Supreme Court of Indiana.

HURLEY v. EDDINGFIELD

156 Ind. 416 (1901)

BAKER, J.

The appellant sued appellee for $10,000 damages for wrongfully causing the death of his intestate. The court sustained appellee's demurrer to the complaint, and this ruling is assigned as error.

The material facts alleged may be summarized thus: At and for years before decedent's death appellee was a practicing physician at Mace, in Montgomery county, duly licensed under the laws of the state. He held himself out to the public as a general practitioner of medicine. He had been decedent's family physician. Decedent became dangerously ill, and sent for appellee. The messenger informed appellee of decedent's violent sickness, tendered him his fee for his services, and stated to him that no other physician was procurable in time, and that decedent relied on him for attention. No other physician was procurable in time to be of any use, and decedent did rely on appellee for medical assistance. Without any reason whatever, appellee refused to render aid to decedent. No other patients were requiring appellee's immediate service, and he could have gone to the relief of decedent if he had been willing to do so. Death ensued, without decedent's fault, and wholly from appellee's wrongful act.

The alleged wrongful act was appellee's refusal to enter into a contract of employment. Counsel do not contend that, before the enactment of the law regulating the practice of medicine, physicians were bound to render professional service to every one who applied. Whart. Neg. § 731. The act regulating the practice of medicine provides for a board of examiners, standards of qualification,
examinations, licenses to those found qualified, and penalties for practicing without license. Acts 1897, p. 255; Acts 1899, p. 247. The act is a preventive, not a compulsive, measure. In obtaining the state's license (permission) to practice medicine, the state does not require, and the licensee does not engage, that he will practice at all or on other terms than he may choose to accept. Counsel's
analogies, drawn from the obligations to the public on the part of innkeepers, common carriers, and the like, are beside the mark.

Judgment affirmed.

518 P.2d 1201 (1974)
95 Idaho 739

CONTINENTAL FOREST PRODUCTS, INC., a corporation, Plaintiff-Respondent,
v.
CHANDLER SUPPLY COMPANY, a corporation, Defendant-Appellant.

No. 11019.
Supreme Court of Idaho.
February 4, 1974.
Rehearing Denied March 7, 1974.

[1203] Robert S. Campbell, Jr., of Pugsley, Hayes, Watkiss, Campbell & Cowley, Salt Lake City, Utah and Harold Q. Noack, Jr., Boise, for defendant-appellant.

Frank E. Chalfant, Jr., Boise, for plaintiff-respondent.

[1202] BAKES, Justice.

Continental Forest Products, Inc., the plaintiff-respondent, is an Oregon corporate lumber broker. As plaintiff, it instituted this action against Chandler Supply Company, also a corporation, the defendant-appellant, seeking recovery of $10,231.45, plus interest, for two carloads of plywood allegedly sold defendant in the summer of 1969. Following trial without a jury, the court entered findings of fact and conclusions of law in favor of the plaintiff (hereinafter referred to as Continental), and entered judgment in conformity with its findings and conclusions. The defendant-appellant (hereinafter referred to as Chandler) appeals from this judgment and from the order of the trial court denying its objections to the findings of fact, conclusions of law and judgment of the court.

The appellant Chandler is a wholesale lumber distributor at Boise and has done business, both buying and selling of lumber products, with a company known as North America Millwork, Inc., of Tacoma, Washington. On June 26, 1969, Larry Williams, an employee of Chandler, phoned North America Millwork, Inc., for quotations on plywood prices, advising North America it was in the market for a carload of 1/2 inch plywood and a carload of 5/8 inch plywood. Williams spoke with Ed Barker, an employee of North America, giving him the necessary data. Later on the same day, Barker advised Williams of the quoted prices for plywood, and Williams ordered the two carloads of plywood from North America Millwork, giving Barker the Chandler purchase order numbers 3246 and 3247.

On the same day, Williams prepared two separate Chandler purchase orders covering the two carloads of plywood fixing the delivery date as two weeks or sooner, f.o.b. mill, with the quoted prices. These two purchase orders, one numbered 3246 and the other numbered 3247, were mailed by Chandler to North America Millwork on the same day.

This was Chandler's first order for plywood from North America Millwork, although it had transacted a considerable volume of other lumber business with North America Millwork between December, 1968, and July, 1969. In prior transactions when Chandler had purchased from North America, North America had sent its own written acknowledgments of Chandler's purchase orders placed with it and later had submitted invoices upon shipments being made. In this instance, North America neither confirmed nor rejected the June 26, 1969, Chandler purchase orders by written acknowledgment nor did it send its invoices to Chandler.

However, on July 2, 1969, Chandler received two acknowledgments of the orders for plywood from Continental, both dated June 27, 1969, one for a carload of 1/2 inch plywood, and the other for a carload of 5/8 inch plywood. The specifications, prices and terms for the plywood as recited in the acknowledgments were substantially the same as the orders placed by Chandler with North America on June 26. The acknowledgments also referred to the Chandler purchase orders 3246 and 3247 which had been sent to North America Millwork. It is not entirely clear how Continental received Chandler's orders sent to North America. Apparently Ed Barker left his employment with North America and commenced brokering for Continental and gave the orders to Continental.

On July 7, 1969, the Monday following the Fourth of July holiday, Earl Chandler, the president of appellant company, in his [1204] own handwriting, wrote on each duplicate copy of the acknowledgments of orders received from Continental, "Purchased from North America Millwork. Earl Chandler 7-7-69" and directed that they be mailed to Continental. Earl Chandler testified that in writing this notation he assumed that Continental was making the shipments for North America. Mrs. Hebein, Earl Chandler's secretary, testified that she mailed these copies of the acknowledgments of orders, addressed to Continental, by regular mail. Witnesses for Continental testified that even though they searched through their files for these copies of the acknowledgments, they could not be found. Chandler kept copies of these acknowledgments with his handwritten note on them, and they were introduced into evidence.

Chandler received the first carload of plywood on July 24, 1969, and received an invoice from Continental for this carload. The second carload of plywood arrived August 6, 1969, and the invoice from Continental arrived on August 15. Chandler took delivery of both of these carloads, and at no time offered to return the plywood.

The terms of the orders provided for a 2% discount if paid for within five days after arrival of the invoice. On August 11, 1969, Chandler made a check for $3,636.36 payable to both Continental and North America Millwork and returned it to North America Millwork in payment of these two carloads of plywood. In calculating the amount of the payment, Chandler first deducted the 2% discount for the two carloads of plywood and also deducted a $6,212.95 trade debt owing from North America to Chandler.^[1]

North America returned Chandler's check and denied that Chandler owed it money for the shipment of plywood. Chandler sent the payment to North America a second time, but it was again returned. Through a series of letters and telephone calls Chandler attempted to induce North America to accept payment. During this time, Ed Barker (who was then acting as an independent lumber broker, having left employment with North America on June 30, 1969), sent a letter to Williams (employee of Chandler) indicating that Continental was the actual supplier of the plywood. Chandler's attempt to pay North America failed, and Chandler refused to tender payment to Continental without deducting North America's trade debt.

Not having received payment for the two carloads, Continental brought this action for the quoted price of the plywood plus interest. Continental subsequently filed its supplemental complaint alleging a second claim against Chandler on the theory of unjust enrichment on the part of Chandler and seeking as damages $10,231.45.

Appellant Chandler answered the complaint and supplemental complaint, denying that it owed Continental any money or that Continental had sold it any goods. Chandler alleged that it had a contract only with North America to whom it had tendered payment. Following trial to the court on the issues framed by the pleadings, the trial court rendered its memorandum opinion in favor of Continental. Pursuant to I.R.C.P. Rule 52, Chandler moved for reconsideration of the memorandum opinion and proposed findings, which motion the court denied. Thereafter findings of fact, conclusions of law and judgment for $11,559.93 were entered, to which appellant objected. The district court denied these objections, and this appeal was taken.

Appellant first assigned as error the trial court's failure to find that Continental's [1205] claim was subject to Chandler's right of set off against North America.

In the trial court's memorandum opinion, rendered on May 26, 1971, the court discussed the relationship between Continental and Chandler and found that "the very least we have was an implied agreement or quasi contract."

Basically the courts have recognized three types of contractual arrangements. Restatement of Contracts, § 5, comment a, at p. 7 (1932); 3 Corbin on Contracts, § 562 at p. 283 (1960). First is the express contract wherein the parties expressly agree regarding a transaction. Alexander v. O'Neil, 77 Ariz. 316, 267 P.2d 730 (1954). Secondly, there is the implied in fact contract wherein there is no express agreement but the conduct of the parties implies an agreement from which an obligation in contract exists. Clements v. Jungert, 90 Idaho 143, 408 P.2d 810 (1965). The third category is called an implied in law contract, or quasi contract. However, a contract implied in law is not a contract at all, but an obligation imposed by law for the purpose of bringing about justice and equity without reference to the intent or the agreement of the parties and, in some cases, in spite of an agreement between the parties. Hixon v. Allphin, 76 Idaho 327, 281 P.2d 1042 (1955); McShane v. Quillin, 47 Idaho 542, 277 P.2d 554 (1929); 3 Corbin on Contracts, § 561, at p. 276 (1960). It is a non-contractual obligation that is to be treated procedurally as if it were a contract, and is often referred to as quasi contract, unjust enrichment, implied in law contract or restitution. In discussing a quasi contract or an action founded on unjust enrichment, the California Supreme Court stated in Ward v. Taggart, 51 Cal.2d 736, 336 P.2d 534 (1959):

"The promise is purely fictitious and unintentional, originally implied to circumvent rigid common-law pleading. It was invoked not to deny a remedy, but to create one 'for the purpose of bringing about justice without reference to the intention of the parties.' 1 Williston, Contracts (rev. ed.) p. 9; . . ." 336 P.2d at 538.

Similarly, in Roberts v. Roberts, 64 Wyo. 433, 196 P.2d 361 (1948), the court stated at p. 367:

"This brings us to the question as to an implied or quasi-contract pleaded in the second cause of action. Black's Law Dictionary defines it thus:

'A quasi-contract is what was formerly known as the contract implied in law; it has no reference to the intentions or expressions of the parties. The obligation is imposed despite and frequently in frustration of their intention.'" 196 P.2d at 367.

See also, Trollope v. Koerner, 106 Ariz. 164, 470 P.2d 91 (1970), and 1 Williston on Contracts (3d Ed.), § 3A at p. 13 (1957).

In this case it is clear that there is neither an express nor an implied in fact contract since there was an express rejection by Chandler of any intention to enter into a contract with Continental as evidenced by the notation made on the acknowledgments and Chandler's subsequent attempts to pay North America Millwork for the carloads of plywood. However, we agree with the trial court that under the peculiar circumstances of this case, the third type of contract, implied in law or quasi contract, exists obligating Chandler to pay for the materials which he received. However, the problem which arises is determining the amount of recovery to which Continental is entitled.

As the essence of a contract implied in law lies in the fact that the defendant has received a benefit which it would be inequitable for him to retain, it necessarily follows that the measure of recovery in a quasi-contractual action is not the actual amount of the enrichment, but the amount of the enrichment which, as between the two parties it would be unjust for one party to retain. Hixon v. Allphin, supra; 66 Am.Jur.2d, Restitution and Implied Contracts, at p. 946 (1973); Meehan v. Cheltenham, 410 Pa. 446 189 A.2d [1206] 593 (1963); Farmers National Bank of Bloomsburg v. Albertson, 203 Pa.Super. 205, 199 A.2d 486 (Pa. 1964). In the instant case we feel that the enrichment which Chandler "unjustly received" was the value of the plywood shipped less the trade set off which Chandler had against North America Millwork and which he would have been entitled to take had the transaction been completed the way Chandler had intended and attempted to complete it. Chandler had a right to deal exclusively with North America and use his trade set off as part of the purchase price. Chandler should not be deprived of this set off in view of the way that Continental became involved in this transaction.

The foregoing conclusions necessarily follow as a matter of law from the salient facts found in the record. Those facts are that Chandler had placed the orders initially with North America Millwork, knowing that he had a trade set off; that the North America Millwork employee Ed Barker left his employment with North America Millwork and apparently took the Chandler orders with him, and that the orders subsequently wound up in the Continental organization; that Continental, without notifying Chandler that Barker had terminated his employment with North America and was now brokering for Continental, mailed its acknowledgments of the two orders which Chandler had placed with North America Millwork, referring to them by Chandler purchase order numbers which were sent to North America Millwork; that Chandler wrote on those acknowledgments that he had purchased the plywood from North America Millwork and mailed the acknowledgments back to Continental; and that Chandler attempted to make payment for the plywood to North America Millwork. If any party was responsible for the situation present in this case, it was Continental. Although it is not entirely clear from the record, it would appear that Barker breached the fiduciary duty which he owed to his employer North America Millwork by taking the Chandler purchase orders to Continental. Continental then, wittingly or unwittingly, took advantage of that breach of a fiduciary relationship and filled the orders, apparently without inquiry concerning the status of North America Millwork, the existence of a trade debt, the situation behind Barker's taking the purchase orders to Continental, or notifying Chandler that it was attempting to take over the North America transactions. Under these circumstances we feel that it would not be unjust to require Chandler to pay only that amount which he would have had to pay to North America had the transaction gone the way Chandler had intended and attempted to have it go.

