
    Czarnikow, MacDougall & Company, Ltd., Appellant, v. George S. Baxter and Others, Respondents.
    First Department,
    July 7, 1911.
    Sale — damages — special damage — forfeiture for breach of contract of resale — damages within contemplation of parties — question of fact — loss of profits — evidence — market value of goods — pleading.
    The plaintiff in an action for a breach of defendant’s contract to deliver ties on the docks of a railroad company can recover as special damage the amount of a penalty he forfeited to the railroad company by reason of his own failure to furnish the ties to it on a contract of resale, where the evidence shows that defendant had knowledge of the contract of resale and of the sum deposited to secure performance by the plaintiff, where the plaintiff could not have obtained the ties in the market so as to have made delivery in time to prevent the forfeiture. With such knowledge on the part of the defendant the damages must be deemed to have been within the contemplation of the parties.
    Such damages may be recovered, although the contract of sale was made before the plaintiff’s contract of resale was actually executed, if the defendant knew that his bid had been made and accepted.
    The question as to whether said item of special damage was in the minds of the parties when the contract was made is a question of fact.
    
      It seems, that the buyer could not recover as-special damage the profits lost on his contract of resale without proving that there was "no market value for -the ties at the time and place of delivery.
    In such action it is error to exclude proof by the plaintiff showing the market value of the ties at the time and place of delivery, even though he did not specifically allege the market value, where the complaint, in addition to allegations of special damages, made an averment of general damage which included the items of special damage.
    Where such testimony was excluded upon the ground that the measure of damages to be established thereby was not recoverable under the complaint, it was unnecessary for the plaintiff to qualify his witness as an expert as to the market value.
    Appeal by the plaintiff, Czarnikow, MacDougall. & Company, Ltd., from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk' of the county of New York on the 24th day of January, 1910, rendered by direction of the court, after a trial at the New York Trial Term, a jury having been waived, dismissing the complaint and directing judgment in favor of the defendants upon their counterclaims, and also from an order entered in said clerk’s , office on the 7th day of February, 1910, denying the plaintiff’s motion for a new trial made upon the minutes.
    
      William P. Maloney, for the appellant.
    
      George V. Mullan, for the respondents.
   Miller, J. :

This case was tried beforé the court without a jury, upon a stipulation that at the close of the evidence both sides should move for the direction of a verdict and that the court should dispose of the case as though a jury were present. At the close of the case the court granted the motion of the defendants, dismissed the complaint for failure of proof and directed judgment in favor of the defendants on their counterclaim.

On the 25th of October, 1905, the plaintiff entered into a contract with the defendants for the purchase of 26,000 cypress ties, to be delivered by the defendants at the ‘‘ Begla Wharf, Havana. * * * Shipment ■ to be made from Brunswick the first week in January, if possible, sooner.” .The contract was evidenced by two letters, written by the respective parties. The lumber was purchased by the plaintiff for resale to the United Railways of Havana. The purchase price was sixty.-nine cents each; the resale price was seventy-five cents each. The plaintiff agreed in the contract of resale to make deliveries at the-wharf of its vendee at Regia,- Havana, Cuba, in March, 1906. The contract of resale also provided for-a deposit'of $2,500, “in guarantee of the satisfactory fulfillment of -this contract, which sum is to be returned to him [meaning J. M. Clark, the plaintiff’s agent,, in whose name the contract was. made] on such satisfactory fulfillment, or if not to. be forfeited to the party of the second part.” 'The ties were not delivered by the defendants as agreed upon and a correspondence ensued between the parties in which the defendants set up various excuses for the delay and the plaintiff insisted upon immediate delivery, at the same time - informing the defendants that damage would result from delay. During March and April defendants delivered 16,000 ties in two ship-' ments. They-refused, however, to deliver the remaining' 10,000 ties until the plaintiff sent its check for the earlier shipments and a letter stating that no claim would be made for delay in shipment. The plaintiff refused to comply with that request and the defendants failed to make the delivery of the 10,000 ties undelivered. The $2,500 deposited by the plaintiff with the United Railways Company was forfeited by the latter for the non-performance of the plaintiff’s contract. This action was brought for damages for the breach of the contract. The complaint specified two items of. special damage; the $2,500 penalty forfeited to the United Railways Company, and $600, the difference between the contract price of sixty-nine cents and the resale price of seventy-five cents on the 10,000 ties not delivered. The complaint also ■ contained this general averment: “ That by reason of the premises, the plaintiff has been damaged in the sum of” $8,100. .The plaintiff’s agent testified that he informed the defendants’ agent, with whom the negotiations were conducted, that the ties were purchased for resale to the United Railways Company,, who had accepted the plaintiff’s bid for such ties, and that the United Railways Company required a deposit as security for the performance of the contract. I quote from his testimony: “ I told him also that it was necessary to make these deliveries in accordance with the contract that we had with them — that we were about to make with them, because we were under penalty of $2,500 with the. railroad. ” The said agent of the defendants denied that any such conversation occurred,. or that he even had knowledge that the ties were purchased for resale to the said United Railways Company. The place of delivery specified in the contract was the wharf of the said company, and the correspondence between the parties prior to the making of the contract plainly shows that the defendants had knowledge of the plaintiff’s bid, and indeed that they refused to quote prices until after it was accepted, for the reason that they had made quotations to other bidders whom they considered it their duty to protect.

