55 Ga. App. 520 | Ga. Ct. App. | 1937
Lead Opinion
The Georgia Power and Light Company brought suit against the Eruit Growers Express Company, to recover damage for breach of a contract requiring and obligating the defendant to accept and pay for a minimum of 20,000 tons of ice during each year of 1932 and 1933, at a price fixed by the contract. The defendant admitted its failure to accept and pay for such ice, and raised only the issue as to the amount of damage to which the plaintiff was entitled. By agreement the matter was submitted to an auditor to pass upon all questions of law and fact. To the report of the auditor both parties filed exceptions of law and exceptions of fact. The exceptions were heard by the judge without intervention of a jury. All of the exceptions of the plaintiff, both of law and of fact, were overruled, and the defendant’s exceptions were sustained. The plaintiff assigns error on that ruling. The defendant took a cross-bill of exceptions.
The contract sued on was made in July, 1926. Performance was to begin May 1, 1927. The contract required the plaintiff to build and maintain at Waycross, Georgia, a plant fully equipped with modern appliances for the manufacture, storage, and distribution of ice, according to plans and specifications approved by the Fruit Growers Express Company. It was to have a daily manufacturing capacity of not less than 150 tons of ice, and a storage capacity of not less than 6000 tons. The plaintiff was also to construct buildings, runways, machinery, platforms, and other facilities necessary for the loading and handling of such ice, and delivering the same to the defendant in its cars, and was to
By its answer the defendant denied that plaintiff could have manufactured the undelivered ice at the cost named in the petition, and that any damage resulted to the plaintiff; and alleged that the profits lost by the plaintiff, if any, must be measured by applying to the number of tons of ice the defendant is alleged not to have purchased and received the per ton profit, if any, the plaintiff would have realized had it manufactured and delivered the full amount agreed on under the contract; and that the difference between the total contract price and the complete cost of manufacturing and delivering the entire minimum amount would disclose the net profits. It was further alleged that the contract was an entire and indivisible contract for the purchase and sale, each year throughout its life, of a minimum amount at a fixed price; that the profits lost by the plaintiff in the years 1932 and 1933, if any, must be measured by applying to the number of tons of ice which the defendant failed to accept and pay for in each of said years the per ton profit, if any, that the plaintiff would have realized each year had it manufactured and delivered the.ice, called for under the contract; that the difference between the total contract price and the complete cost of manufacturing
The evidence of the plaintiff showed that the cost of manufacture and delivery to the defendant of the undelivered ice would have amounted to $1.29 per ton, and that no other items of expense would have accrued. It disclosed also the total cost to the plaintiff of the plant, and the operating revenues and the operate ing expenses. This estimate did not include the cost of manufacture and delivery of the ice and of superintendence, insurance, taxes, maintenance of buildings and grounds, depreciation, etc., because, as the plaintiff contended, such items would not be affected by the manufacture of additional tonnage, and these amounts would not have been changed by the manufacture of the additional tonnage under the contract. The defendant introduced a table of what it termed omitted costs incurred in the carrying on of the business by the plaintiff, which included maintenance of buildings and grounds, superintendence, ice inventory, taxes, insrrrance, and depreciation, which, if said items were included in the cost off manufacture, would amount to another $1.49 per ton, and contended that said sum and the $1.29 cost of labor, materials, and delivery represented the actual cost of manufacturing the ice, and that the difference between these two sums and the contract price of $3.25 per ton was the damage per ton that plaintiff had suffered. It was shown by the evidence for plaintiff, that these sums of maintenance, taxes, insurance, and depreciation would have been present whether the plant was operated or not.
The question for determination is, what is the proper measure of damages applying to the particular situation? This is the controlling issue. The auditor, whose findings were approved by the court, found that the damage accruing to the plaintiff was the difference between the contract price of the ice not manufactured by the plaintiff or accepted by defendant and the manufacturing costs thereof, and that this manufacturing cost included not only the $1.29 per ton which was the amount which would have been expended by plaintiff in making the ice, but also the proportionate part of the overhead expense listed under the items cited above. The parties were in accord as to the number of tons of ice
As an original proposition it can not be questioned that overhead charges such as are noted above are a part of the cost of production of the ice in question. Neither can it be'denied, if the anticipatory breach of the contract had occurred before the plaintiff had built the plant and incurred the expense of superintendence, taxes, insurance, and the consequent depreciation of the buildings and machinery, that in a suit for such damages because of such breach the recovery would be limited to the difference between the contract price and the entire cost of production, which would include the items under both heads as noted above. After the plant was built in accordance with the contract, and the performance thereof begun and continued from 1937 until 1933, these items of fixed charges became a necessary part of the expenses of the producer whether ten thousand or twenty thousand tons were manufactured each year. An examination of the record in White & Hamilton Lumber Co. v. Lynch, supra, discloses that no issue was raised as to any segregation of the costs of manufacture of the