Since the resolution of the quasi-contractual issue is dispositive in this case it is unnecessary to become embroiled in a discussion of the presumption of receipt of a letter duly mailed versus the weight to be given to testimony on non-receipt, as did the trial court in deciding the case and as did the parties on appeal.

Judgment should be entered for Continental against Chandler in the amount of the principal claim less the amount of the North America Millwork trade debt which Chandler had. The matter should be remanded to the trial court to make the necessary computations including adjustments for interest on account.

Judgment reversed and remanded. Costs awarded to appellant.

DONALDSON and McQUADE, JJ., concur; SHEPARD, C.J., concurs in result.

McFADDEN, Justice (dissenting).

It is my conclusion that the judgment of the trial court should be affirmed, and I dissent from that portion of the majority opinion which after determining that Chandler was obligated to pay for the plywood it received, then proceeds to grant an offset to Chandler for an alleged debt owed to it by North America Millwork.

[1207] The basic reason for this dissent is that the majority opinion in effect grants to Chandler an offset for a trade debt allegedly due Chandler from North America, who is neither a party to this action, nor in privity with Continental. Stringent requirements are established for a court to recognize an offset. See, Brown v. Porter, 42 Idaho 295, 245 P. 398 (1926), which considered the provisions governing the right to a setoff, C.S. §§ 6694-6697 (I.C. §§ 5-612 to 5-615). See I.R.C.P. 13(a) and 13(b). In Petersen v. Lyders, 139 Cal. App. 303, 33 P.2d 1030, 1031 (1934), cert. den. 294 U.S. 716, 55 S.Ct. 514, 79 L.Ed. 1249, reh. den. 294 U.S. 734, 55 S.Ct. 635, 79 L.Ed. 1262, the Supreme Court of California considered statutes governing the right to setoff which were identical to Idaho's:

"It is elementary that a set-off may not be invoked unless the parties and the debts are mutual and that the doctrine of mutuality requires that the debts be due to and from the same persons in the same capacity."

Later in Advance Ind. Fin. Co. v. Western Equities, Inc., 173 Cal. App.2d 420, 343 P.2d 408 (1959), the California Supreme Court again emphasized the necessity of mutuality in setoff cases in the following language:

"A counterclaim or a setoff is defined as a cause of action in favor of the defendant on which he might have sued the plaintiff in a separate action and, in the case of a counterclaim, might have obtained affirmative relief * * *. A claim based on an equitable right may be set up as a counterclaim against a claim based on a legal right. While the doctrine of setoff, as distinguished from statutory counterclaim, is eminently an equitable one, the equitable right is founded on the idea that mutual existing indebtedness, arising out of contracts between parties to the record, creates payment of both demands so far as they equal each other. The two demands must be mutual." (Citations omitted.) 343 P.2d at 412.

See also, Cruzan v. Franklin Stores Corp., 72 N.M. 42, 380 P.2d 190 (N.M. 1963); Sarkeys v. Marlow, 205 Okl. 15, 235 P.2d 676 (1951); A.S. & R. Co. v. Swisshelm Gold Silver Co., 63 Ariz. 204, 160 P.2d 757 (Ariz. 1945).

In this case there is no record of mutuality. The alleged debt is owing from North America to Chandler, Continental has not been shown to have been connected with North America by agency, contract, or assignment, and the trial court did not find any such relationship between Continental and North America.

The majority opinion reaches its final conclusion on the basis that Chandler was going to be unjustly enriched if it was allowed to retain the plywood shipped by Continental without paying somebody. By some process the opinion places fault on the part of Continental, and then states "Under these circumstances we feel that it would not be unjust to require Chandler to pay only that amount which he would have had to pay to North America had the transaction gone the way Chandler had intended and attempted to have it go." This conclusion is then followed by a refusal of the majority opinion to consider what in my opinion is one of the crucial points of the case, i.e., whether Continental ever received the copies of the acknowledgment of orders on which Earl Chandler had written "Purchased from North America Millwork. Earl Chandler 7-7-69."

The majority opinion in faulting Continental for its activities in effect holds the trial court erred when it specifically found "the return acknowledgment with the notation by Mr. Earl Chandler was not received by Continental Forest Products." At trial both parties contested this issue and appellant assigned the issue as an error on appeal. In such cases, when there is testimony by the addressee denying receipt of the mailed instrument, an issue of fact is presented for resolution by the trier [1208] of facts. American Surety Co. v. Blake, 54 Idaho 1, 27 P.2d 972 (1933); IX Wigmore (3d ed.) § 2519; Bell, Handbook of Evidence (1972), p. 239. The trial court sat as a trier of the facts and its function was to weigh the evidence and judge the credibility of the witnesses. A conflict in the evidence as to the receipt of the acknowledgments was presented, and in light of competent, substantial, although conflicting evidence, the trial court's findings in this regard should have been considered and upheld. Ivie v. Peck, 94 Idaho 625, 495 P.2d 1110 (1972).

There are numerous other points wherein I disagree with the majority opinion, particularly in regard to what it claims the trial court found. Extended discussion of these would be futile in a dissent and would unduly lengthen it.

[1] During the summer of 1969 North America Millwork began experiencing financial difficulties. Eventually, in December, 1969, North America Millwork made a common law assignment of assets to its creditors in an effort to liquidate its trade obligations. Through a letter of July 17, 1969, North America Millwork advised Chandler of its financial problems. At this time there was a balance due from North America to Chandler on other transactions in the amount of $6,212.95.

1 Q.B. 346

WATTEAU
v.
FENWICK.

[346] Principal and Agent—Liability of Principal—Undisclosed Principal—Unauthorized Acts of Agent.

The defendants, a firm of brewers, who were the owners of the business of a beerhouse, appointed a manager of the business; the licence was always taken out in the name of the manager, whose name also appeared over the door. By the agreement between the defendants and their manager, the latter was forbidden to purchase certain articles for the purpose of the business, which were to be supplied by the defendants; but the manager, in contravention of his instructions, ordered such articles from the plaintiff for use in the business; the plaintiff supplied the goods and gave credit for them to the manager only. Subsequently, upon discovering that the defendants were the real owners of the business, the plaintiff sued them for the value of the goods:—

Held, that the plaintiff was entitled to maintain the action, for the defendants, as the real principals, were liable for all acts of their agent which were within the authority usually conferred upon an agent of his particular character, although he had never been held out by the defendants as their agent, and although the authority actually given to him by them had been exceeded.

APPEAL from the decision of the county court judge of Middlesborough.

From the evidence it appeared that one Humble had carried on business at a beerhouse called the Victoria Hotel, at Stockton-on-Tees, which business he had transferred to the defendants, a firm of brewers, some years before the present action. After the transfer of the business, Humble remained as defendants' manager; but the licence was always taken out in Humble's name, and his name was painted over the door. Under the terms of the agreement made between Humble and the defendants, the former had no authority to buy any goods for the business except bottled ales and mineral waters; all other goods required were to be supplied by the defendants themselves. The action was brought to recover the price of goods delivered at the Victoria Hotel over some years, for which it was admitted that the plaintiff gave credit to Humble only: they consisted of cigars, bovril, and other articles. The learned judge allowed the claim for the cigars and bovril only, and gave judgment for the plaintiff for £22 12s. 6d. The defendants appealed.

[347] 1892. Nov. 19. Finlay, Q.C. (Scott Fox, with him), for the defendants. The decision of the county court judge was wrong. The liability of a principal for the acts of his agent, done contrary to his secret instructions, depends upon his holding him out as his agent—that is, upon the agent being clothed with an apparent authority to act for his principal. Where, therefore, a man carries on business in his own name through a manager, he holds out his own credit, and would be liable for goods supplied even where the manager exceeded his authority. But where, as in the present case, there is no holding out by the principal, but the business is carried on in the agent's name and the goods are supplied on his credit, a person wishing to go behind the agent and make the principal liable must shew an agency in fact.

[LORD COLERIDGE, C.J. Cannot you, in such a case, sue the undisclosed principal on discovering him?]

Only where the act done by the agent is within the scope of his agency; not where there has been an excess of authority. Where anyone has been held out by the principal as his agent, there is a contract with the principal by estoppel, however much the agent may have exceeded his authority; where there has been no holding out, proof must be given of an agency in fact in order to make the principal liable.

Boydell Houghton, for the plaintiff. The defendants are liable in the present action. They are in fact undisclosed principals, who instead of carrying on the business in their own names employed a manager to carry it on for them, and clothed him with authority to do what was necessary to carry on the business. The case depends upon the same principles as Edmunds v. Bushell^[1], where the manager of a business which was carried on in his own name with the addition "and Co."  accepted a bill of exchange, notwithstanding a stipulation in the agreement with his principal that he should not accept bills; and the Court held that the principal was liable to an indorsee who took the bill without any knowledge of the relations between the principal and agent. In that case there was no holding out of the manager as an agent; it was the simple case of an agent being allowed to act as the ostensible principal without any [348] disclosure to the world of there being anyone behind him. Here the defendants have so conducted themselves as to enable their agent to hold himself out to the world as the proprietor of their business, and they are clearly undisclosed principals: Ramazotti v. Bowring^[1] All that the plaintiff has to do, therefore, in order to charge the principals, is to shew that the goods supplied were such as were ordinarily used in the business—that is to say, that they were within the reasonable scope of the agent's authority.

[He also cited Yorkshire Banking Co. v. Beatson.^[2]]

Finlay, Q.C., in reply, cited Summers v. Solomon.^[3]

Cur. adv. vult.

Dec. 12. LORD COLERIDGE, C.J. The judgment which I am about to read has been written by my brother Wills, and I entirely concur in, it.

WILLS, J. The plaintiff sues the defendants for the price of cigars supplied to the Victoria Hotel, Stockton-upon-Tees. The house was kept, not by the defendants, but by a person named Humble, whose name was over the door. The plaintiff gave credit to Humble, and to him alone, and had never heard of the defendants. The business, however, was really the defendants', and they had put Humble into it to manage it for them, and had forbidden him to buy cigars on credit. The cigars, however, were such as would usually be supplied to and dealt in at such an establishment. The learned county court judge held that the defendants were liable. I am of opinion that he was right.

There seems to be less of direct authority on the subject than one would expect. But I think that the Lord Chief Justice during the argument laid down the correct principle, viz., once it is established that the defendant was the real principal, the ordinary doctrine as to principal and agent applies—that the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that [349] character, notwithstanding limitations, as between the principal and the agent, put upon that authority. It is said that it is only so where there has been a holding out of authority—which cannot be said of a case where the person supplying the goods knew nothing of the existence of a principal. But I do not think so. Otherwise, in every case of undisclosed principal, or at least in every case where the fact of there being a principal was undisclosed, the secret limitation of authority would prevail and defeat the action of the person dealing with the agent and then discovering that he was an agent and had a principal.

But in the case of a dormant partner it is clear law that no limitation of authority as between the dormant and active partner will avail the dormant partner as to things within the ordinary authority of a partner. The law of partnership is, on such a question, nothing but a branch of the general law of principal and agent, and it appears to me to be undisputed and conclusive on the point now under discussion.

The principle laid down by the Lord Chief Justice, and acted upon by the learned county court judge, appears to be identical with that enunciated in the judgments of Cockburn, C.J., and Mellor, J., in Edmunds v. Bushell^[1], the circumstances of which case, though not identical with those of the present, come very near to them. There was no holding out, as the plaintiff knew nothing of the defendant. I appreciate the distinction drawn by Mr. Finlay in his argument, but the principle laid down in the judgments referred to, if correct, abundantly covers the present case. I cannot find that any doubt has ever been expressed that it is correct, and I think it is right, and that very mischievous consequences would often result if that principle were not upheld.

In my opinion this appeal ought to be dismissed with costs.

Appeal dismissed.

Solicitors for plaintiff: Belfrage & Co., for Bainbridge & Barnley, Middlesborough.

Solicitors for defendants: Johnson, Weatherall, & Sturt, for Marshall, Sunderland.

----------

[1] Law Rep. 1 Q.B. 97.

----------

[1] 7 C.B. (N.S.) 851.

[2] 4 C. P. D. 204; 5 C. P. D. 109.

[3] 7 E. & B. 879.

