Kellogg v. Malick
125 Wis. 239
Wis.
1905
Check Treatment
KjsRwth, J.

1. Tbe question respecting tbe rule of damages raised by tbe first assignment-of error involves tbe main controversy in tbis case. Tbe court below found tbat, as a result of tbe breach of tbe covenants in tbe lease from defendant to plaintiffs to fumisb pasture and feed for plaintiffs’ cattle, plaintiffs were entitled to recover for depreciation of cattle, $1,500; expense for feeding, $330; loss on butter product, $1,486.28 ; loss on milt product, $192; and tbe question arises wbetber sucb damages were properly recoverable in tbe action. It is established tbat under tbe lease tbe pasture was to be furnished and tbe feed raised upon tbe farm leased. It is also undisputed tbat plaintiffs were well acquainted with tbe premises, and discovered about tbe time they took possession tbat tbe pasture was insufficient and tbat their cows were running down, but afterwards, on June 30th, put on tbe farm an additional herd of seventeen bead of cattle; tbat they, under tbe lease, bad one year from date thereof to provide themselves with 100 cows, tbe rent which they were to pay under tbe lease being in proportion to tbe number of cattle they bad upon tbe farm; tbat defendant acted in good faith and believed tbe premises would furnish sufficient pasture for 100 bead of cattle; tbat be was to clear more land for pasture and feed, and did some clearing during tbe season, and prepared tbe same for pasture and feed, but, tbe season being dry, tbe seeding did not catch well or produce very substantial pasture. Tbe plaintiffs continued in possession from about tbe date of tbe lease, April 22, 1901, until February 10, 1902, during all of which time their cows were depreciating in value and damages accruing. Tbe general rule with respect to tbe measure of damages in actions upon contract laid down in tbe leading case of Hadley v. Baxendale, 9 Exch. 341, is referred to with approval by tbis court in many cases, and, among others, Hinckley v. Beckwith, 13 Wis. 31; Cockburn v. Ashland L. Co. 54 Wis. 619, 621, 12 N. W. 49; Shepard v. Milwaukee G. L. Co. 15 Wis. 318; Richardson v. *246Chynoweth, 26 Wis. 656; Chapman v. Ingram, 30 Wis. 290; Ingram v. Rankin, 47 Wis. 406, 2 N. W. 155; Guetzkow Bros. Co. v. A. H. Andrews & Co. 92 Wis. 214, 66 N. W. 119; Gross v. Heckert, 120 Wis. 314, 97 N. W. 952. Under tbis rule tbe damages which can be recovered for breach of contract are such as may fairly and reasonably be considered as either arising naturally — that is, according to the usual' course of things — from such breach, or such as may reasonably be supposed to have been in contemplation by both parties at the time they made the contract as the result of the breach of it. In the absence of circumstances, special or1 otherwise, brought home to the knowledge of the lessor, therefore, the damages which may be recovered in case of breach of the covenants of a lease respecting the condition of the leased premises is the difference between the value of the use of the premises in the condition as contracted to be, and the-rental value in their actual condition. 3 Sutherland, Damages (3d ed.) § 872; Pewaukee M. Co. v. Howitt, 86 Wis. 270, 56 N. W. 784; Serfling v. Andrews, 106 Wis. 78, 81 N. W. 991; Cook v. Soule, 56 N. Y. 420; Long v. Gieriet, 57 Minn. 278, 59 N. W. 194; Allendorph v. Banks, 8 Kan. App. 219, 55 Pac. 488; Lightfoot v. West, 98 Ga. 546, 25 S. E. 587; Jackson v. Farrell, 6 Pa. Super. 31; Wayne v. Lapp, 180 Pa. St. 278, 36 Atl. 723; Leick v. Tritz, 94 Iowa, 322, 62 N. W. 855; Taylor v. Lehman, 17 Ind. App. 585, 46 N. E. 84, 47 N. E. 230. And if the contract be made for a particular use by the lessee, the rental value for that use will be the standard by which damages may be awarded. 3 Sutherland, Damages (3d ed.) § 872; Bien v. Hess, 102 Fed. 436, 42 C. C. A. 421.