In the present case, according to the contract, had the minimum amount of ice, 40,000 tons, been taken by the defendant and paid for, the plaintiff would have received $130,000. Under the evidence, only 17,727 tons were accepted and paid for. The plaintiff by reason of the contract had assumed the burden of the expense of the fixed charges or “overhead expense” which had to be paid irrespective of whether ten thousand or twenty thousand tons were delivered each year. This fixed charge or overhead was necessarily in contemplation of the parties at the time of the making of the contract; and unless it is paid to the seller, he can not be placed in the same position he occupied before the making of the contract. Mimms v. Betts Co., 9 Ga. App. 718, 721 (72 S. E. 271), was a suit by one who contracted to supply a certain number of teams to haul logs during the year 1908. Where, after having entered upon the performance of the work, the defendant in June of the year had refused to allow plaintiff to continue his hauling, the court in laying down the measure of damage said: “Take the gross amount the plaintiff would have earned if he had been allowed to continue in the performance of the contract, and deduct from it such portions of the amount he would necessarily have expended in fulfilling the contract as were saved to him [italics ours] by reason of his not being required to perform.” It is true that any ice the plaintiff may have manufactured and sold to outside parties should bear its proportionate part of the overhead expense and the defendant have the benefit of such saving. This principle holds true because it is the duty
In Holston Box & Lumber Co. v. Vonberg, 34 Ga. App. 298 (129 S. E. 562), it was said: “But if the lumber has been cut and tendered, or the processes of manufacture are completed so that the goods are on hand ready for delivery at the time of such breach, the measure of damages is ‘the difference between the contract price and the market price at the time and place of delivery’ (citing the White & Hamilton case, supra). ‘If the cost of delivery at the place fixed therefor is saved to the seller, deduction therefor should be made.’ 24 R. C. L. 116 (§ 386).” The converse of that proposition is true; and if the cost of the delivery is not saved to the seller, the buyer becomes liable therefor, under the principle that the seller is entitled to be placd in the same position he would have been in had the contract been performed. The defendant’s counsel cite Worrell v. Kinnear, 103 Va. 719 (49 S. E. 988, 2 Ann. Cas. 997), which dealt with the breach by a buyer of an executory contract for the sale and erection of 73 galvanized steel-shutter doors. On the day next after the acceptance of the order by which the contract had been consummated, the buyer withdrew the acceptance, and notified the seller of his intent to cancel it. The Virginia court held that the measure of damage was the difference between the contract price and the cost of production or manufacture and delivery, and that in determining that cost of manufacture and delivery a due proportion of the seller’s “fixed charges” (overhead) should be taken into consideration. It is clearly apparent that in such case this was a proper measure, for the reason that the parties would thereby be placed in the same position as they would have been in had the contract been performed. A different rule might have been applied had the seller, by reason of the contract, expended large sums in preparations for the manufacture of such doors, and, after having done so and made delivery of some of the doors, the contract had been rescinded. As was said by Judge Hines in the White & Hamilton case, supra: “The general rule is stated in the Civil Code (1910) .§ 4131 [96-113]. It is applicable where the seller has the goods on hand, and can deliver them to the buyer.” He then proceeded to fix the rule pertinent to the
We think the rule may be stated as announced in the White & Hamilton case, supra, that “ Where there is an anticipatory breach of the contract and the seller accepts the tender of breach, bringing suit upon the anticipatory breach to recover damages for the refusal to accept other installments [which are not at that time manufactured], . . the measure of damages is the difference between the contract price and the cost of production,” provided such measure of damage will place the parties in the same position they would have occupied had the contract been fully performed. Expenses which have become fixed and inevitable by reason of the entering into of the contract are not such items of the cost of production as will limit the seller, upon a breach by the buyer of the contract, to a recovery of the profits which would be earned when such fixed items are figured in making up the total cost of production. In other words, such a calculation would not place the seller in the same position as he would have occupied had the contract been fully performed, nor would it compensate him for the injury sustained. That this principle is in accord with the universal rule is evidenced in 1 Restatement of the Law of Contracts, § 329 : “Where a right of action for breach exists, compensatory damages will be given for the net amount of the losses caused and gains prevented by defendant’s breach, in excess of savings made possible.” And further, as stated in com
Judgment reversed on the main hill of exceptions, and affirmed on the cross-hill.
Rehearing
ON MOTIONS TOR REHEARING.
This court stated in its opinion in this case as originally written that "damages were prayed for to the extent of the profit it would have made on the minimum amount of ice to be sold under the contract, or the difference between the contract price and the cost of producing and delivering the same.” It appears from a further examination of the record that this allegation was stricken from the petition by amendment, and we have amended the opinion by striking therefrom this statement.
Counsel for the plaintiff has filed a motion for rehearing, complaining of the following language used in the opinion: "It is true that any ice the plaintiff may have manufactured and sold to outside parties should bear its proportionate part of the overhead expense, and the defendant have the benefit of such savings.” It will be borne in mind that the fixed or overhead charges are ordinarily a part of the cost of manufacture, and in an anticipatory breach of an executory contract they are to be considered in estimating the damages because of a breach of such contract, which damages are the profits the contracting party would have made if the contract were performed. It is true, had the defendant complied with its contract and purchased and paid for the full tw.enty thousand tons of ice yearly, that any amount of ice made and
Counsel for the defendant also has filed a motion for rehearing. We have carefully read this motion, and we find nothing therein discussed or contended for that was not covered by our original opinion. Both motions are denied.