150 Ky. 439

Noble, et al.
v.
Williams, et al.

(Decided November 1, 1912.)
Appeal from Breathitt Circuit Court.

Schools land School Districts—Voluntary Payment of Rent of Schoolhouse and Furnishing of Supplies by Teacher.—A teacher of a common school who voluntarily pays rent for the schoolhouse and furnishes fuel and supplies necessary to the conduct of the school, cannot recover the amount so expended in an action against the school board. In contracting and paying these obligations the teacher was a volunteer. If the board made it impossible to conduct the school by failing to furnish a place to conduct it, the teacher had a right of action upon his contract. He had no right to voluntarily pay an obligation which was not his.

G. W. FLEENOR for appellants.

CHESTER BACH for appellees.

OPINION OF THE COURT BY JUDGE WINN—Affirming.

According to the allegations of the petition the appellants, the plaintiffs, were hired to teach the public school in Jackson, Kentucky, for the fall term of 1908. The school board failed to pay rent for the schoolhouse, to buy the coal, to furnish the seats, crayons, blackboards, and the like, incident and necessary to the conduct of the school. Plaintiffs allege that they, in order to conduct the school, were obliged to and did pay the rent and buy the supplies. They allege no request by the school board that they should do so, nor any promise by the board to reimburse them. They sought to recover nevertheless, against the appellee board for these expenditures. The circuit court sustained a demurrer to their petition, and they appeal.

The circuit court was right. The teachers, in contracting and paying these obligations, were volunteers. No man entirely of his own volition can make another his debtor. The school board could have been required by mandamus, at the suit of any proper party, to furnish a place for the conduct of the school. The teachers had no right to supply it themselves, and then recover the rent. They had their teaching contract; and if the board made it impossible for them to teach by failing to furnish a place for conducting the school, they had their right of action on their contract, subject to the customary principles involved in such cases. They adopted neither of these courses, but instead voluntarily paid an obligation which was not theirs.

Judgment affirmed.

CONTRACT OF EMPLOYMENT—ALTERATION-CONSIDERATION—ENFORCEMENT.

1. Where a contract of employment is made for one year at a stipulated salary per month, an agreement during the term to receive less or to pay more than the contract price is void, unless supported by some change in place, hours, character of employment, or other consideration.

2. Protection to person and property is the duty of the state, and in pursuance thereof laws are made to protect property and award damages for breach of contract, but courts cannot enforce promises binding on the conscience, except in those cases where some pecuniary damage flows from the breach, or where, in addi tion to the moral obligation, the promise is also supported by a legal consideration.

(Syllabus by the Court.)

Error from Superior Court, Mcintosh County; P. E. Seabrook, Judge.

Action by A. M. Morgan against C. H. Davis & Co. Judgment for plaintiff, and defendants bring error. Reversed.

Osborne & Lawrence, for plaintiffs in error.

Gignilliatt & Stubbs, for defendant in error.

LAMAR, J. Davis & Co. employed Morgan for one year at $40 per month. After the contract had been in force for some time, Morgan received an offer of $65 per month from a company in Florida, and mentioned the fact to Davis, saying that of course be would not go without consent Davis insists that he then said, if Morgan would stay out the balance of the term, and work satisfactorily, he would give him $120 at the end of the year. Morgan says that Davis stated, "I will add $10 a month from the time you began, and owe you $120 when your time is up." Davis & Co. discharged Morgan two or three weeks before the end of the term, because the latter had gone to Florida for several days without their consent. Morgan insists that he told Davis that he was going, and the latter made no objection. He claimed that he was discharged without proper cause, and brought suit for the extra compensation promised. The jury found a verdict in his favor, and, the court having refused to grant a new trial, Davis & Co. excepted.

If the promise contemplated that Davis & Co. were to pay Morgan $10 per month for that part of the year which had already passed, and as to which there had been a settlement, it was manifestly nudum pactum; for a past transaction, the obligation of which has been fully satisfied, will not sustain a new promise. Gay v. Mott, 43 Ga. 254. And the result is practically the same whether Morgan or Davis was correct in the statement of the conversation. Both proved a promise to give more than was due, and to pay extra for what one was already legally bound to perform. The employer, therefore, received no consideration for his promise to give the additional money at the end of the year. Morgan had agreed to work for 12 months at the price promised, and if during the term he had agreed to receive less, the employer would still have been liable to pay him the full $40 per month. On the other hand, the employer could not be forced to pay more than the contract price. He got no more services that he had already contracted to receive, and according to an almost unbroken line of decisions the agreement to give more than was due was a nudum pactum, and void, as having no considertion to support the promise. The case is something like that of Bush v. Rawlins, 89 Ga. 117, 14 S. E. 886, where the landlord agreed to give [43 S.E. 733] the tenant certain property if he would pay his rent promptly; and it was held that such a promise was a gratuity, and void, as without consideration to support it. And see Tatum v. Morgan, 108 Ga. 336, 33 S. E. 940 (2); Civ. Code 1895, § 3735. It is also within the principle of Stilk v. Myrick, 2 Campbell, 317, where Lord Ellenborough held that an agreement to pay seamen extra for what they were bound by their articles to do was void. And so in Bartlett v. Wyman, 14 Johns. 260, a similar ruling was made in a case where a master agreed to give more wages if the seamen would not abandon the ship. See, also, Ayres v. C. R. I. Ry. Co., 52 Iowa. 478, 3 N. W. 522. There are cases holding that a new promise is binding where one of the parties to a contract refuses to perform, and, to save a loss, the innocent party agrees to pay more than the original contract price, if the actor will perform as originally agreed. Goebel v. Linn, 47 Mich. 489, 11 N. W. 284, 41 Am. Rep. 723. But even if that line of cases should not be disregarded as tending to encourage a breach of contract, they do not affect the rights of Morgan here, because he does not bring himself within their ruling. Had there been a rescission or formal cancellation (Vanderbilt v. Schreyer, 91 N. Y. 402) of the old contract by mutual consent, and if a new contract with new terms had been made; or if there had been any change in the hours, services, or character of work, or other consideration to support the promise to pay the increased wages it would have been enforceable. But, as It was, Morgan proved that Davis promised to pay more for the performance of the old contract than he had originally agreed. Such a promise was not binding.

It was argued that the moral obligation would support the promise here, and undoubtedly there are cases in which such consideration has been held to be sufficient. For example, that arising from the duty of a father to support his bastard child. Har-groves v. Freeman, 12 Ga. 342. At one time Lord Mansfield was quoted as having said that all promises deliberately made should be held binding, but Lord Denman, in Eastwood v. Kenyon, 11 Adol. & E. 438, attempts to show that this was either a misquotation, or that, if such a doctrine could have been deduced from whatever he said, the court had refused to follow it in Littlefield v. Shee, 2 Barn. & Ad. 811. The cases holding in conformity with Lord Mansfield's supposed statement, while set out in Hargrove v. Freeman, supra, are not adopted as law, because the court finally held that the principle to be adduced from the general current of authorities is that, for a moral obligation to constitute a sufficient consideration to support an express promise, it must be founded upon an antecedent valuable consideration, though respectable authority can be adduced on the "other side." In an agreement by one partner to pay the other for extra work (Gray v. Hamil, 82 Ga. 375, 10 S. E. 205, 6 L. R. A. 72); in the promise by a landlord to refund to tenant's money paid by them for worthless fertilizer (Parrott v. Johnson, 61 Ga. 475); and in the agreement by a brother to account to a sister for her interest as an heir at law in land which he had improperly induced the father to convey (Brown v. Latham, 92 Ga. 280, 18 S. E. 421)—the court recognized that there was a moral obligation to support the promise, but in each of the cases there was something very close akin to a legal obligation or to a trust. In Pittman v. Elder, 76 Ga. 371, it was shown that an agreement to pay a debt barred by the statute of limitations, or discharged in bankruptcy, was not supported by what was formerly called a "moral obligation," but by the antecedent obligation; the new promise to pay amounting simply to a waiver of the statute or of the discharge. Civ. Code 1895, § 3658, defines a good consideration to be such as is founded on natural duty and affection or "on a strong moral obligation." In the light of the authorities, however, the strong moral obligation here referred to seems to be one supported either by some antecedent legal obligation, though unenforceable at the time, or by some present equitable duty. The section, however, does not relate to the moral obligation which inheres in every promise. Austell v. Humphries, 99 Ga. 416, 27 S. E. 736. While all courts recognize the obligation arising from any undertaking, they are, from the necessity of the case, forced to hold that naked promises must depend for their performance solely upon the will of the promisor, and not upon the tribunals which are organized to perform the "duty of government to protect person and property," and in pursuance thereof to award money damages for breaches of contracts. Civ. Code 1895, § 5009. But they cannot enforce promises binding on the conscience, except in those cases where some pecuniary damage flows from the breach, or where, in addition to the moral obligation, the promise is also supported by a consideration. When one receives a naked promise, and such promise is broken, he is no worse off than he was. He gave nothing for it, he has lost nothing by it, and on its breach he has suffered no damage cognizable by courts. No benefit accrued to him who made the promise, nor did any injury flow to him who received it. Such promises are not made within the scope of transactions intended to confer rights enforceable at law. They are lightly made, dictated by generosity, curtesy, or impulse, often by ruinous prodigality. To enforce them by a judgment in favor of those who gave nothing therefor would often bring such imperfect obligations into competition with the absolute duties to wife and children, or into competition with debts for property actually received, and make the law an instrument by which a man could be forced to be generous before he was just. Both [43 S.E. 734] under the civil and the common law, courts were prohibited from enforcing contracts without consideration, and relegated the performance of such promises solely to those who made them.

Judgment reversed. All the Justices concurring, except LUMPKIN, P. J., absent on account of sickness.

231 N.Y. 196

Louis SCHWARTZREICH, Respondent,
v.
BAUMAN-BASCH, INCORPORATED, Appellant.

Contract — trial — where record shows question of fact it is error for trial justice to set aside verdict and dismiss complaint — contract may be set aside by parties and new one made at one and the same time — charge.

1. Where, in an action to recover on a contract for services, defended on the ground that there was no consideration for the contract as the plaintiff was already bound under a prior agreement to do the same work for the same period for a lesser salary, the record shows that a [197] question of fact was presented and that the evidence most favorable for the plaintiff would sustain a finding that the first contract was destroyed, canceled or abrogated by the consent of both parties, it was error for the trial justice to set aside a verdict in favor of plaintiff and dismiss the complaint and a reversal of such ruling was proper.

2. A contract of employment may be set aside or terminated by the parties to it and a new one made or substituted in its place and it is competent to end the one and make the other at the same time.

3. A charge, by the trial justice, therefore, to the effect that if the jury find that the old contract was, prior to or at the time of the execution of the new contract, "cancelled and revoked by the parties by their mutual consent then it is your duty to find that there was a consideration for the making of the contract in suit" and "the test question is whether by word or by act, either prior to or at the time of the signing" of the new contract "these parties mutually agreed that the old contract from that instant should be null and void," is correct and a reinstatement of the verdict was proper.

Schwartzreich v. Bauman-Basch, Inc., 188 App. Div. 960, affirmed.

(Submitted April 27, 1921; decided May 10, 1921.)

APPEAL, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered June 28, 1919, affirming a determination of the Appellate Term, which reversed a judgment in favor of defendant entered upon an order of the trial justice in the City Court of the city of New York setting aside a verdict in favor of plaintiff and directing a dismissal of the complaint and reinstated said verdict.

Louis Boehm and Samuel Zeiger for appellant. Not only was there lacking evidence of a cancellation of the first contract for $90 before the second contract for $100 was agreed upon, but it affirmatively appears from plaintiff's own testimony that such cancellation was not even mentioned. (Disker v. Herten, 73 App. Div. 453; 175 N. Y. 480; Sanders v. Pottlitzer Bros. Fruit Co., 144 N. Y. 209; Pratt v. Hudson R. R. R. Co., 21 N. Y. 305; Belmar Contracting Co. v. State, 185 N. Y. Supp. 734.) A promise to do that which one is already legally obligated to do does not furnish a consideration sufficient to support a [198] contract. (Teele v. Mayer, 173 App. Div. 869; Weed v. Spears, 193 N. Y. 289; Carpenter v. Taylor, 164 N. Y. 171; Vanderbilt v. Schreyer, 91 N. Y. 392.) Both sides having offered all their proof, and both plaintiff and defendant having testified as to what took place when the second contract was signed, and the contract itself being plain and unambiguous, a question of law was presented for the decision of the trial court, and its dismissal of the complaint on the merits was proper. (Carpenter v. Taylor, 164 N. Y. 171.)