The rule of damages laid down in the foregoing cases and' many others which might be cited clearly applies to the caáe-before us, unless it can in some way be taken out of the general rule by circumstances, special or otherwise, known to-both parties at the time the lease was made; and it will not *247do that such special circumstances came to the knowledge of the lessor after the execution of the lease. Bradley v. C., M. & St. P. R. Co. 94 Wis. 44, 68 N. W. 410. As we understand the argument of counsel for respondents, some importance is attached to the finding that they were unable to procure other pasture or feed, so as to prevent the damages which resulted. Whether it would cut any figure even if it were known to both parties at the time of execution of the lease that other pasture could not conveniently be secured it is unnecessary to consider, because there is neither finding of fact nor evidence that any such circumstances were known to defendant at the time as would take the case out of the general rule. All the cases cited by counsel for respondents are where the damages recovered were the natural and proximate result of the breach, and, in the light of circumstances known to both parties at the time of making the contract, might reasonably be supposed to have been in contemplation of the parties as the probable result of a breach of it. We will refer to a few of them: Hinckley v. Beckwith, 13 Wis. 31, is put upon the express ground that the damages recovered were certain in their nature and in respect to the cause from which they proceeded, and were fairly in the contemplation of the parties when the contract was made. Poposkey v. Munkwitz, 68 Wis. 322, 32 N. W. 35, is where the lessor executed a lease, knowing that he could not put lessee in possession, in order to maintain the good will of his business. This case clearly recognizes the rule in Hadley v. Baxendale, 9 Exch. 341, and places the right to recover damages upon the ground that ‘Tie knew that there was a valid, paramount .lease upon the premises, executed by himself to Wilde & Uhlig, having seventeen or eighteen months to run after the commencement of the plaintiffs term.” The lessor therefore knew, wien he leased the store, of the defect in his title which prevented him from assuring the plaintiff quiet enjoyment of the premises, and also that the store was hired for the purpose of con-*248tinning the former business of the lessee, which had been established, and the continuation of which in that locality was valuable. At page 335 of 68 Wis. (32 N. W. 41) the court says:

“It is conceded that if the plaintiff had not a business already built up and established in the same vicinity, which, with its good will, could have been transferred to the store No. 411 Broadway, there would be no basis upon which to estimate the prospective value of the business which the plaintiff would have done there, had he obtained possession and carried on the business therein.”

Pewaukee M. Co. v. Howitt, 86 Wis. 270, 56 N, W. 784, was an action for rent; and under a covenant in the lease by lessor to put in a water-wheel of not less than fifty horsepower — one of only thirty horse-power having been furnished — it was held that the rule of damages in such case was the difference between the rental value of the premises with the specified wheel and the rental value without it. No allowances’ were made for prospective profits as damages, and the case was distinguished from Poposkey v. Murikwitz, supra, on the ground that it did not appear that a lite business had been built up, which might serve as a basis for allowance of such damages. So, in Raynor v. Valentin Blatz B. Co. 100 Wis. 414, 76 N. W. 343, the business had been established which furnished a basis for the recovery of anticipated profits; and it was held that the allowance of such profits in such case was clearly within the contemplation of the parties and not too remote or conjectural, and were capable of being ascertained with reasonable certainty, because the plaintiff had been transacting the same business for years in the same building. In Gross v. Heckert, 120 Wis. 314, 97 N. W. 952, the claim for damages was , failure to put plaintiff in possession according to the terms of lease. It appeared that the lessor knew the use the premises were to be devoted to, and that the lessee purposed preparing, for the enjoyment of the lease, and, relying upon lessor’s agreement *249to put bim in possession, incurred obligations and paid out money in anticipation of enjoying bis term, and was damaged ~by reason of tbe lessor’s failure to put bim in possession. So it is very clear tbat tbe damages recovered in tbis case were witbin tbe contemplation of tbe parties at tbe time tbe contract was made and tbe necessary result of a breach ■of it.

