
    Enoch C. Swain, Resp’t, v. William H. Schieffelin et al., App’lts.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed October 1, 1892.)
    
    Damages—Injury to plaintiff's business by sale of poisonous substance.
    Defendants, who are druggists, sold to plaintiff, a caterer, a bottle of “ carlet red,” manufactured by them for the purpose of being used in coloring creams and ices, and represented “that it was absolutely pure and harmless.” Plaintiff used it and sold the creams and ices to about forty different families, customers of his, and about two hundred persons were made sick, with symptoms of arsenical poisoning. In an action for damages, Held, that the measure of damages in such a case was not limited to the difference between the value of the “ carlet red” had it been as warranted, and as it proved to be, but the loss of business and profits and expenses incurred could be recovered.
    Appeal from a judgment of the general term of the supreme court, in the second judicial department, entered on an order made December 8, 1890, which affirmed a judgment in favor of plaintiff entered upon a verdict.
    
      John C. McGuire, for resp’t; William Jay, for app’lts.
    
      
       Affirming 34 St. Rep., 888.
    
   Follett, Ch. J.

—In 1888 and 1889 the defendants were druggists, and engaged in business at the city of New York. In those years the plaintiff was a manufacturer of ice cream and ices at the city of Brooklyn, which he sold to persons and families for immediate consumption. The defendants knew the character of the business in which the plaintiff was engaged. December 28,1888, the defendants, for two dollars, sold and delivered to the plaintiff a bottle of “ carlet red ” which they had previously manufactured, representing “ that it was absolutely pure and harmless.” The defendants knew that it was purchased for coloring certain kinds of ice creams and ices. One of the defendants testified that the formula for “ carlet red ” is: “ One ounce of red aniline, .half a gallon of alcohol, and two pounds of glycerine, which when mixed makes 96 fluid ounces of carlet red.’ ” March 4, 1889, the plaintiff manufactured some strawberry ice cream and apricot ice, using “ carlet red” to give them color, and sold them to about forty different families, who were customers of his. About 200 persons who ate of the cream and apricot ice were sick with symptoms of arsenical poisoning. An analysis of the “carlet red” showed that it contained arsenic. Some of the persons who ate of these articles became slightly, and others seriously, ill. By reason of the sickness, complaints, and the discovery by the chemists of arsenic in the “ carlet red,” the plaintiff destroyed all of the ice creams and ices colored with that material, and he asserts that the occurrences greatly injured his business. He brings this action to recover, (1), the value of the ice cream and ices destroyed ; and (2), the damages occasioned by the loss of customers, of sales, and profits thereon, subsequent to the occurrences complained of. The trial court submitted the questions of fact to the jury in a charge which was not excepted to in any respect, except as to the rule of damages laid down, and we must determine the case upon the theory that the issues of fact were well found for the plaintiff. The important question presented by this appeal is, what damages was the plaintiff entitled to recover?

The principle on which damages should be assessed is well stated in the recent case of Wakeman v. Wheeler & Wilson Manuf. Co., 101 N. Y., 205, where it is said: “ When it is certain that damages have been caused by a breach of contract, and the only uncertainty is as to their amount, there can rarely be good reason for refusing, on account of such uncertainty, any damages whatever for the breach. A person violating his contract should not be permitted entirely to escape liability because the amount of the damages which he has caused is uncertain. It is not true that loss of profits cannot be allowed as damages for a breach of contract. Losses sustained and gains prevented are proper elements of damage.” That the plaintiff was damaged by reason of the impurity of the carlet red ” has been found by the jury upon conflicting evidence, and the verdict is binding upon this court upon the questions of fact. This injury was brought about by the breach of the contract by the defendants. When one violates his contract or his duty to another, the theory of the law is that compensation shall be made for the injury directly and proximately caused by the breach of contract or duty. Ordinarily, upon the sale and delivery of a chattel accompanied by a warranty of its quality, which is broken,, the measure of damages is the difference between its value had it been as warranted, and as it proved to be. But it seems to be conceded that this rule is not applicable to the case at bar. If it is, the plaintiff was not entitled to recover the value of the property destroyed, but the difference in the value of the “ carlet red ” as it was warranted to be, and as it was found to be, which could not have exceeded the purchase price of two dollars. In case a manufacturer of goods sells them to a purchaser to be used for a particular purpose, which is known by the vendor at the time of the sale, a more liberal rule prevails than in cases where like articles are sold as merchandise, for general purposes. In the former cases profits lost and expenses incurred may be recovered. Passinger v. Thorburn, 34 N. Y., 634; Van Wyck v. Allen, 69 id., 61; White v. Miller, 71 id., 118; White v. Miller, 78 id., 393; Messmore v. The N. Y. Shot & Lead Co., 40 id., 422; Booth v. The Spuyten Duyvil R. M. Co., 60 id., 487.