I. Maurice Wormser and I. Gainsburg for respondent. The trial court erred in dismissing the complaint on the merits. There was, at the very least, a clean-cut issue of fact for the jury, whether the $90 contract was canceled and rescinded by the parties, and a new $100 contract made. (Harris v. Carter, 3 El. & Bl. 559; Hart v. Lawman, 39 Barb. 410; Lattimore v. Harsen, 14 Johns. 330; Spier v. Hyde, 78 App. Div. 151, 159; Bailey v. Elm City Lumber Co., 167 App. Div. 42, 45; Stewart v. Keteltas, 36 N. Y. 338; Wood v. Knight, 35 App. Div. 21; International Cont. Co. v. Lamont, 15.5 U. S. 303; Am. Ex. Nat. Bank v. Smith, 61 Misc. Rep. 49; 113 N. Y. Supp. 236; Galway v. Prignano, 134 N. Y. Supp. 571.)

CRANE, J. On the 31st day of August, 1917, the plaintiff entered into the following employment agreement with the defendant:

"BAUMAN-BASCH, INC., 

"Coats & Wraps,

"31-33 East 32nd Street,

"New York

"Agreement entered into this 31st day of August, 1917, by and between Bauman-Basch, Inc., a domestic corporation, party of the first part, and Louis Schwartzreich, of the Borough of Bronx, City of New York, party of the second part, Witnesseth:

[199] "The party of the first part does hereby employ the party of the second part, and the party of the second part agrees to enter the services of the party of the first part as a designer of coats and wraps.

"The employment herein shall commence on the 22nd day of November, 1917, and shall continue for twelve months thereafter. The party of the second part shall receive a salary of Ninety ($90.00) per week, payable weekly.

"The party of the second part shall devote his entire time and attention to the business of the party of the first part, and shall use his best energies and endeavors in the furtherance of its business.

"In witness whereof, the party of the first part has caused its seal to be affixed hereto and these presents to be signed, and the party of the second part has here- unto set his hand and seal the day and year first above written.

"BAUMAN-BASCH, INC.

 S. BAUMAN

"LOUIS SCHWARTZREICH.

"In the presence of:"

In October the plaintiff was offered more money by another concern. Mr. Bauman, an officer of the Bauman-Basch, Inc., says that in that month he heard that the plaintiff was going to leave and thereupon had with him the following conversation.

"A. I called him in the office, and I asked him, 'Is that true that you want to leave us?' and he said 'Yes,' and I said, 'Mr. Schwartzreich, how can you do that; you are under contract with us?' He said, 'Somebody offered me more money.' * * * I said, 'How much do they offer you?' He said, 'They offered him $115 a week.' * * * I said, 'I cannot get a designer now, and, in view of the fact that I have to send my sample line out on the road, I will give you a hundred dollars a week rather than to let you go.' He said, 'If you will give me $100, I will stay.'"

[200] Thereupon Mr. Bauman dictated to his stenographer a new contract, dated October 17, 1917, in the exact words of the first contract and running for the same period, the salary being $100 a week, which contract was duly executed by the parties and witnessed. Duplicate originals were kept by the plaintiff and defendant.

Simultaneously with the signing of this new contract, the plaintiff's copy of the old contract was either given to or left with Mr. Bauman. He testifies that the plaintiff gave him the paper but that he did not take it from him. The signatures to the old contract plaintiff tore off at the time according to Mr. Bauman.

The plaintiff's version as to the execution of the new contract is as follows:

"A. I told Mr. Bauman that I have an offer from Scheer & Mayer of $110 a week, and I said to him, 'Do you advise me as a friendly matter — will you advise me as a friendly matter what to do; you see I have a contract with you, and I should not accept the offer of $110 a week, and I ask you, as a matter of friendship, do you advise me to take it or not.' At the minute he did not say anything, but the day afterwards he came to me in and he said, 'I will give you $100 a week, and I want you to stay with me.' I said, 'All right, I will accept it; it is very nice of you that you do that, and I appreciate it very much.'"

The plaintiff says that on the 17th of October when the new contract was signed, he gave his copy of the old contract back to Mr. Bauman, who said: "You do not want this contract any more because the new one takes its place."

The plaintiff remained in the defendant's employ until the following December when he was discharged. He brought this action under the contract of October 17th for his damages.

The defense, insisted upon through all the courts, is that there was no consideration for the new contract as [201] the plaintiff was already bound under his agreement of August 31, 1917, to do the same work for the same period at $90 a week.

The trial justice submitted to the jury the question whether there was a cancellation of the old contract and charged as follows:

"If you find that the $90 contract was prior to or at the time of the execution of the $100 contract cancelled and revoked by the parties by their mutual consent, then it is your duty to find that there was a consideration for the making of the contract in suit, viz., the $100 contract and, in that event, the plaintiff would be entitled to your verdict for such damages as you may find resulted proximately, naturally and necessarily in consequence of the plaintiff's discharge prior to the termination of the contract period of which I shall speak later on."

Defendant's counsel thereupon excepted to that portion of the charge in which the court permitted the jury to find that the prior contract may have been canceled simultaneously with the execution of the other agreement. Again the court said:

"The test question is whether by word or by act, either prior to or at the time of the signing of the $100 contract, these parties mutually agreed that the old contract from that instant should be null and void."

The jury having rendered a verdict for the plaintiff the trial justice set it aside and dismissed the complaint on the ground that there was not sufficient evidence that the first contract was canceled to warrant the jury's findings.

The above quotations from the record show that a question of fact was presented and that the evidence most favorable for the plaintiff would sustain a finding that the first contract was destroyed, canceled or abrogated by the consent of both parties.

The Appellate Term was right in reversing this ruling. Instead of granting a new trial, however, it reinstated [202] the verdict of the jury and the judgment for the plaintiff. The question remains, therefore, whether the charge of the court, as above given, was a correct statement of the law or whether on all the evidence in the plaintiff's favor a cause of action was made out.

Can a contract of employment be set aside or terminated by the parties to it and a new one made or substituted in its place? If so, is it competent to end the one and make the other at the same time?

It has been repeatedly held that a promise made to induce a party to do that which he is already bound by contract to perform is without consideration. But the cases in t'his state, while enforcing this rule, also recognize that a contract may be canceled by mutual consent and a new one made. Thus Vanderbilt v. Schreyer (91 N. Y. 392, 402) held that it was no consideration for a guaranty that a party promise to do only that which he was before legally bound to perform. This court stated, however:

"It would doubtless be competent for parties to cancel an existing contract and make a new one to complete the same work at a different rate of compensation, but it seems that it would be essential to its validity that there should be a valid cancellation of the original contract. Such was the case of Lattimore v. Harsen (14 Johns. 330)."

In Cosgray v. New England Piano Co. (10 App. Div. 351, 353) it was decided that where the plaintiff had bound himself to work for a year at $30 a week, there was no consideration for a promise thereafter made by the defendant that he should notwithstanding receive $1,800 a year. Here it will be noticed there was no termination of the first agreement which gave occasion for BARTLETT, J., to say in the opinion:

"The case might be different if the parties had, by word of mouth, agreed wholly to abrogate and do away with a pre-existing written contract in regard to service [203] and compensation, and had substituted for it another agreement."

Any change in an existing contract, such as a modification of the rate of compensation, or a supplemental agreement, must have a new consideration to support it. In such a case the contract is continued, not ended. Where, however, an existing contract is terminated by consent of both parties and a new one executed in its place and stead, we have a different situation and the mutual promises are again a consideration. Very little difference may appear in a mere change of compensation in an existing and continuing contract and a termination of one contract and the making of a new one for the same time and work, but at an increased compensation. There is, however, a marked difference in principle. Where the new contract gives any new privilege or advantage to the promisee, a consideration has been recognized, though in the main it is the same contract. (Triangle Waist Co., Inc., v. Todd, 223 N. Y. 27.)

If this which we are now holding were not the rule, parties having once made a contract would be prevented from changing it no malter how willing and desirous they might be to do so, unless the terms conferred an additional benefit to the promisee.

All concede that an agreement may be rescinded by mutual consent and a new agreement made thereafter on any terms to which the parties may assent. Prof. Williston in his work on Contracts says (Vol. 1, § 130a): "A rescission followed shortly afterwards by a new agreement in regard to the same subject-matter would create the legal obligations provided in the subsequent agreement."

The same effect follows in our judgment from a new contract entered into at the same time the old one is destroyed and rescinded by mutual consent. The determining factor is the rescission by consent. Provided this is the expressed and acted upon intention, the time [204] of the rescission, whether a moment before or at the same time as the making of the new contract, is unimportant. The decisions are numerous and divergent where one of the parties to a contract refuses to perform unless paid an additional amount. Some states hold the new promise to pay the demand binding though there be no rescission. It is said that the new promise is given to secure performance in place of an action for damages for not performing (Parrot v. Mexican Central Railway Co., 207 Mass. 184), or that the new contract is evidence of the rescission of the old one and it is the same as if no previous contract had been made (Coyner v. Lynde, 10 Ind. 282; Connelly v. Devoe, 37 Conn. 570; Goebel v. Linn, 47 Mich. 489), or that unforeseen difficulties and hardships modify the rule (King v. Duluth, M. & N. Ry. Co., 61 Minn. 482), or that the new contract is an attempt to mitigate the damages which may flow from the breach of the first. (Endriss v. Belle Isle Ice Co., 49 Mich. 279.) (See Anson's Law of Contract [Huffcut's Amer. Ed.], p. 114, sec. 138.) To like effect are Blodgett v. Foster (120 Mich. 392); Scanlon v. Northwood (147 Mich. 139); Evans v. Oregon & Washington R. R. Co. (58 Wash. 429); Main Street & A. P. R. R. Co. v. Los Angeles Traction Co. (129 Cal. 301).

The contrary has been held in such cases as Carpenter v. Taylor (164 N. Y. 171); Price v. Press Publishing Co. (117 App. Div. 854); Davis & Company v. Morgan (117 Ga. 504); Alaska Packers' Association v. Domenico (117 Fed. Rep. 99); Conover v. Stillwell (34 N. J. L. 54, 57); Erny v. Sauer (234 Penn. St. 330). In none of these cases, however, was there a full and complete rescission of the old contract and it is this with which we are dealing in this case. Rescission is not presumed; it is expressed; the old contract is not continued with modifications; it is ended and a new one made.

The efforts of the courts to give a legal reason for holding good a promise to pay an additional compensation [205] for the fulfillment of a pre-existing contract is commented upon in note upon Abbott v. Doane (163 Mass. 433) in 34 L. R. A. 33, 39, and the result reached is stated as follows: "The almost universal rule is that without any express rescission of the old contract, the promise is made simply for additional compensation, making the new promise a mere nudum pactum." As before stated, in this case we have an express rescission and a new contract.

There is no reason that we can see why the parties to a contract may not come together and agree to cancel and rescind an existing contract, making a new one in its place. We are also of the opinion that reason and authority support the conclusion that both transactions can take place at the same time.

For the reasons here stated, the charge of the trial court was correct, and the judgments of the Appellate Division and the Appellate Term should be affirmed, with costs.

HISCOCK, Ch. J., HOGAN, CARDOZO, MCLAUGHLIN and ANDREWS, JJ., concur; CHASE, J., dissents.

Judgments affirmed.

64 Wis. 265

WOOD, Appellant,
vs.
BOYNTON and another, Respondents.

September 26 — October 13, 1885.

SALE OF CHATTELS. (1) Rescission. (2) Disparity between price and value: Evidence of fraud.

1. In the absence of fraud or a mistake as to the identity of the thing sold, the vendor cannot rescind the sale and maintain an action of replevin.

2. Where the value of the thing sold was open to the investigation of both parties, and both supposed at the time that the price paid was a fair one, no disparity, however great, between such price and the real value, is to be received in an action at law as evidence of fraud.

APPEAL from the Circuit Court for Milwaukee County.

The case is stated in the opinion.

For the appellants there was a brief by Johnson, Rietbrock & Halsey, and oral argument by Mr. Johnson: 1. The gross disparity between the price paid for the diamond and its admitted value was evidence of fraud, and should have been submitted to the jury in connection with the other facts of the case. Veazie v. Williams, 8 How. 134, 150; Eyre v. Potter, 15 id. 42, 60; Byers v. Surget, 19 id. 303, 311; Kerr on F. & M. (2 Eng. ed.), 169, (Am. ed. 186); Risch v. Von Lillienthal, 34 Wis. 258; Kuelkamp v. Hidding, 31 id. 511; Wright v. Wilson, 2 Terg. 294; Barnet v. Spratts Adm'r, 4 Ired. Eq. 171; Deaderick v. Watkins, 8 Humph. 520; Morriso v. Philliber, 30 Mo. 145; Hardeman v. Burge, 10 Yerg. 202; Butler v. Haskell, 4 Desaus. 651.