But it is unnecessary to further discuss tbe authorities ■cited by respondents. We are convinced tbat tbe case before us cannot be brought witbin tbe rule of such cases. Moreover, profits upon tbe farm in question were wholly speculative. Plaintiffs bad not built up a business. There was no basis, as appears from tbe record, for determining profits, or whether any would be made in tbe business. It was unlike an established business which bad been run for years and profits made; nor could it have been contemplated tbat, in case of failure of pasture, there would have been a loss, since it is reasonable to suppose, in tbe absence of circumstances known to tbe parties to tbe contrary, tbat tbe plaintiffs would have made other provisions to supply pasture in case tbe pasture contracted for should prove insufficient, and tbat the general rule of damages would compensate them in such event. It is probably true tbat tbe plaintiffs acquiesced in tbe situation and relied upon tbe premises for pasture as they existed. They bad as full knowledge at or about tbe time possession was taken of tbe condition and character of tbe premises as tbe defendant, and, notwithstanding they claimed tbe pasture proved insufficient very soon after taking possession, they still continued to keep all their stock thereon, and even put on an additional herd of seventeen bead after discovering tbe alleged insufficiency. If it were necessary to consider tbe finding to tbe effect tbat defendant might, with reasonable diligence, have cleared more land and gotten tbe same in a condition so tbat grass would grow thereon and furnish sufficient pasture for tbe year 1901, we should be very strongly inclined *250to bold such finding not supported by the evidence. The testimony is practically undisputed that the season was dry, the-soil light and sandy, and it was difficult to get a catch of seeding that year. The great weight of the testimony establishes the fact that no substantial pasture could have been obtained from new seeding during the season of 1901 after the date of the lease, April 22d; and it does not appear from the record that the plaintiffs used any diligence to procure land upon which to raise' feed to supply the deficiency occasioned by defendant’s breach of covenant in that regard. The finding that the purchases of stock after execution of lease were made before plaintiffs had good reason to believe they would suffer any damages under their contract is not sustained by the evidence. They purchased the Tobey herd June 30th, and it is clear from the evidence they knew of the deficiency of pasture before this. One of the plaintiffs testified that the cattle commenced running down soon after they were turned in pasture j. that he noticed deficiency of pasture the first time he went over it; that the cattle ran down within a month; that he made examination May 20th and pasture was poor then. It was the duty of the plaintiffs, upon any phase of the case, to-have reduced the damages to a minimum when they discovered that the pasture was not sufficient and profits could not be made, but losses incurred. It was their duty to have taken some steps to avoid such damages. They did not do so. They enhanced the damages, and, so far as appears in this case, may have produced them all by increasing the number of cattle upon the premises after discovery of the insufficiency of the pasture, and in other respects not necessary to detail here. It appears from the record that the plaintiffs could have avoided a large amount of the damages which the referee and court found were incurred had they used diligence to do so. They were directly responsible in continuing the business at a loss, and in fact incurring all the loss after knowledge that the business was running at a loss, which they had shortly *251after taking possession; and, even if the plaintiffs could recover damages in tbis case under tbe rule adopted by the court below, they are entitled to no damages which might have been avoided by them in the exercise of care on their part. Flynn v. Trask, 11 Allen, 550; Poposkey v. Munkwitz, 68 Wis. 322, 32 N. W. 35; Adair v. Bogle, 20 Iowa, 238; Bradley v. Denton, 3 Wis. 551; Anderson v. Sloane, 72 Wis. 566, 40 N. W. 214; Cook v. Soule, 56 N. Y. 420. The damages' recovered below under the first assignment of error were too remote, contingent, uncertain, and speculative, and therefore' should have been excluded. Bradley v. Denton, supra; Brayton v. Chase, 3 Wis. 456; Wright v. Mulvaney, 78 Wis. 89, 46 N. W. 1045; Anderson v. Sloane, supra; Gross v. Heckert, 120 Wis. 314, 329, 97 N. W. 952; Bierbach v. Goodyear R. Co. 54 Wis. 208, 11 N. W. 514; Pewaukee M. Co. v. Howitt, 86 Wis. 270, 56 N. W. 784; Prosser v. Jones, 41 Iowa, 674; Osborne v. Poket, 33 Minn. 10, 21 N. W. 752; Rhodes v. Baird, 16 Ohio St. 573; Greene v. Williams, 45 Ill. 206; Howard v. S. & B. Mfg. Co. 139 U. S. 199, 206, 11 Sup. Ct. 500; Manhattan S. Works v. Koehler, 45 Hun. 150; Haker v. Boedeker, White & W. Civ. Cas. (Tex.) § 1034; Fuller v. Curtis, 100 Ind. 237.

