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ing, and fully installing both machines from and after their shipment, such time being subject to enlargement for cause specified.

Assuming that the legal effect of this testimony must now be considered as though it were in fact before the court, it necessitates the adoption of some rule of damages upon the case as made by the pleadings or upon pleadings and the proffered evidence; and, as indicated, it is not necessary to rest the ruling upon any possible merit of the special objection made by the plaintiff to the admissibility of this testimony, because no sufficient basis was laid in the pleading. Neither is it necessary to consider the variant rules of damages arising upon contracts of sale or of manufacture and sale. It is not necessaryand, if it were attempted, it could not be done—to frame a broad general rule, negative in its character, that profits as profits can never be recovered, or that they may not indirectly be pertinent evidence under some other rule or measure of recovery.

It is, however, proper to bear in mind the necessity in every case of adopting the most certain rule of recovery. It is thus stated by Mr. Mechem, in his work on Sales (volume 2, § 1779):

"And so, as between two possible methods by which the loss might be computed, the law prefers that which leads to the more certain and east speculative results. Thus, as has been seen, the damages to be recovered for not supplying a machine or other article as agreed are usually the market value for which another may be procured, and not the profits which might have been made from its use. And for like reasons the damages to be recorered for the loss of the use of the property are to be estimated with reference to rental value or fair interest upon investment, and not upon the uncertain and speculative basis on the profit which might have been made from its use."

The principles relating to the adoption of a rule of damages in be satisfied by a calculation of profits which a machine bargained for might have made during a delay period are so fully discussed in the two cases of Howard v. Stillwell & Bierce Manufacturing Co., 139 U. S. 199, 11 Sup. Ct. 500, 35 L. Ed. 147, and Globe Refining Co. v. Landa Cotton Oil Co., 190 U. S. 540, 23 Sup. Ct. 754, 47 L. Ed. 1171, that the ruling in the present case, unless it can be justified upon their application to the facts before us, cannot be justified at all; and it may be noted that both of these authorities, and it is believed the great weight of all adjudications, treat the recovery of profits as possible only under exceptional circumstances, unless the engagement by its very terms discloses them to have been in effect, in whole or in part, a subject-matter of the bargain. In the Globe Case, after discussing the question respecting the absence in a contract of language appropriately disclosing items of damage within the contemplation of the parties in case of breach, Mr. Justice Holmes uses this language:

"It is true that as people, when contracting, contemplate performance, not breach, they commonly say little or nothing as to what shall happen in the lat. ter event, and the common rules have been worked out by common sense, which has established what the parties probably would have said if they had spoken about the matter. But a man never can be absolutely certain of performing any contract when the time of performance arrives, and in many cases he obviously is taking the risk of an event which is wholly or to an appreciable extent beyond his control. The extent of liability in such cases i,

255 F.-45

likely to be within his contemplation, and whether it is or not, should be worked out on terms which it fairly may be presumed he would have assented to if they had been presented to his mind."


"We have to consider, therefore, what the plaintiff would have been entitled to recover in that case, and that depends on what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made."

He proceeds:

*This point of view is taken by implication in the rule that 'a person can only be held to be responsible for such consequences as may be reasonably supposed to be in the contemplation of the parties at the time of making the contract'” (citing cases).

And further:

"The question arises, then, what is sufficient to show that the consequences were in contemplation of the parties in the sense of the vendor taking the risk? It has been held that it may be proved by oral evidence when the contract is in writing (citing cases). But, in the language quoted, with seeming approbation, by Blackburn, J., from Mayne on Damages (2d Ed.) 10, in Elbinger Actien-Gesellschaft v. Armstrong, L. R. 9 Q. B. 473, 478: 'It may be asked, with great deference, whether the mere fact of such consequences being communicated to the other party will be sufficient, without going on to say that he was told he would be answerable for them, and consented to undertake such liability.' Mr. Justice Wills answered this question, so far as it was in his power, in British Columbia Sawmill Co. v. Nettleship, L. R. 3. C. P. 499, 508: 'I am disposed to take the narrow view that one of two contracting parties ought not to be allowed to obtain an advantage which he has not paid for.