2. There was a mutual, vital mistake as to the kind or species of thing sold, and this justifies a rescission. The case is precisely like the cases of " sales by description." In all such cases the courts have held that where the article varied from the description in hind (not quality), the consideration failed and the contract of sale could be rescinded, even though there was neither fraud nor warranty. Burchard v. Moore, 3 El. & Bl. 683; Westropp v. Solomon, 8 C. B. 345; Story on Sales, sec. 148; Paton v. Duncan, 3 Carr. & P. 336; 2 Schouler on Pers. Prop. 621; Benjamin on Sales, sec. 600, and note (P). See, also, 2 Schouler on Pers. Prop. 204; Benjamin on Sales, sec. 77; Byers v. Chapin, 28 Ohio St. 300; Bannerman v. White, 10 C. B. (N. S.), 844; S. C. 31 L. J. C. P. 28; Josling v. Kingsford, 32 id. 94; Azemar v. Casella, L. B. 2 C. P. 431, 677; 36 L. J. C. P. 124; Morse v. Brackett, 98 Mass. 205.

N.S. Murphey, for the respondents:

A mutual mistake as to the quantity or quality of the thing sold is no ground for a rescission of the contract. The mistake must concern the subject matter of the contract; and care must be taken to distinguish between the subject matter and collateral facts, such as quantity, quality, etc. 1 Story's Eq. Jur. sees. 141-151; Barr v. Gibson, 3 Mees. & W. 390; Kerr on F. & M. (Am. ed. 1871), 399, 409, 432; Stebbins v. Eddy, 4 Mason, 414; Rhode Island v. Massachusetts, 14 Pet. 274; Okill v. Whittaker, 1 DeG. & Sm. 83; Buckner v. Street, 15 Fed. Rep. 365; Morris Canal Co. v. Emmett, 9 Paige, 168; Durham v. Legard, 34 Beav. 611; Cooper v. Phibbs, L. R. 2 H. of L. App. Cas. 149; Bingham v. Bingham, 1 Ves. Sr. 126; Chanter v. Hopkins, 4 Mees. & W. 399; Leake on Cont. 169; Hawkins v. Jackson, 2 Macn. & G. 372; Grieveson v. Kirsopp, 5 Beav. 287; Hill v. Bush, 19 Ark. 522. And the fraud or mistake must be of such a nature that the plaintiff could not, with reasonable diligence, acquire knowledge thereof when put on inquiry. Trigg v. Reed, 5 Humph. 529; Kerr on F. & M. 407; Hill v. Bush, 19 Ark. 522; Daniel v. Mitchell, 1 Story C. C. 172; Warner v. Daniels, 1 Woodb. & M. 90; Juzan v. Toulmin, 9 Ala. 662; Brown v. Leach, 107 Mass. 364; Severence v. Whittier, 24 Me. 120. A contract for the sale of a thing, the extent or value of which is understood to be unknown to both parties, or which is from its nature or character doubtful or uncertain, is valid and binding. Mortimer v. Capper, 1 Bro. C. C. 156; Ridgway v. Sneyd, Kay, 627; Frank v. Frank, 1 Ch. Cas. 84; Beckley v. Newland, 2 P. Wms. 182; Cooth v. Jackson, 6 Ves. Jr. 24; Croome v. Zediard, 2 Mylne & K. 251; Sullivan v. Jacob, 1 Molloy, 472; Baxendale v. Seale, 19 Beav. 601. Or, if the subject matter be an uncertain thing and the chance be known to both parties, neither can have relief because the reality has turned out to be different from what he anticipated. Monro v. Taylor, 3 Macn. & G. 718. The parties in this case were dealing at arms length, and the means of information and knowledge were open to both alike. Kerr on F. & M. 408, 414; Laidlaw v. Organ, 2 Wheat. 178; Kintsing v. McElrath, 5 Pa. St. 469; Blydenburgh v. Welsh, Baldw. 331; Bronson v. Wiman, 8 N. Y. 187; Rhode Island v. Massachusetts, 14 Pet. 274; Fox v. Mackreth, 2 Bro. C. C. 420; Turner v. Harvey, Jacob, 178; Stettheimer v. Killip, 75 N. Y. 282.

TAYLOR, J. This action was brought in the circuit court for Milwaukee county to recover the possession of an uncut diamond of the alleged value of $1,000. The case was tried in the circuit court and, after hearing all the evidence in the case, the learned circuit judge directed the jury to find a verdict for the defendants. The plaintiff excepted to such instruction, and, after a verdict was rendered for the defendants, moved for a new trial upon the minutes of the judge. The motion was denied, and the plaintiff duly excepted, and, after judgment was entered in favor of the defendants, appealed to this court.

The defendants are partners in the jewelry business. On the trial it appeared that on and before the 28th of December, 1883, the plaintiff was the owner of and in the possession of a small stone of the nature and value of which she was ignorant; that on that day she sold it to one of the defendants for the sum of one dollar. Afterwards it was ascertained that the stone was a rough diamond, and of the value of about $700. After learning this fact the plaintiff tendered the defendants the one dollar, and ten cents as interest, and demanded a return of the stone to her. The defendants refused to deliver it, and therefore she commenced this action.

The plaintiff testified to the circumstances attending the sale of the stone to Mr. Samuel B. Boynton, as follows:

"The first time Boynton saw that stone he was talking about buying the topaz, or whatever it is, in September or October. I went into his store to get a little pin mended, and I had it in a small box, — the pin, — a small ear-ring; . . . this stone, and a broken sleeve-button were in the box. Mr. Boynton turned to give me a check for my pin. I thought I would ask him what the stone was, and I took it out of the box and asked him to please tell me what that was. He took it in his hand and seemed some time looking at it. I told him I had been told it was a topaz, and he said it might be. He says, 'I would buy this; would you sell it?' I told him I did not know but what I would. What would it be worth? And he said he did not know; he would give me a dollar and keep it as a specimen, and I told him I would not sell it; and it was certainly pretty to look at. He asked me where I found it, and I told him in Eagle. He asked about how far out, and I said right in the village, and I went out. Afterwards, and about the 28th of December, I needed money pretty badly, and thought every dollar would help, and I took it back to Mr. Boynton and told him I had brought back the topaz, and he says, 'Well, yes; what did I offer you for it?' and 1 says, 'One dollar;' and he stepped to the change drawer and gave me the dollar, and I went out."

In another part of her testimony she says:

"Before I sold the stone I had no knowledge whatever that it was a diamond. I told him that I had been advised that it was probably a topaz, and he said probably it was. The stone was about the size of a canary bird's egg, nearly the shape of an egg, — worn pointed at one end; it was nearly straw color, — a little darker."

She also testified that before this action was commenced she tendered the defendants $1.10, and demanded the return of the stone, which they refused. This is substantially all the evidence of what took place at and before the sale to the defendants, as testified to by the plaintiff herself. She produced no other witness on that point.

The evidence on the part of the defendant is not very different from the version given by the plaintiff, and certainly is not more favorable to the plaintiff. Mr. Samuel B. Boynton, the defendant to whom the stone was sold, testified that at the time he bought this stone, he had never seen an uncut diamond; had seen cut diamonds, but they are quite different from the uncut ones; "he had no idea this was a diamond, and it never entered his brain at the time." Considerable evidence was given as to what took place after the sale and purchase, but that evidence has very little if any bearing upon the main point in the case.

This evidence clearly shows that the plaintiff sold the stone in question to the defendants, and delivered it to them in December, 1883, for a consideration of one dollar. The title to the stone passed by the sale and delivery to the defendants. How has that title been divested and again vested in the plaintiff? The contention of the learned counsel for the appellant is that the title became vested in the plaintiff by the tender to the Boyntons of the purchase money, with interest, and a demand of a return of the stone to her. Unless such tender and demand revested the title in the appellant, she cannot maintain her action.

The only question in the case is whether there was anything in the sale which entitled the vendor (the appellant) to rescind the sale and so revest the title in her. The only reasons we know of for rescinding a sale and revesting the title in the vendor so that he may maintain an action at law for the recovery of the possession against his vendee are (1) that the vendee was guilty of some fraud in procuring a sale to be made to him; (2) that there was a mistake made by the vendor in delivering an article which was not the article sold, — a mistake in fact as to the identity of the thing sold with the thing delivered upon the sale. This last is not in realty a rescission of the sale made, as the thing delivered was not the thing sold, and no title ever passed to the vendee by such delivery.

In this case, upon the plaintiff's own evidence, there can be no just ground for alleging that she was induced to make the sale she did by any fraud or unfair dealings on the part of Mr. Boynton. Both were entirely ignorant at the time of the character of the stone and of its intrinsic value. Mr. Boynton was not an expert in uncut diamonds, and had made no examination of the stone, except to take it in his hand and look at it before he made the offer of one dollar, which was refused at the time, and afterwards accepted without any comment or further examination made by Mr. Boynton. The appellant had the stone in her possession for a long time, and it appears from her own statement that she had made some inquiry as to its nature and qualities. If she chose to sell it without further investigation as to its intrinsic value to a person who was guilty of no fraud or unfairness which induced her to sell it for a small sum, she cannot repudiate the sale because it is afterwards ascertained that she made a bad bargain. Kennedy v. Panama, etc., Mail Co. L. K 2 Q. B. 580.

There is no pretense of any mistake as to the identity of the thing sold. It was produced by the plaintiff and exhibited to the vendee before the sale was made, and the thing sold was delivered to the vendee when the purchase price was paid. Kennedy v. Panama, etc., Mail Co. L. R. 2 Q. B. 587; Street v. Blay, 2 Barn. & Adol. 456; Gompertz v. Bartlett, 2 El. & Bl. 849; Gurney v. Womersley, 4 El. & Bl. 133; Ship's Case, 2 De G., J. & S. 544. Suppose the appellant had produced the stone, and said she had been told that it was a diamond, and she believed it was, but had no knowledge herself as to its character or value, and Mr. Boynton had given her $500 for it, could he have rescinded the sale if it had turned out to be a topaz or any other stone of very small value? Could Mr. Boynton have rescinded the sale on the ground of mistake? Clearly not, nor could he rescind it on the ground that there had been a breach of warranty, because there was no warranty, nor could he rescind it on the ground of fraud, unless he could show that she falsely declared that she had been told it was a diamond, or, if she had been so told, still she knew it was not a diamond. See Street v. Blay, supra.

It is urged, with a good deal of earnestness, on the part of the counsel for the appellant that, because it has turned out that the stone was immensely more valuable than the parties at the time of the sale supposed it was, such fact alone is a ground for the rescission of the sale, and that fact was evidence of fraud on the part of the vendee. Whether inadequacy of price is to be received as evidence of fraud, even in a suit in equity to avoid a sale, depends upon the facts known to the parties at the time the sale is made.

When this sale was made the value of the thing sold was open to the investigation of both parties, neither knew its intrinsic value, and, so far as the evidence in this case shows, both supposed that the price paid was adequate. How can fraud be predicated upon such a sale, even though after-investigation showed that the intrinsic value of the thing sold was hundreds of times greater than the price paid ? It certainly shows no such fraud as would authorize the vendor to rescind the contract and bring an action at law to recover the possession of the thing sold. Whether that fact would have any influence in an action in equity to avoid the sale we need not consider. See Stettheimer v. Killip, 75 N. T. 287; Etting v. Bank of U.S. 11 Wheat. 59.

We can find nothing in the evidence from which it could be justly inferred that Mr, Boynton, at the time he offered the plaintiff one dollar for the stone, had any knowledge of the real value of the stone, or that he entertained even a belief that the stone was a diamond. It cannot, therefore, be said that there was a suppression of knowledge on the part of the defendant as to the value of the stone which a court of equity might seize upon to avoid the sale. The following cases show that, in the absence of fraud or warranty, the value of the property sold, as compared with the price paid, is no ground for a rescission of a sale. Wheat v. Cross, 31 Md. 99; Lambert v. Heath, 15 Mees. & W. 487; Bryant v. Pemler, 45 Vt. 487; Kuelkamp v. Hidding, 31 Wis. 503, 511.

However unfortunate the plaintiff may have been in selling this valuable stone for a mere nominal sum, she has failed entirely to make out a case either of fraud or mistake in the sale such as will entitle her to a rescission of such sale so as to recover the property sold in an action at law.

By the Court.— The judgment of the circuit court is affirmed.

For a report of the case, see p. 887 infra.

15 U.S. 178
4 L.Ed. 214
2 Wheat. 178

LAIDLAW et al.
v.
ORGAN.

March 15, 1817.

311 Mass. 677

NEIL W. SWINTON
vs.
WHITINSVILLE SAVINGS BANK.

Middlesex County.
March 4, 1942 - June 22, 1942.

Present: FIELD, C.J., DONAHUE, QUA, & RONAN, JJ.

