Tompkins v. Dallas Cotton Mill, 130 N.C. 347 (1902)

June 17, 1902 · Supreme Court of North Carolina

130 N.C. 347

TOMPKINS v. DALLAS COTTON MILL.

(Filed June 17, 1902.)

DAMAGES — Measure of — Contract—Breach.

Where a cotton mill has capital invested in its plant and other; machinery, such capital "being kept idle during the time a machinery company fails to deliver certain machinery according to contract, the measure of damages for such delay is interest on such idle capital and such losses and expenses as. are incidental to the delay, such as insurance, idle labor,, deterioration in its machinery, etc.

AgtioN by the D. A. Tompkins Company against the Dallas Cotton Mill, heard by Judge W. A. Holes and a jury, at July Term, 1901, of the Superior Court of Mecklenburg County. Erom the judgment allowing the counter-claim, the plaintiff appealed.

Plaintiff brought this action to recover a balance of $15,-789.61 and'interest, for machinery, materials, work and labor furnished and done for defendant under a contract, which is admitted in the answer. Eor a counter-claim, defendant alleges that plaintiff made default in the compliance with its contract, in that it failed to furnish the machinery at the time agreed upon, and delayed the delivery thereof for several months, to its damage five thousand dollars. There is no allegation or proof that defendant had made any contracts with third parties, securing to itself a determinate profit, which was known to: plaintiff and contemplated by the parties at the making of the contract.

The breach is established by the verdict, and damages assessed at $1,900. One of the exceptions of plaintiff is the admission of the evidence of Wilson as to> the rental value. Upon his direct examination he testified that the reasonable rent of that machinery during, the time between the 1st of November, 1899, and the 1st of March, 1900, was $1,500 per month, without reference to any special condition of the market, and without reference to any special contracts that he may have made or could make. Upon his cross-examination, he testified that the mill (for which the machinery was purchased) had failed, for some time, before he took charge of it. to pay dividends, and “just along this line I want to' explain,” said the witness, the “character of this first machinery that was in there. I wish to' say that any mill-man would tell you that running a mill with only 2,000' spindles could not make as much as running a larger mill. The kind of machinery that Was first put in this mill was said to- be not aa profitable as other machinery. The cost of running a small mill is much larger than running a large mill; also; that during the first years of this mill the prices were extremely low, and further, the mill made a mistake in her first superintendent ; he didn’t give anything like the production he ought to have given. I wish to say that this neiw machinery was put in for higher class of goods, and this goods demanded a much higher price than the ordinary goods.

“Q. I understand you to tell that jury in answer to that question, in your opinion, this $15,000 worth of machinery, was worth a mill $180,000 a year, year in and year out. Did I understand you to say that ?

“A. Yes, sir; but I desire to make this calculation. At that time I was paying for cotton 71-4 cents a pound, average about that. I could manufacture this goods, and the class of goods I was making was two-ply lace curtain goods. This goods could be manufactured at 6 1-2 cents a pound, which w’ould make it cost about 14 cents to get them on the market. In the year 1900 this goods was commanding from 211-2 cents to 26 cents a pound. The production of these spindles was 6,000 pounds weekly of 28-ply goods. Taking it at 21 cents, 14 from 21 we have a net profit of seven cents. That woud be $420 per week. That is the basis on which I base my calculation.”

(Here plaintiff made a motion to strike out the witness’ answer as to what was the average monthly rental value of this mill; overruled; plaintiff excepts.)

By the witness: “When I made that remark, I meant the mill was worth that much to me.”

Upon his re-direct examination, he testified that the machinery would manufacture 6,000 pounds of No. 28 two-ply lace curtain goods per week, which, in 1899, was worth 21 cents per pound, then gradually went up to 26 cents in July, being 22 cents in December, 23 cents in February, and so on. In October, 189'9, was paying for cotton 71-4 to 7 1-2 cents per pound; in January, 1900, 9 1-2 cents; that it cost about 6 1-2 cents per pound to do the spinning, and that the net weekly earnings would be not less than $375 or $400, and in about November it would have been possibly a little more.

As toi this evidence, admitted over plaintiff’s objection, plaintiff’s counsel prayed tbe Court to give tbe jury tbis in.struction: “Tbat if tbe jury find tbat tbe statement of tbe witness E. L. Wilson, as to damages, to-wdt, tbat tbe rental value of tbe machinery was fifteen hundred dollars per month, was made by him because in bis estimate of such rental be considered tbe profits which be thought might have been made during tbe months of November, December and Janu.•ary, and until tbe machinery was put in operation, tbe jury will not consider tbis statement as. testimony in tbis case, be- - cause, in tbat event, tbe statement was made upon a wrong principle and contrary to. tbe instruction of tbe Court, as to tbe true basis for establishing such rental value.”

Tbe Court refused to give tbis instruction as it 'was asked to be given by tbe plaintiff, but gave it with tbe following modifications:

“1st. In so far as tbe witness Wilson may have made such profits tbe basis or data for a direct estimate, bis testimony will be disregarded by tbe jury.

“2d. Tbe product and profits of a given time are only testimony as circumstances bearing on tbe business generally, and in so far as it tends to determine risks and what is a fair rental return for the capital invested in such an enterprise, rl should be considered by tbe jury.”

Tbe plaintiff excepted to tbe modification of tbis instruction in so far as it allows tbe jury to consider profits, even indirectly, in ascertaining tbe damages, if any, to- be awarded to tbe plaintiff; and especially excepted to tbe second branch of tbe modification.