If a liability for the full profits that might be made by machinery which the defendant was transporting, if the plaintiff's trade should prove successful and without a rival, had been presented to the mind of the ship owner at the time of making the contract, as the basis upon which he was contracting, he would at once have rejected it. And, though he knew from the shippers the use they intended to make of the articles, it could not be contended that the mere fact of knowledge, without more, would be a reason for imposing upon him a greater degree of liability than would otherwise have been cast upon him. To my mind, that leads to the inevitable conclusion that the mere fact of knowledge cannot increase the liability. The knowledge must be brought home to the party sought to be charged, under such circumstances that he must know that the person he contracts with reasonably believes that he acccpts the contract with the special condition attached to it.'

The Bierce Case announced a like view. That was an action for damages occasioned through the delay in remodeling a flour mill and installing a new type of milling machinery. It was sought to recover as damages the profits which would have resulted through an operation of the mill in particular in grinding up a stock of grain which the vendee had on hand, and the court, after ruling that the loss of such profits was speculative and remote, not resulting immediately from the alleged breach of a contract which contained no stipulation that profits would be made on flour from the wheat ground up by the machinery contracted to be furnished and erected, adds this as a final statement:

"Nor were there any special circumstances attending the transaction from which an understanding between the partics 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.”

The general principle announced in these cases--and I am satisfied that it is the general principle sought to be applied in all cases-brings us to their applicability in the present situation upon testimony establishing three propositions of fact:

First. Upon their face, the contracts between the plaintiff and the defendant themselves negative the thought that the Bermingham-SearsRoebuck contracts, whose life began January 1, 1917, were, in respect of the time of commencement, deemed to be of the essence of the machine contracts; for by the principal of the latter contracts the defendant, in any event, had until February 1, 1917, to install the machine, and the contracts prescribed the consequences which should ensue a delay in installation, namely, a postponement of the maturity of two of the purchase-money notes.

Second. The Bermingham-Sears-Roebuck memorandum (Exhibit 5), which, of course, must be read into the contract of the defendant with the Bermingham-Seaman Company, contains this provision :

“We propose [to furnish, etc.) subject to the following specifications and conditions:

“(1) Duration of contract to be five years from January 1, 1917, providing te succeed in erecting plant and have same running by that time, or five years from actual date plant starts operation, which will be not later than July 1, 1917."

Third. Closely related to the last above is this: There is not a syllable or suggestion in the evidence that by reason of the delay the defendant in fact defaulted upon the contracts constituting the “special circumstances”; nor is there any proof that it was in fact disenabled from fully carrying out the terms of the contracts from and after the deferred date, July 1, 1917. In short, the second consideration above shows that the so-called special circumstance—the existence of a contract with a third person, communicated to the plaintiff-was inherently not a special circumstance because its life, while nominally beginning January 1, 1917, was made contingent in its commencement upon the very circumstance of delay which is at the foundation of the present action. In other words, the contract, while nominally dating from January 1, 1917, was ambulatory.

Upon the trial of the case some of the matters above pointed out were referred to as a basis of the court's ruling. The court said, in discussing the exceptional cases noted in the two cases cited:

"The exceptions, if they exist at all, require great particularity of evidence to support the proposition that the vendor, the manufacturer, was apprised of those (them) with such certainty that he ought not in fairness and in justice to be heard to say that he did not have in mind that both parties did not have in :nind-the contemplated loss which would ensue through a failure to regard time as of the essence of the contract. Now, there is no suggestion here that Pusey & Jones could in fairness be said to have been acquainted with the idea, which is now sought to be pressed; that a failure to have this machine in place November 1st, December 1st, January 1st, or February 1st, should entail the consequences of a guaranty or an iudemnity against loss of profits upon contracts which certainly were not communicated to them except in this very general way.”

Again : "The evidence offered so far is not such that the court or this jury should be heard to say 'why Pusey & Jones understood that the Combined Locks

Company were to lose $9.78 a ton' because the talk was of a general nature. It is a talk which could be indulged in, and usually is indulged in, in nego tiations for this sort of a repair or a sale, and the rule, if extended upon the strength of such general testimony as that, simply amounts to no rule at all-simply amounts to superseding the contract. Now, that the parties here had in mind anything of that kind I do not believe should be left open to inference upon the testimony offered so far."