A buyer of a dwelling house cannot maintain an action of tort against the seller in which he relies solely upon the facts that the seller, knowing the building to be infested with termites and the internal destruction they were creating therein, failed to reveal their presence to him.

Characterization in a declaration of conduct of the defendant as false and fraudulent was ineffective, on demurrer, if not supported by allegations of fact respecting such conduct.

TORT. Writ in the Superior Court dated November 10, 1941.

A demurrer to the declaration was sustained by Swift, J. The plaintiff appealed.

J. E. Hannigan, (E. M. McMahon with him,) for the plaintiff.

A. V. Harper, for the defendant.

QUA, J. The declaration alleges that on or about September 12, 1938, the defendant sold the plaintiff a house in Newton to be occupied by the plaintiff and his family as a dwelling; that at the time of the sale the house "was infested with termites, an insect that is most dangerous and destructive to buildings"; that the defendant knew the house was so infested; that the plaintiff could not readily observe this condition upon inspection; that, "knowing the internal destruction that these insects were creating in said house," the defendant falsely and fraudulently concealed from the plaintiff its true condition; that the plaintiff at the time of his purchase had no knowledge of the termites, exercised due care thereafter, and learned of them about August 30, 1940; and that, because of the destruction that was being done and the dangerous condition that was being created by the termites, the plaintiff was put to great expense for repairs and for the installation of termite control in order to prevent the loss and destruction of said house.

There is no allegation of any false statement or representation, or of the uttering of a half truth which may be tantamount to a falsehood. There is no intimation that the defendant by any means prevented the plaintiff from acquiring information as to the condition of the house. There is nothing to show any fiduciary relation between the parties, or that the plaintiff stood in a position of confidence toward or dependence upon the defendant. So far as appears the parties made a business deal at arm's length. The charge is concealment and nothing more; and it is concealment in the simple sense of mere failure to reveal, with nothing to show any peculiar duty to speak. The characterization of the concealment as false and fraudulent of course adds nothing in the absence of further allegations of fact. Province Securities Corp. v. Maryland Casualty Co. 269 Mass. 75, 92.

If this defendant is liable on this declaration every seller is liable who fails to disclose any nonapparent defect known to him in the subject of the sale which materially reduces its value and which the buyer fails to discover. Similarly it would seem that every buyer would be liable who fails to disclose any nonapparent virtue known to him in the subject of the purchase which materially enhances its value and of which the seller is ignorant. See Goodwin v. Agassiz, 283 Mass. 358. The law has not yet, we believe, reached the point of imposing upon the frailties of human nature a standard so idealistic as this. That the particular case here stated by the plaintiff possesses a certain appeal to the moral sense is scarcely to be denied. Probably the reason is to be found in the facts that the infestation of buildings by termites has not been common in Massachusetts and constitutes a concealed risk against which buyers are off their guard. But the law cannot provide special rules for termites and can hardly attempt to determine liability according to the varying probabilities of the existence and discovery of different possible defects in the subjects of trade. The rule of nonliability for bare nondisclosure has been stated and followed by this court in Matthews v. Bliss, 22 Pick. 48, 52, 53, Potts v. Chapin, 133 Mass. 276, Van Houten v. Morse, 162 Mass. 414, 38 N.E. 705, Phinney v. Friedman, 224 Mass. 531, 533, 113 N.E. 285, Windram Manuf. Co. v. Boston Blacking Co. 239 Mass. 123, 126, 131 N.E. 454, Wellington v. Rugg, 243 Mass. 30, 35, 36, 136 N.E. 831, and Brockton Olympia Realty Co. v. Lee, 266 Mass. 550, 561, 165 N.E. 873. It is adopted in the American Law Institute's Restatement of Torts, § 551. See Williston on Contracts (Rev. ed.) §§ 1497, 1498, 1499.

The order sustaining the demurrer is affirmed, and judgment is to be entered for the defendant. Keljikian v. Star Brewing Co. 303 Mass. 53, 55-63, 20 N.E.2d 465.

So ordered.

27 N.J.L. 513

THE SUPERINTENDENT AND TRUSTEES OF PUBLIC SCHOOLS OF THE CITY OF TRENTON
vs.
IRA BENNETT and AARON CARLISLE.

1. If a person contract with the owner of a lot to build, erect and complete a building on a certain lot, and by reason of a latent defect in the soil, the building falls down before it is completed, the loss falls upon the contractor.

2. Where a contract is made to build and complete a building and find materials for a certain entire price, payable in installments as the work progresses, the contract is entire; and if the building, either by fault of the builder or by inevitable accident, is destroyed before completion, the owner may recover back the installments he has paid.

3. If specifications require a cellar to be a certain depth, it is not a trade phrase which fixes the depth of the foundation walls; it is the duty of the builder to place the walls deep enough to get a sufficient foundation.

This was an action of assumpsit, brought against Bennett and Carlisle, as guarantors for Evernham and Hill. In the fall of 1856, the plaintiffs made a contract with Evernham and Hill to build and complete a school-house, and find all materials therefor, according to specifications annexed to the contract; the building to be located on a lot owned by the plaintiffs, and designated in the contract. Bennett and Carlisle guaranteed the fulfillment of this contract on the part of Evernham and Hill. When the building was partially erected, it was blown down by a gale of wind. The contractors rebuilt it, and when nearly completed, the house again fell down, and the contractors, alleging that the second fall was occasioned by latent defects in the soil, refused to rebuild it.

The contract price was $2610, of which $2200 was to be paid in installments, as follows: $300 when the first floor of joists was on; $300 when the second floor of joists was on; $1000 when the building was enclosed; $400 when the plastering was done; $200 when the building was completed, except the rough-casting, and the balance to be paid when the whole was finished. When the building fell down the second time, installments to the amount of $1600 had been paid to the contractors. To recover the damages which the plaintiffs had sustained by reason of the non-fulfillment of the contract on the part of the contractors, this suit was brought against the guarantors.

The cause was tried at the Mercer Circuit, at April Term, 1858. On the trial, the plaintiffs, having proved the amount paid to the contractors, and that they had failed to complete the building according to contract, rested their case.

The defendants then opened their case, and offered to prove that the plaintiffs procured the plan and specifications for the building to be made under the advice of builders or architects employed by them, and purchased the lot, of land whereon the building was to be erected, and designated the particular location of the building, and the precise elevation of said building and its first floor, and that the contractors and defendants were not consulted about either the plan, specifications, lot purchased, particular location, or elevation; that the plaintiffs advertised for proposals to erect said building according to said plan and specifications, and that the contractors were the lowest bidders therefor, and proceeded to erect said building, and did erect the same in strict accordance with said specifications, and that as each portion of the building was completed, the completion of which was a condition precedent to the payment of an installment of the contract price, such completion was reported to the plaintiffs by the plaintiffs' agents; that all the work of the said contractors was done in strict accordance with the plans and specifications, in a workmanlike manner and of proper materials, and that they exercised all proper care over said building while in course of erection; that after the second floor of joists was laid on said building, and the installment due therefor was paid, a violent gale of wind arose suddenly, without any of the usual premonitory signs of a storm, and prostrated the said building; that the said contractors thereupon again proceeded to, and did erect said building of proper materials, and in a good workmanlike manner, in strict accordance with the said plans and specifications, until said building was enclosed, and the plastering nearly completed; that as each portion of said building was so again completed, its completion was reported to the plaintiffs by their agents, and the installment of one thousand dollars was paid; that when the building was thus enclosed, and nearly plastered, it fell, solely on account of the soil on which it stood having become soft and miry, and unable to support the weight of said building; that at the time the foundation walls were laid, the said soil appeared to be in all respects suitable for the support of such building that said soil was at that time so hard as to be penetrated with difficulty by the pick-ax, and that its defects were latent; that said soil became soft and miry in the spring of the year, either by reason of the rising of the springs, or from other natural causes wholly beyond the control of said contractors; that by the uniform custom of the trade, the phrase "with a cellar under the building to be eight feet deep," is a trade phrase, meaning that the height of the foundation wall is to be of the depth of the cellar, measuring from the bottom of the cellar to the joists of the first floor.

The counsel of the plaintiffs moved to overrule said evidence so offered by said defendants, upon the ground that if all the facts offered to be proved were proved, they would constitute no legal defence to said action. The court overruled said defence, and, under the direction of the court, a verdict was taken for the plaintiffs for the amount of the installment paid the contractors, with interest, subject to the opinion of the court; and to the end that it might be decided whether the said verdict was properly rendered, it was directed that the case be certified to the Supreme Court, for its opinion upon the following points:

1. Were all or either of the facts offered to be proved on the part of the defendants competent evidence; if proved, would they constitute a valid legal defence to the action of said plaintiffs?

2. Should the damage occasioned by the destruction of the part of said building first erected, by the aforesaid gale of wind, be borne by the plaintiffs or the defendants?

Argued at February Term, 1859, before the CHIEF JUSTICE, and Justices OGDEN, VEEDENBURGH, and WHELPLEY.

Gummere and W. L. Dayton, for defendants.

E. W. Scudder and Dutcher, for plaintiffs.

The opinion of the court was delivered by 

WHELPLEY, J. This case presents the naked question whether, where a builder has agreed, by a contract under seal, with the owner of a lot of land "to build, erect, and complete a building upon the lot for a certain entire price, but payable in arbitrary installments, fixed without regard to the value of the work done, and the house before its completion falls down, solely by reason of a latent defect in the soil, and not on account of faulty construction, the loss falls upon the builder or the owner of the land."

The case comes before the court, upon a certificate from the Mercer Circuit, for the advisory opinion of this court.

The covenant of Evernham and Hill was to build, erect, and complete the school-house upon the lot in question for the sum of $2610; the whole price was to be paid for the whole building; the division of that sum into installments, payable at certain stages of the work, was not intended to sever the entirety of the contract, and make the payment of the installments payments for such parts of the work as might be done when they were payable: this division was made, not to apportion the price to the different parts of the work, but to suit the wants of the contractor, and aid' him in the completion of the work; the consideration of the covenant to complete the building was the whole price, and not the mere balance that might remain after the payment of the installments: it cannot be pretended that the contractor, after payment of a part of the installments, might refuse to go on and complete the building, and yet retain that part of the price he had received. Haslack v, Mayers, 2 Dutcher 284.

No rule of law is more firmly established by a long train of decisions than this, that where a party, by his own contract, creates a duty or charge upon himself, he is bound to make it good if he may, notwithstanding any accident by inevitable necessity, because lie might have provided against it by his contract; therefore, if a lessee covenant to repair a house, though it be burned by lightning, or thrown down by enemies, yet he is bound to repair it. Paradine v. Jayne, Alleyn 26; Walton v. Waterhouse, 2 Wm. Saunders 422, a, note 2; Brecknock Company v. Pritchard, 6 Term Rep. 750. This case was an action upon a covenant to build a bridge, and keep it in repair: the defendant pleaded that the bridge was carried away by the act of God, by a great and extraordinary flood, although well built and in good repair. The plea was held bad on demurrer.

To the same effect are Bullock v. Dommit, 6 Term Rep. 650; Phillips v. Stevens, 16 Mass. 238; Dyer 33, a. And there is no relief in equity. Gates v. Green, 4 Paige 355; Holtzapffell v. Baker, 18 Ves. 115. Chancellor Walworth, in Gates v. Green, in denying relief in equity against a covenant to pay rent after the destruction of the demised premises, admits the rule to be against natural law, and not to be found in the law of other countries where the civil law prevails; yet says it is firmly established, notwithstanding the struggles of some of the early English Chancellors against it.

In Beebe v. Johnson, 19 Wend. 500, it was held by Nelson, C. J., delivering the opinion of the court, that the defendant was not excused from performing his covenant to perfect, in England, a patent granted in this country, so as to insure to the plaintiff the exclusive right of vending the patented article in the Canadas, because the power of granting such an exclusive privilege appertained not to the mother country, but to the provinces, and was never granted, except to subjects of Great Britain and residents of the provinces.; and the plaintiff and defendant were both American citizens.

The court said, if the covenant be within the range of possibility, however absurd or improbable the idea of execution may be, it will be upheld, as where one covenants it shall rain to-morrow, or that the pope shall be at Westminster on a certain day. To bring the case within the rule of dispensation, it must appear that the thing to be done cannot by any means be accomplished; for if it be only improbable, or out of the power of the obligor, it is not deemed in law impossible. 3 Comyn's Dig. 93. If a party enter into an absolute contract, without any qualification or exception, and receives from the party with whom he contracts the consideration of such engagement, he must abide by the contract, and either do the act or pay the damages; his liability arises from his own direct and positive undertaking.

