Pleas. Brett, J., said: "When you come to estimate the dam-
ages, it must be by the difference between the contract price
and the market price at the day or days appointed for perform-
ance, and not at the time of breach." The defendant might,
however, reduce these damages by showing that the plaintiff



Online LibraryTheodore SedgwickA treatise on the measure of damages, or, An inquiry into the principles which govern the amount of pecuniary compensation awarded by courts of justice (Volume 2) → online text (page 47 of 91)