Coming, therefore, to a direct application of the principles, and upon evidence which negatives with particularity the idea that the parties contemplated the consequences of a loss of profits, is it possible to permit a jury to infer, nevertheless, that both parties contemplated such consequences as fully as though they had really agreed thereto? It seems absurd to say that a contract containing a nominal date, January 1, 1917, even standing alone, should be made the basis or should be considered as a special circumstance justifying an award of special damage, merely because its existence was communicated to the vendor when the vendor and vendee entered into formal contracts which on their face give the vendor a leeway in performance, extending very substantially beyond the date of the special circumstance contract. But when it appears that the date, January 1, 1917, was, after all, not binding upon the vendee, that by an express proviso of the contract he had relieved himself by getting six months' leeway in order to meet the precise contingency which has arisen in the present case, namely, a delay in installing machines, it is not only idle, but it would be monstrously unjust, to permit him to impose upon the vendor consequences which might have ensued had the vendee's contract with the third person been binding as of the earlier date.

This situation impresses me as a fundamental obstacle to the application of the general principle controlling an award of special damages involving profits as such, which a machine might have earned. In other words, no matter how clearly it may have been the desire, hope, or expectation of the defendant to have the machine installed by January 1st, it very clearly and by the express terms of the SearsRoebuck contract contemplated the possibility, if not the probability, of being unable to have it at that time. Therefore, having such contemplation from its side, can it be heard to say that the plaintiff here did not contemplate, or, upon full disclosure of the facts, would not have contemplated, the very same thing, but, on the contrary, contemplated its rigid responsibility to the defendant for loss of profits upon a contract which, by express reservation and proviso, the defendant was not obliged to perform on or begin performance until six months later. As I understand the rule, the contemplation of one of the parties is not sufficient; it must be a mutual and reciprocal contemplation produced by such particularity of attendant circumstances as should preclude both parties from saying that they were not, in effect, in law incorporated into the engagement.

We are brought to the next consideration, that the defendant did not, and could not, default upon its contract with Bermingham & Seaman, and therefore did not and could not, prior to July 1, 1917, lose any profit which it might have made upon the sale of the product to be manufactured pursuant to that contract. The most to be said is that it did not enjoy such profits from and after the earlier date. It

does not and cannot claim that plaintiff's delay entailed a breach of its contract with Bermingham & Seaman, resulting in a loss of profits upon that contract, because it was within its right, as already observed, to simply move the date of commencement forward, not exceeding six months, and presumably that is just what was done. In other words, the notion of special damage, because of an actual loss of profits, is wholly negatived.

It is unnecessary to consider whether the defendant might not, upon some other theory, have established a claim for damages because of the delay. The course of the trial, in connection with the offer and rejection of the testimony upon the items of defendant's bill of particulars, brought it to the position where, its testimony respecting profits as such having been rejected, it was obliged to substantiate the other items upon some variant theory of damage. But it formally declined to proceed with any offer of proof to support, for example, a claim for deprivation of the use of the machine, to be measured either by interest upon the contract price, or upon payments made, or by some other standard, and formally elected to rest its whole case upon its offer to show loss of profits. In this situation there was no alternative, except to direct the verdict in favor of the plaintiff, both upon the complaint and upon the counterclaim.

I am satisfied to adhere to the ruling upon such motion for direction, and the motion for a new trial will be denied; and an order may be entered accordingly.

(District Court, D. Maine, S. D. November 21, 1918.)


A collision between two steamers meeting in a narrow channel in a dense fog held due to the fault of one for immoderate speed, proceeding on the wrong side of the channel, and failure to stop on hearing the

whistle of the other vessel ahead, all in violation of the navigation rules. 2 COLLISION 82(1)-NAVIGATION RULES—“MODERATE SPEED" IN Fog.

Under the rule requiring moderate speed in fog, vessels are bound to reduce their speed to such a rate as will enable them to stop in time to avoid a collision after the approaching vessel comes in sight, providing she is herself going at such moderate speed.

[Ed. Note.-For other definitions, see Words and Phrases, First and

Second Series, Moderate Speed.] 3. COLLISION Cm 82(2)—STEAM VESSELS IN Fog-Fault.

A steamer which before she came in sight, in a fog, of a meeting vessel, which she knew was approaching, had stopped and reversed, and was actually going astern at the time of collision, cannot be held in fault be

cause of her previous speed. 4. COLLISION 80-NAVIGATION IN FOG-CONSTRUCTION OF RULE.

Under the rule requiring a vessel in a fog on hearing another, apparently forward of her beam, “the position of which is not ascertained,” to stop, ascertaining of the position of the other vessel need not necessarily be by sight, and when she knows such vessel, the locality, and her usual

and proper course, she is justitied in navigating accordingly. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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