The point is made that the contract with the said United Railways Company was not in fact made until November twenty-seventh, a month after the making of the contract in suit, and that it was not made in the plaintiff’s name. However, there is no dispute but that said Clark was the plaintiff’s agent, and the evidence plainly shows that its bid had been accepted when the contract in suit was made, and that the defendants had knowledge that the ties were purchased for the purpose of resale pursuant to a formal contract to be made in accordance with said bid and its. acceptance.

We think the plaintiff’s evidence was sufficient to justify a .recovery of the item of $2,500 as special damages. According to that evidence the defendants had knowledge of the contract of . resale and the deposit of $2,500, and the provision'for the delivery in January was inserted for the purpose,, as expressly stated by the plaintiff’s agent, of guarding against the forfeiture of said sum. It was, therefore, within the contemplation of the parties that one of the consequences of a breach might be the forfeiture by the plaintiff of said sum. Not only did the defendants have notice that a forfeiture might result from a breach, but the circumstances were such as to justify the inference of knowledge on their part that the contract was accepted by the plaintiff with the special condition attached thereto, that they would indemnify it in case of a breach. The said evidence, therefore, brings the case squarely within the rule laid down by the Supreme Court, of the United States in Globe Refining Co. v. Landa Cotton Oil Co. (190 U. S. 540), the case principally relied upon by the defendants; but see, also, on that head, Booth v. Spuyten Duyvil Rolling Mill Co. (60 N. Y. 487); Hecla Powder Co. v. Sigua Iron Co. (91 Hun, 429; affd., 157 N. Y. 437); Sutton v. Wanamaker (95 N. Y. Supp. 525); Delafield v. Armsby Co. (131 App. Div. 572; affd., 199 N. Y. 518).

It was of course a question of fact whether, the item of $2,500 special damage was in the minds, of the parties when the contract was made and whether they contracted with reference thereto. The judgment is in effect one entered upon a directed verdict, upon motions by both sides, and that question of fact has, therefore, been resolved in the defendants’- favor. It is unnecessary to determine whether the finding is contrary to the weight of evidence, because in any view of the case the judgment must be reversed'for an error in the exclusion of evidence.

Of course the plaintiff could not recover the loss sustained by the forfeiture, if it could have obtained the ties in the market and made a delivery so as to prevent such forfeiture, for in such case it would have been its duty to procure the ties elsewhere and thus prevent the loss. The record does not disclose anything on that head. It is also true that the plaintiff could not recover the. item of $600,‘profits lost, without proving that there was no market value for the ties at the time and place of delivery. There was, however, a. general averment of damages, and the plaintiff undertook to prove the market value of the ties at the time and place of delivery. Its witness testified that he was familiar with the market price of ties in Havana. He was then asked to state the market value of ties of the description of those contracted for in Havana at the time when they were to be delivered under the contract. An objection to that testimony was sustained on the ground .that On the state of the pleadings, any such measure of damages cannot be entertained,” and an exception was taken. As the ruling was made on the precise ground stated it was unnecessary for the plaintiff further to qualify the witness, even if such further qualification would otherwise have been needed. It is stated in the respondents’ brief that the plaintiff’s claim for general damage has-been waived, but that was the principal point discussed on .the oral argument, the appellant insisting that in any view of the case, it was entitled, under its complaint, tq prove general damage. The learned counsel for the respondents urged on oral argument that as the complaint specified the items of special damage, an averment of general damage in an action for breach of contract was insufficient, in the absence of averments showing how the computation was made. Ho case was cited in support of that contention, and we are aware of no rule of pleading to sustain it. The plaintiff united in the. complaint claims for both special and general damage. The complaint stated the facts with respect to the making of the contract. and its breach, and alleged that by reason thereof the plaintiff was damaged in the sum of $8,10.0; $3,100 of that sum was made up of two items of special damage. The amount of general damage claimed was, therefore, $6,000. Obviously that claim was based on the difference between the contract price and the market price at the time and place of delivery. But it was not necessary for the plaintiff specifically to state in its complaint what the market price was. The ultimate fact, the amount of damage sustained, was stated.

A defense of waiver was pleaded. The respondents concede in their brief that it is unnecessary to consider the evidence on that head for the reason that the ca§e was decided without reference to that defense.

The judgment and order should be reversed and a new trial granted, with costs to the appellant to abide the event.

Ingraham, P. J., McLaughlin, Laughlin and Dowling, JJ:, concurred.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.  