After a careful examination of the cases heretofore cited' and many others, and in the light of the facts appearing in the record, we are convinced that' the proper rule of damages, and the one which should have been adopted by the court below, is the difference between ihe rental value of the property in the condition in which it was contracted to be., and' the condition in which it existed for the use intended.

2. Error is assigned because the court charged defendant' with $1,720, value of the cattle sold under the "chattel mortgages, and refused to allow, him $1,257.71, the net cost of keeping the cattle between the time of seizure and sale. He-took possession of the cattle under the chattel mortgages, and, after holding them for about three months, undertook to sell *252them, but, upon the sale, practically precluded competition by selling in such manner as to prevent competitive bids, and secured the property at his own price. It appears that at the time of seizure, January 29th, the cattle were worth $1,470, and two horses $250, making a total of $1,720; that during the three months before sale defendant expended in feeding and improving the animals, less what he received for their produce, $1,257.71, and their value was much improved by such feeding. After this he made a sale and bid in the whole lot for $1,300. Plaintiffs were present at the sale and asked that the animals be sold in small lots. Several bidders were also present who desired to buy small lots, but not the whole herd. Defendant put the herd up in two lots — one of twenty-eight cattle covered by one chattel mortgage, and the balance of the 105 cattle and one horse covered by the other chattel mortgage in another lot — and no one bid but those representing defendant, and the two lots were bid in for him. So, under the sale, defendant got the cattle and horses for $1,300, or only a few dollars more than was expended in feeding them for the three months after seizure. Whether this sale was planned and executed to defraud plaintiffs it is unnecessary to decide. It was certainly well calculated to take an unjust advantage of them. In the seizure of the property under the mortgages defendant owed a duty to plaintiffs. That duty required him to use all fair and reasonable means in obtaining the best price for the property on sale. The referee and the court found that the sale was not made in good faith nor the amount received upon the sale adequate, and that defendant took a wrongful and unfair advantage of plaintiffs. We think the finding on this point is fully sustained by the evidence. The sale, therefore, being unfair was void, and the defendant was bound to account for the value of the property. Boyd v. Beaudin, 54 Wis. 193, 11 N. W. 521; Vreeland v. Waddell, 93 Wis. 107, 67 N. W. 51; Pettibone v. Perkins, 6 Wis. 616. Assuming that the original *253seizure of tbe property under the mortgages was lawful, it was upon the theory that a sale in good faith would be made- and no unlawful advantage would be taken of plaintiffs after defendant got possession of the property. The sale being void there was no valid foreclosure, and the acts of defendant amounted to a conversion of the property to his own use, and rendered him liable for its value at the time he converted it. Gauche v. Milbrath, 94 Wis. 674, 69 N. W. 999; Tenney v. State Bank, 20 Wis. 152; Hartman v. Ringgenberg, 119 Ind. 72, 21 N. E. 464; Mussey v. Cahoon, 34 Me. 74; Sackrider v. M'Donald, 10 Johns. 253; Van Brunt v. Schenck, 13 Johns. 414; Jarratt v. Gwathmey, 5 Blackf. 237.