In Lord v. Wheeler, 1 Gray 282, where a workman had agreed to repair a building for an entire sum, and after the owner had moved in, it was burned up before the repairs were completed, it was held, that where one per- son agrees to expend labor upon a specific subject, the property of another, as to shoe his horse, or slate his dwelling-house, if the horse dies, or the dwelling-house is destroyed by fire, before the work is done, the performance of the contract becomes impossible, and with the principal perishes the incident. The case was clearly distinguished from the ordinary contract of one to erect a building upon the lands of another, performing the labor and supplying the materials therefor; where, if before the building is completed or accepted, it is destroyed by fire or other casualty, the loss falls upon the builder, he must rebuild. The thing may be done, and he has contracted to do it. 19 Pick 275, Nichols v. Adams; Brumby v. Smith, 3 Ala. 123; 2 Parsons on Con. 184; 1 Chit, on Con. 568.

No matter how harsh and apparently unjust in its operation the rule may occasionally be, it cannot be denied that it has its foundations in good sense and inflexible honesty. He that agrees to do an act should do it, unless absolutely impossible. He should provide against contingencies in his contract. Where one of two innocent persons must sustain a loss, the law casts it upon him who has agreed to sustain it, or rather the law leaves it where the agreement of the parties has put it; the law will not insert, for the benefit of one of the parties, by construction, an exception which the parties have not, either by design or neglect, inserted in their engagement. If a party, for a sufficient consideration, agrees to erect and complete a building upon a particular spot, and find all the materials, and do all the labor, he must erect and complete it, because he has agreed so to do. No matter what the expense, he must provide such a substruction as will sustain the building upon that spot, until it is complete and delivered to the owner. If he agrees to erect a house upon a spot where it cannot be done without driving piles, he must drive them, because he has agreed to do everything necessary to erect and complete the building. If the difficulties are apparent on the surface, he must overcome them. If they are not, but become apparent by excavation or the sinking of the building, the rule is the same. He must overcome them, and erect the building, simply because he has agreed to do so—to do everything necessary for that purpose.

The cases make no distinction between accidents that could be foreseen when the contract was entered into, and those that could not have been foreseen. Between accidents by the fault of the contractor, and those where he is without fault, they all rest upon the simple principle—such is the agreement, clear and unqualified, and it must be performed, no matter what the cost, if performance be not absolutely impossible.

The case of a bailment of an article—locatio operis faciendi—is not analogous to the case before the court; there, if the article intrusted to the workman is lost without his fault, the owner sustains the loss; not because he is the owner, but because the contract of bailment is well defined by the law; there is no express agreement to return the article to the owner in a finished state; but the agreement is an implied agreement, a duty imposed by the law upon a bailee, because the chattel has been bailed to him, to use his best endeavors to protect the bailment from injury. Parsons states the obligation of the workman to be, to do the work in a proper manner, to employ the materials furnished in the right way. These obligations grow out of the act of bailment; they are its legal consequences, and the law declares them to be so, not because the parties have actually so stipulated, but because they are equitable and fair; and in the absence of express agreement such will be implied.

The case of Menetone v. Athawes, 3 Burr. 1592, was relied upon by defendants' counsel to show that when the failure to perform the contract was not the fault of the contractor, he can recover. It was the bailment of a ship, to be repaired vehicle in the shipwrights' dock, for the use of which the owner paid £5. The vessel was burned when the repairs were nearly completed; the action was for these repairs. It was like the case of Lord v. Wheeler, before cited. The right to recover was put upon the ground that the plaintiff was not answerable for the accident, which happened with- out his default, unless there had been a special undertaking; that this liability did not grow out of the law of bailments.

The cases of Trippe v. Armitage, 4 Mees. & Wels. 689; Woods v. Russell, 5 B. & Aid. 942; Clarks v. Spence, 4 Ad. & Ellis 448, have no application; they are all cases arising under the bankrupt laws, involving the question when, under the circumstances of each case, the property in an incomplete chattel in process of manufacture passed out of the bankrupt, so as not to belong to his assignees. They are inapplicable, because the rights of the parties to this suit do not turn upon the question whether the property in an incomplete building is in the owner of the land or the builder, or whether the owner would derive a partial benefit from partial performance, but upon what was the express contract between the parties. The question upon whom the loss is to fall, occasioned by an inevitable accident, is not to be settled by determining what is equitable, what is right, or by the application of the maxim, res peril domino, or by any nice philosophical disquisitions whether the owner or the builder shall bear the loss. These considerations—this maxim—have their full application in cases where the rights of the parties have not been fixed by contract, but are to be settled by the law upon facts of the case; where resort is to be had to an implied contract, to a legal obligation raised by the law out of the natural equities of the case, in the absence of an express agreement.

Neither the destruction of the incomplete building by a sudden tornado, nor its falling by reason of a latent softness of the soil which rendered the foundation insecure, necessarily prevented the performance of the contract to build, erect, and complete this building for the specified price; it can still be done, for aught that was opened to the jury as a defence, and overruled by the court.

The whole defence was properly overruled, because it did not show the performance of the covenant impossible, or any lawful excuse for non-performance of the contract.

I am also of opinion that the damage occasioned by the destruction of the building by the gale of wind must be borne by the defendants, for the reasons before given, and that the Circuit Court be advised accordingly.

CITED in Brown v. Fitch, 4 Vr. 422; Mutual Benefit Life Ins. Co. v. Hillyard, 8 Vr. 483; Coles v. Celluloid Manufacturing Co., 10 Vr. 327; Dermott v. Jones, 2 Wall. 8.

IN THE COURTS OF EXCHEQUER

The first count of the declaration stated, that, before and at the time of the making by the defendants of the promises hereinafter mentioned, the plaintiffs carried on the business of millers and mealmen in copartnership, and were proprietors and occupiers of the City Steam-Mills, in the city of Gloucester, and were possessed of a steam-engine, by means of which they worked the said mills, and therein cleaned corn, and ground the same into meal, and dressed the same into flour, sharps, and bran, and a certain portion of the said steam-engine, to wit, the crank shaft of the said steam-engine, was broken and out of repair, whereby the said steam-engine was prevented from working, and the plaintiffs were desirous of having a new crank shaft made for the said mill, and had ordered the same of certain persons trading under the name of W. Joyce & Co., at Greenwich, in the country of Kent, who had contracted to make the said new shaft for the plaintiffs; but before they could complete the said new shaft it was necessary that the said broken shaft should be forwarded to their works at Greenwich, in order that the said new shaft might be made so as to fit the other parts of the said engine which were not injured, and so that it might be substituted for the said broken shaft; and the plaintiffs were desirous of sending the said broken shaft to the said W. Joyce & Co. for the purpose aforesaid; and the defendants, before and at the time of the making of the said promises, were common carriers of business of common carriers, under the name of "Pickford & Co."; and the plaintiffs, at the request of the defendants, delivered to them as such carriers the said broken shaft, to be conveyed by the defendants as such carriers from Gloucester to the said W. Joyce & Co., at Greenwich, and there to be delivered for the plaintiffs on the second day after the day of such delivery, for reward to the defendants; and in consideration thereof the defendants then promised the plaintiffs to convey the said broken shaft from Gloucester to Greenwich, and there on the said second day to deliver the same to the said W. Joyce & Co. for the plaintiffs. And although such second day elapsed before the commencement of this suit, yet the defendants did not nor would deliver the said broken shaft at Greenwich on the said second day, but wholly neglected and refused so to do for the space of seven days after the said shaft was so delivered to them as aforesaid.

The second count stated, that, the defendants being such carriers as aforesaid, the plaintiffs, at the request of the defendants, caused to be delivered to them as such carriers the said broken shaft, to be conveyed by the defendants from Gloucester aforesaid to the said W. Joyce & Co., at Greenwich, and there to be delivered by the defendants for the plaintiffs, within a reasonable time in that behalf, for reward to the defendants; and in consideration of the premises in this count mentioned, the defendants promised the plaintiffs to use due and proper care and diligence in and about the carrying and conveying the said broken shaft from Gloucester aforesaid to the said W. Joyce & Co., at Greenwich, and there delivering the same for the plaintiffs in a reasonable time then following for the carriage, conveyance, and delivery of the said broken shaft as aforesaid; and although such reasonable time elapsed long before the commencement of this suit, yet the defendants did not nor would use due or proper care or diligence in or about the carrying or conveying or delivering the said broken shaft as aforesaid, within such reasonable time as aforesaid, but wholly neglected and refused so to do; and by reason of the carelessness, negligence, and improper conduct of the defendants, the said broken shaft was not delivered for the plaintiffs to the said W. Joyce & Co., or at Greenwich, until the expiration of a long and unreasonable time after the defendants received the same as aforesaid, and after the time when the same should have been delivered for the plaintiffs; and by reason of the several premises, the completing of the said new shaft was delayed for five days, and the plaintiffs were prevented form working their said steam-mills, and from cleaning corn, and grinding the same into meal, and dressing the meal into flour, sharps, or bran, and from carrying on their said business as millers and mealmen for the space of five days beyond the time that they otherwise would have been prevented from so doing, and they thereby were unable to supply many of their customers with flour, sharps, and bran during that period, and were obliged to buy flour to supply some of their other customers, and lost the mans and opportunity of selling flour, sharps, and bran, and were deprived of gains and profits which otherwise would have accrued to them, and were unable to employ their workmen, to whom they were compelled to pay wages during that period, and were otherwise injured, and the plaintiffs claim 300l.

The defendants pleaded non assumpserunt to the first count; and to the second payment of 25l. into Court in satisfaction of the plaintiffs' claim under that count. The plaintiffs entered a nolle prosequi as to the first count; and as to the second plea, they replied that the sum paid into the Court was not enough to satisfy the plaintiffs' claim in respect thereof; upon which replication issue was joined.

At the trial before Crompton, J., at the last Gloucester Assizes, it appeared that the plaintiffs carried on an extensive business as millers at Gloucester; and that, on the 11^th of May, their mill was stopped by a breakage of the crank shaft by which the mill was worked. The steam-engine was manufactured by Messrs. Joyce & Co., the engineers, at Greenwich, and it became necessary to send the shaft as a pattern for a new one to Greenwich. The fracture was discovered on the 12^th, and on the 13^ththe plaintiffs sent one of their servants to the office of the defendants, who are the well-known carriers trading under the name of Pickford & Co., for the purpose of having the shaft carried to Greenwich. The plaintiffs' servant told the clerk that the mill was stopped, and that the shaft must be sent immediately; and in answer to the inquiry when the shaft would be taken, the answer was, that if it was sent up by twelve o'clock an day, it would be delivered at Greenwich on the following day. On the following day the shaft was taken by the defendants, before noon, for the purpose of being conveyed to Greenwich, and the sum of 2l. 4s. was paid for its carriage for the whole distance; at the same time the defendants' clerk was told that a special entry, if required, should e made to hasten its delivery. The delivery of the shaft at Greenwich was delayed by some neglect; and the consequence was, that the plaintiffs did not receive the new shaft for several days after they would otherwise have done, and the working of their mill was thereby delayed, and they thereby lost the profits they would otherwise have received.

On the part of the defendants, it was objected that these damages were too remote, and that the defendants were not liable with respect to them. The learned Judge left the case generally to the jury, who found a verdict with 25l. damages beyond the amount paid into Court.

Whateley, in last Michaelmas Term, obtained a rule nisi for a new trial, on the ground of misdirection.