Tbe Court then charged tbe jury tbat they “will not con■sider tbe aforesaid statement of tbe witness Wilson as to the rental value, or so far as tbe saíne is, in their opinion, founded upon tbe witness’ estimate of profits, which tbe witness thought tbe machinery would have earned.”

Burwell, Walker & Gansler, for the plaintiff.

J ones & Tillett, for the defendant.

Cook, J.,

after stating tbe case. It certainly appearing that the witness’ estimate was based upon the profits growing out of circumstances then existing, we think his Honor erred in not sti’iking out his entire answer, as moved for by the plaintiff’s counsel. And there being no evidence that witness based his estimate or calculation upon any data other than those of profits, his statement, or estimate, should not have been submitted to the jury for consideration. The witness estimated the monthly rental value of the machinery to be $1,500, being the profits derivable from a rising market both as to the raw material purchased and the manufactured goods sold. But if the price of the manufactured goods had gone down with the rise in the raw material remaining, the result would necessarily have been different. So, it is clear to us that his estimate was based upon speculation and uncertain profits, depending upon a variety of contingencies, the failure of any one of which would subvert his whole calculation, and. which are too remote and indeterminate to enter into and become the measure of damages. Manufacturing Co. v. Rogers. 19 Ga., 416. While it appears from his estimate that the market went in favor of defendant, and that it would have made a handsome profit if it had obtained its machinery, and gotten the same in good working oader, and had had a sufficient number of competent employees and laborers and an ample supply of material, and met with no reverses, yet if the market had gone contra, and reverses had befallen it, then, instead of having a profit, it might have incurred a loss, ir, which event the default of plaintiff would have been a benefit rather than an injury. Nevertheless, as the injury can not be estimated by the standard of profits, the law will not allow it to go unredressed. The measure of damage is a fair rental value of tbe mill for tbe loss of time caused by plaintiff’s wrong' — tbat is, tbe portion of tbe mill tbis machinery would bave equipped. If tbis can not be otherwise accurately determined by certain and determinate data, which were "contemplated by tbe parties and entering into their contract, then tbe law will allow tbe legal rate of interest upon tbe capital invested, to be tbe measure (Rocky Mount Mills v. Railroad, 119 N. C., 693, 56 Am. St. Rep., 682), not because it is an accurate criterion, but’ for tbe reason tbat it is approximately just. Tbe party injured by reason of a breach of contract should be, so far as money can do it, placed in tbe same sitution with respect to' damages, as if tbe contract bad been performed. Robeson v. Harman, 1 Ex. Ch., 855-6. In tbe case at bar, there is no certainty as to' what would bave been defendant’s situation if plaintiff bad performed its contract; but it is shown tbat it bad capital invested in its plant and other machinery which was kept idle during tbe time plaintiff was delaying tbe fulfillment of its contract, upon the value of which it is entitled to recover tbe legal rate of interest ; and it may bave incurred losses and expenses which were incidental to such delay, such as insurance, idle labor, deterioration in its machinery, .etc., which could be considered if properly put in issue. Tbe charge and rulings of bis Honor, with respect to which other exceptions are taken, are sustained.

For tbe error above pointed out, a new tidal is awarded.

New Trial.

Furches, C. J.,

concurring.

I agree in the conclusion that there should be a new trial. As I remember the facts in the case, the defendant owned a cotton mill, which he was operating, and had been operating for some time. But thinking it would be profitable to do so, he concluded to enlarge his mill, and for that purpose built an addition to his mill-house, in which to place new machinery. He also made a contract with the plaintiff to furnish the new machinery necessary for this addition to his mill. The machinery was to be furnished at a specified price, to be delivered by a specified time, and to be paid for when delivered. The plaintiff furnished the machinery, but did not deliver it at the time specified in the contract, nor for some months afterwards. The defendant failing to pay for the machinery after it had been delivered by the plaintiff, this action was brought for the agreed price of the machinery bought by the defendant and delivered to him by the plaintiff. The defendant answered and admitted the contract and the receipt of the machinery, but alleged that it was not delivered at the time it was to have been delivered, whereby and by reason of which he sustained great loss and damage, which defendant set up by way of counter-claim and recoupment.

On the trial, the defendant undertook to prove speculative damages, and was allowed to introduce evidence to that effect, over tile objection of the plaintiff. This was error. The evidence of Wilson, as reported in the case, should not have been allowed, aiid the opinion of the Court so states.

But I do not understand that the old mill, as I will call it to distinguish it from the neAv mill or addition, was stopped on account of not receiving the new machinery. So I think the opinion of the Court erroneously allows the defendant damages for that. The defendant had no money invested in the machinery sued for, as he was to pay for it when delivered, and has never paid for it yet. He is, therefore, it seems to me, not entitled to any damages on that account, unless he is entitled to speculative damages'upon an estimate of what he could have made if the machinery had been delivered on time, as he claims he is.

Not being entitled to speculative damages, nor to damages for money invested in the machinery, as he had none invested, the only damages I can see that he is entitled to is the interest on the money invested in putting up the addition to his mill, preparatory to putting in the new machinery; for the reason that such a structure, without any machinery in it, could not be rented for any price.

The opinion of the Court allows the defendant to recover for "insurance, idle labor, deterioration, in machinery,” which he had not received nor paid for. This Court expressly held in Alpha Mills v. Steam Engine Co., 116 N. C., 797, that the plaintiff in that case could not recover for insurance.

MoNtgomeet, J.; concurs in the concurring opinion.