It is claimed by counsel for defendant that plaintiffs’ remedy is to redeem, but the defendant, by converting the property to his own use and selling it, or the greater portion of it, in small lots to different persons, put it out of his power to return the property on tender of amount, and makes a proceeding to redeem of no avail. He cannot complain, therefore, because charged with the value of the property by him converted. The defendant being chargeable with the value-of the cattle and horses at the time of seizure, he cannot be allowed the expense of feeding and improving them, nor credited with $150, value of a horse which died after he took possession. This appears to be a fair disposition of the question under the second and third assignments of error. Defendant having taken possession of the mortgaged property of the value at time of seizure of $1,720, and never having legally foreclosed the mortgages, but converted the property and put it out of the power of the mortgagors to redeem, it seems just that he should be charged with its value. Powell v. Gagnon, 52 Minn. 232, 53 N. W. 1148; Case v. Boughton, 11 Wend. 106.

3. The fourth error assigned involves the allowance to plaintiffs of the item of $322 for work done by them in the summer and fall of 1901. This item was disallowed by the *254referee but allowed, by tbe court, and the question is whether the court erred. It is admitted that the plaintiffs breached the covenant of the lease with reference to the payment of rent, which was to be paid monthly, none having been paid from June, 1901, to January, 1902, aggregating $655. Plaintiffs were in possession until February 10, 1902, and, before removal, judgment of eviction was entered against them in an unlawful detainer action for failure to pay rent, and an appeal .taken, but no bond given for stay of execution, and no writ of restitution issued before removal of plaintiffs from the premises. The court and referee found that, under the advice of their attorneys, because there was no possibility of carrying out the contract farther, and in view of all the circumstances in the case, and partly because of each of them, plaintiffs left the premises in February, 1902. It appears from the record that this work of improving was done after the plaintiffs had knowledge that defendant had not -furnished sufficient pasture, or, in other words, as they claim, after he had breached his contract. .They also had breached their contract by failing to pay any rent. It is possible that they continued in possession with the idea that the breaches on both sides might in some manner be healed, but they were -not, and conditions seemed to grow worse until plaintiffs’ cattle were taken from them under the chattel mortgages. .'Suit was commenced by defendant to recover possession of the premises because of failure to pay rent according to terms - of the lease. This suit was defended, and resulted in judgment against plaintiffs for the recovery of possession of the premises while they were still in possession. They appealed, but gave no bond to stay execution; moving out, however, before any writ of restitution was issued, and .continuing to fight the case to the supreme court, where the judgment of the court below was affirmed. Malick v. Kellogg, 118 Wis. 405, 95 N. W. 372. In the unlawful detainer action the defense was set up that the landlord (defendant here) had *255failed to perform bis contract to make certain improvements upon tbe demised premises; but tbis court beld sucb agreement not one upon wbicb tbe right to demand rent depended, and bence no defense to an action of unlawful detainer for nonpayment of rent. Tbe contention is made by counsel for respondents bere that tbe plaintiffs voluntarily removed from tbe premises and made tbe improvements and did tbe work preparing for tbe next year before they knew it would be impossible for them to continue during tbe second year, and are entitled to recover tbe value of sucb expenditure in tbis action; but, according to plaintiffs’ own contention, they knew before they made tbis expenditure that there was not sufficient pasture and that tbe defendant bad not performed bis contract, and still they continued in possession, refusing to”.pay rent until judgment was rendered against them for tbe possession of tbe premises. Tbis judgment put them in tbe wrong, and was a verity until reversed. . At tbe time they removed it was standing against them, and a writ of restitution could have been issued at any time. We fail to see, under tbe circumstances, bow their removal can be regarded as voluntary, in tbe face of tbe litigation and judgment against them. True, tbe judgments in tbe circuit and supreme courts affirming tbe judgment of tbe county court were after their removal, but tbe judgment of tbe county court against them was in force at tbe time of removal, and it was effectual in fixing tbe rights between tbe parties until reversed. It. -established that tbe plaintiffs themselves breached tbe contract and were in default. Tbe $322 expended by plaintiffs was done upon tbe theory that they might establish their right to continue in possession for another year and have tbe benefit of it, wbicb they failed to do. Tbis item, therefore, they are not entitled to recover in tbis action.

By the Court. — The judgment of tbe court below is reversed, and tbe cause remanded for further proceedings in .accordance with law and tbis opinion.