Keating and Dowdeswell (Feb. 1) shewed cause. The plaintiffs are entitled to the amount awarded by the jury as damages. These damages are not too remote, for they are not only the natural and necessary consequence of the defendants' default, but they are the only loss which the plaintiffs have actually sustained. The principle upon which damages are assessed is founded upon that of rendering compensation to the injured party. The important subject is ably treated in Sedgwick on the Measure of Damages. And this particular branch of it is discussed in the third chapter, where, after pointing out the distinction between the civil and the French law, he says (page 64), "It is sometimes said, in regard to contracts, that the defendant shall be held liable for those damages only which both parties may fairly be supposed to have at the time contemplated as likely to result from the nature of the agreement, and this appears to be the rule adopted by the writers upon the civil law." In a subsequent passage he says, "In cases of fraud the civil law made a broad distinction" (page 66); and he adds, that "in such cases the debtor was liable for all consequences." It is difficult, however, to see what the ground of such principle is, and how the ingredient of fraud can affect the question. For instance, if the defendants had maliciously and fraudulently kept the shaft, it is not easy to see why they should have been liable for these damages, if they are not to be held so where the delay is occasioned by their negligence only. In speaking of the rule respecting the breach of a contract to transport goods to a particular place, and in actions brought on agreements for the sale and delivery of chattels, the learned author lays it down, that, "In the former case, the difference in value between the price at the point where the goods are and the place where they were to be delivered, is taken as the measure of damages, which, in fact, amounts to an allowance of profits; and in the latter case, a similar result is had by the application of the rule, which gives the vendee the benefit of the rise of the market price" (page 80). The several cases, English as well as American, are there collected and reviewed. If that rule is to be adopted, there was ample evidence in the present case of the defendants' knowledge of such a state of things as would necessarily result in the damage the plaintiffs suffered through the defendants' default. The authorities are in the plaintiffs' favour upon the general ground. In Nurse v. Barns (1 Sir T. Raym. 77) which was an action for breach of an agreement for the letting of certain iron mills, the plaintiff was held entitled to a sum of 500l., awarded by reason of loss of stock laid in, although he had only paid 10l. by way of consideration. InBorradaile v. Brunton (8 Taunt. 535, 2 B. Moo. 582), which was an action for the breach of the warranty of a chain cable that it should last two years as a substitute for a rope cable of sixteen inches, the plaintiff was held entitled to recover for the loss of the anchor, which was occasioned by the breaking of the cable within the specified time. These extreme cases, and the difficulty which consequently exists in the estimation of the true amount of damages, supports the view for which the plaintiffs contend, that the question is properly for the decision of a jury, and therefore that this matter could not properly have been withdrawn from their consideration. In Ingram v. Lawson (6 Bing. N.C. 212) the true principle was acted upon. That was an action for a libel upon the plaintiff, who was the owner and master of a ship, which he advertised to take passengers to the East Indies; and the libel imputed that the vessel was not seaworthy, and that Jews had purchased her to take out convicts. The Court held, that evidence shewing that the plaintiff's profits after the publication of the libel were 1500l below the usual average, was admissible, to enable the jury to form an opinion as to the nature of the plaintiff's business, and of his general rate of profit. Here, also, the plaintiffs have not sustained any loss beyond that which was submitted to the jury. Bodley v. Reynolds (8 Q. B. 779) and Kettle v. Hunt (Bull. N. P. 77) are similar in principle. In the latter, it was held that the loss of the benefit of trade, which a man suffers by the detention of his tools, is recoverable as special damage. The loss they had sustained during the time they were so deprived of their shaft, or until they could have obtained a new one. In Black v. Baxendale (1 Exch. 410), by reason of the defendant's omission to deliver the goods within a reasonable time at Bedford, the plaintiff's agent, who had been sent there to meet the goods, was put to certain additional expenses, and this Court held that such expenses might be given by the jury as damages. In Brandt v. Bowlby (2 B. & Ald. 932), which was an action of assumpsit against the defendants, as owners of a certain vessel, for not delivering a cargo of wheat shipped to the plaintiffs, the cargo reached the port of destination was held to be the true rule of damages." As between the parties in this cause," said Parke, J., "the plaintiffs are entitled to be put in the same situation as they would have been in, if the cargo had been delivered to their order at the time when it was delivered to the wrong party; and the sum it would have fetched at the time is the amount of the loss sustained by the non-performance of the defendants' contract." The recent decision of this Court, in Waters v. Towers (8 Ex. 401), seems to be strongly in the plaintiffs' favour. The defendants there had agreed to fit up the plaintiffs' mill within a reasonable time, but had not completed their contract within such time; and it was held that the plaintiffs were entitled to recover, by way of damages, the loss of profit upon a contract they had entered into with third parties, and which they were unable to fulfil by reason of the defendants' breach of contract. There was ample evidence that the defendants knew the purpose for which this shaft was sent, and that the result of its nondelivery in due time would be the stoppage of the mill; for the defendants' agent, at their place of business, was told that the mill was then stopped, that the shaft must be delivered immediately, and that if a special entry was necessary and natural result of their wrongful act. They also cited Ward v. Smith (11 Price, 19); and Parke, B., referred to Levy v. Langridge (4 M. & W. 337).

Whateley, Willes, and Phipson, in support of the rule (Feb. 2). It has been contended, on the part of the plaintiffs, that the damages found by the jury are a matter fit for their consideration; but still the question remains, in what way ought the jury to have been directed? It has been also urged, that, in awarding damages, the law gives compensation to the injured individual. But it is clear that complete compensation is not to be awarded; for instance, the non-payment of a bill of exchange might lead to the utter ruin of the holder, and yet such damage could not be considered as necessarily resulting from the breach of contract, so as to entitle the party aggrieved to recover in respect of it. Take the case of the breach of a contract to supply a rick-cloth, whereby and in consequence of bad weather the hay, being unprotected, is spoiled, that damage could not be recoverable. Many similar cases might be added. The true principle to be deduced form the authorities upon this subject is that which is embodied in the maxim: "In jure non remota cause sed proxima spectatur." Sedgwick says (page 38), "In regard to the quantum of damages, instead of adhering to the term compensation, it would be far more accurate to say, in the language of Domat, which we have cited above, 'that the object is discriminate between that portion of the loss which must be borne by the offending party and that which must be borne by the sufferer'. The law in fact aims not at the satisfaction but at a division of the loss." And the learned author also cites the following passage from Broom's Legal Maxims: "Every defendant," says Mr. Broom, "against whom an action is brought experiences some injury or inconvenience beyond what the costs will compensate him for."^[1] Again, at page 78, after referring to the case of Flureau v. Thornhill (2 W. Blac. 1078), he says, "Both the English and American Courts have generally adhered to this denial of profits as any part of the damages to be compensated and that whether in cases of contract or of tort. So, in a case of illegal capture, Mr. Justice Story rejected the item of profits on the voyage, and held this general language: 'Independent, however, of all authority, I am satisfied upon principle, that an allowance of damages upon the basis of a calculation of profits is inadmissible. The rule would be in the highest degree unfavourable to the interests of the community. The subject would be involved in utter uncertainty. The calculation would proceed upon contingencies, and would require acknowledge of foreign markets to an exactness, in point of time and value, which would sometimes present embarrassing obstacles; much would depend upon the length of the voyage, and the season of arrival, much upon the vigilance and activity of the master, and much upon the momentary demand. After all, it would be a calculation upon conjectures, and not upon facts; such a rule therefore has been rejected by Courts of law in ordinary cases, and instead of deciding upon the gains or losses of parties in particular cases, a uniform interest has been applied as the measure of damages for the detention of property." There is much force in that admirably constructed passage. We ought to pay all due homage in this country to the decisions of the American Courts upon this important subject, to which they appear to have given much careful consideration. The damages here are too remote. Several of the cases which were principally relied upon by the plaintiffs are distinguishable. In Waters v. Towers (1 Exch. 401) there was a special contract to do the work in a particular time, and the damage occasioned by the non-completion of the contract was that to which the plaintiffs were held to be entitled. In Borradale v. Brunton (8 Taunt. 535) there was a direct engagement that the cable should hold the anchor. So, in the case of taking away a workman's tools, the natural and necessary consequence is the loss of employment: Bodley v. Reynolds (8 Q. B. 779). The following cases may be referred to as decisions upon the principle within which the defendants contend that the present case falls: Jones v. Gooday (8 M. & W. 146), Walton v. Fothergill (7 Car. & P. 392), Boyce v. Bayliffe (1 Camp. 58) and Archer v. Williams (2. C. & K. 26). The rule, therefore, that the immediate cause is to be regarded in considering the loss, is applicable here. There was no special contract between these parties. A carrier has a certain duty cast upon him by law, and that duty is not to be enlarged to an indefinite extent in the absence of a special contract, or of fraud or malice. The maxim "dolus circuitu non purgatur", does not apply. The question as to how far liability may be affected by reason of malice forming one of the elements to be taken into consideration, was treated of by the Court of Queen's Bench in Lumley v. Gye (2 E. & B. 216). Here the declaration is founded upon the defendants' duty as common carriers, and indeed there is no pretence for saying that they entered into a special contract to bear all the consequences of the non-delivery of the article in question. They were merely bound to carry it safely, and to deliver it within a reasonable time. The duty of the clerk, who was in attendance at the defendants' office, was to enter the article, and to take the amount of the carriage; but a mere notice to him, such as was here given, could not make the defendants, as carriers, liable as upon a special contract. Such matters, therefore, must be rejected from the consideration of the question. If carriers are to be liable in such a case as this, the exercise of a sound judgment would not suffice, but they ought to be gifted also with a spirit of prophecy. "I have always understood," said Patterson, J., in Kelly v. Partington (5 B. & Ad. 651), "that the special damage must be the natural result of the thing done." That sentence presents the true test. The Court of Queen's Bench acted upon that rule in Foxall v. Barnett (2 E. & B. 928). This therefore is a question of law, and the jury ought to have been told that these damages were too remote; and that, in the absence of the proof of any other damage, the plaintiffs were entitled to nominal damages only: Tindall v. Bell (11 M. & W. 232). Siordet v. Hall (4 Bing. 607) and De Vaux v. Salvador (4 A. & E. 420) are instances of cases where the Courts appear to have gone into the opposite extremes: in the one case of unduly favouring the carrier, in the other of holding them liable for results which would appear too remote. If the defendants should be held responsible for the damages awarded by the jury, they would be in a better position if they confined their business to the conveyance of gold. They cannot be responsible for results which, at the time the goods are delivered for carriage, and beyond all human foresight. Suppose a manufacturer were to contract with a coal merchant or min owner for the delivery of a boat load of coals, no intimation being given that the coals were required for immediate use, the vendor in that case would not be liable for the stoppage of the vendee's business for want of the article which he had failed to deliver: for the vendor has no knowledge that the goods are not to go to the vendee's general stock. Where the contracting party is shewn to be acquainted with all the consequences that must of necessity follow from a breach on his part of the contract, it may be reasonable to say that he takes the risk of such consequences. If, as between vendor and vendee, this species of liability has no existence, a fortiori, the carrier is not to be burthened with it. In cases of personal injury to passengers, the damage to which the sufferer has been held entitled is the direct and immediate consequence of the wrongful act.

Cur. adv. vult.

The judgment of the Court was now delivered by

ALDERSON, B. We think that there ought to be a new trial in this case; but, in so doing, we deem it to be expedient and necessary to state explicitly the rule which the Judge, at the next trial, ought, in our opinion, to direct the jury to be governed by when they estimate the damages.

It is. Indeed, of the last importance that we should do this; for, if the jury are left without any definite rule to guide them, it will, in such cases as these, manifestly lead to the greatest injustice. The Courts have done this on several occasions; and in Blake v. Midland Railway Company (18 Q. B. 93), the Court granted a new trial on this very ground, that the rule had not been definitely laid down to the jury by the learned Judge at Nisi Prius.

"There are certain establishing rules", this Court says, in Alder v. Keighley (15 M. & W. 117), "according to which the jury ought to find". And the Court, in that case, adds: "and here there is a clear rule, that the amount which would have been received if the contract had been kept, is the measure of damages if the contract is broken."

Now we think the proper rule in such a case as the present is this:-- Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract.  For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them. Now the above principles are those by which we think the jury ought to be guided in estimating the damages arising out of any breach of contract. It is said, that other cases such as breaches of contract in the nonpayment of money, or in the not making a good title of land, are to be treated as exceptions from this, and as governed by a conventional rule. But as, in such cases, both parties must be supposed to be cognizant of that well-known rule, these cases may, we think, be more properly classed under the rule above enunciated as to cases under known special circumstances, because there both parties may reasonably be presumed to contemplate the estimation of the amount of damages according to the conventional rule. Now, in the present case, if we are to apply the principles above laid down, we find that the only circumstances here communicated by the plaintiffs to the defendants at the time of the contract was made, were, that the article to be carried was the broken shaft of a mill, and that the plaintiffs were the millers of the mill.

But how do these circumstances shew reasonably that the profits of the mill must be stopped by an unreasonable delay in the delivery of the broken shaft by the carrier to the third person? Suppose the plaintiffs had another shaft in their possession put up or putting up at the time, and that they only wished to send back the broken shaft to the engineer who made it; it is clear that this would be quite consistent with the above circumstances, and yet the unreasonable delay in the delivery would have no effect upon the intermediate profits of the mill. Or, again, suppose that, at the time of the delivery to the carrier, the machinery of the mill had been in other respects defective, then, also, the same results would follow. Here it is true that the shaft was actually sent back to serve as a model for the new one, and that the want of a new one was the only cause of the stoppage of the mill, and that the loss of profits really arose from not sending down the new shaft in proper time, and that this arose from the delay in delivering the broken one to serve as a model. But it is obvious that, in the great multitude of cases of millers sending off broken shafts to third persons by a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred; and these special circumstances were here never communicated by the plaintiffs to the defendants. It follows therefore, that the loss of profits here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract. For such loss would neither have flowed naturally from the breach of this contract in the great multitude of such cases occurring under ordinary circumstances, nor were the special circumstances, which, perhaps, would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants. The Judge ought, therefore, to have told the jury that upon the facts then before them they ought not to take the loss of profits into consideration at all in estimating the damages. There must therefore be a new trial in this case.

Rule absolute.