This broader rule rests on the theory that the vendor having sold the articles with the knowledge that they were purchased for a particular purpose should be held liable for such damages as naturally flow from the breach of his contract and which he, or any reasonable man might-apprehend would follow from the breach.. In the present case the defendants knew the precise use which the “ carlet red ” was to be put to, and we think it is reasonable to hold hold that they should have apprehended that the use by the plaintiff of a poisonous or deleterious article would destroy his business-It seems to us that the natural and probable result of the sale of a poisonous, for a wholesome article, to be used by the purchaser in the preparation of food, to be distributed to and eaten by his patrons, would entail a loss of business and of profit to the purchaser. Had the defendants incorrectly, but without malice, re- ■ ported that the plaintiff had sold unwholesome or poisonous ice cream, they would have been liable for the plaintiff’s loss of custom, Hallock v. Miller, 2 Barb., 630; Bergmann v. Jones, 94 N. Y., 51, although not, in the case supposed, for punitive or exemplary damages. The rules governing the assessment of damages are the same in contract as in tort, unless exemplary damages a.re recoverable. Baker v. Drake, 53 N. Y., 211; 1 Sedg. Dam. (8th ed.), 29, § 30; 2 id., 4, § 429.

In Crain v. Petrie, 6 Hill, 522, an executory contract existed between Petrie and Gage, a butcher, by which the latter agreed to purchase of the former a quantity of mutton. Gage refused to accept of the mutton, because he learned that Crain had sold diseased sheep to Petrie. The action was to recover damages for selling diseased sheep. The plaintiff sought to recover the damages occasioned him by the non-fufillment of Gage’s contract, and also the damages sustained by the refusal of others to purchase mutton of him.

The court, in discussing the right to recover special damages, said that such damages “ must appear to be the legal and natural consequences arising from the tort, and not from the wrongful ac of a third party remotely induced thereby.” * * * “ Th/ the refusal of Gage to receive and sell good and well cured bar shoulders, etc., contrary to a previous arrangement with him, consequence of the reports that the plaintiff 'had purchased a 1 of diseased sheep from the defendant, was a wrongful breach contract by Gage, for which the plaintiff had an adequate rem'p edy against him, and therefore such damages could not be recov> ered against Grain, who sold the sheep.” The court, in its opin' ion, cites Vicars v. Wilcocks, 8 East, 1, and Morris v. Langdale, Bos. & Pull., 284, which lay down the same rule, but these cases have been expressly overruled. Lumley v. Gye, 2 E. & B., 216 Lynch v. Knight, 9 H. L. Cas., 577, 586, 590, 600; Green v. Button 2 C., M. & R., 707; S. C., Tyr. & Gr., 118; Mayne Dam., 4th ed. 661; Stark. S. & L. 4th Eng. ed., 320, 438; 1 Suth. Dam. 68; Smith’s L. C. 464.

The only authorities referred to by the two text writers cited in Crain v. Petrie are the two overruled cases. Petrie's - case is distinguishable from the one at bar in the fact that he did not purchase the sheep to sell to persons who were to use them for food, but he intended to sell them to a butcher who was to sell to consumers; besides, it was not shown in that case that the defendant knew that the plaintiff purchased the sheep for the purpose of having them converted into food, even by others. Again, Petrie did not sell the diseased sheep, so he sustained no loss by reason of their sale.

The case at bar is distinguishable from a class of cases in which the damages sought to be recovered arise from a breach of the contract or of duty, or from the wrongful act of a third person, which breach of contract, duty or wrongful act, may have been remotely caused by the person sued. -In such cases the person injured has a right of action against those who have violated their contract or duty, or have committed a wrongful act, to his injury, but here this plaintiff has no cause of action against his former customers who refused to patronize him because of his sale of poisonous ice cream.

The judgment should be affirmed, with costs.

Bradley, J.

—The jury found that the plaintiff’s product of ice cream, etc., which- became useless by reason of its infection with the compound purchased of the defendants and was destroyed, had the value of fifty dollars. To that extent the damages sustained clearly came within the rule of relief. But the i plaintiff claims further that he was injured in his business by this act of the defendants. And the evidence in its support was that of his average monthly receipts for the year ending in March, 1889, and those for the three months following that time. This, basis of estimate was somewhat speculative or uncertain, as there may within that period of three months have been some other causes for a less average of monthly receipts during such time than for the entire year preceding. But as no exception was taken to the charge as made by the court, or to its refusal to charge on the subject of damages, other than such as went to the right of the plaintiff to recover anything, the question whether the plaintiff should be allowed to recover ^special damages for injury to his business was not specifically or necessarily raised after the close of the evidence. Nor is the exception taken to the denial of the motion to reduce the damages awarded by the verdict available on this review. Oldfield v. N. Y. & H. R. R. Co., 14 N. Y., 310; Standard Oil Co. v. Amazon Ins. Co., 79 id., 506. The only question here in that respect arises upon the exception taken to the reception of the evidence on the subject of the average monthly receipts before referred to of the plaintiff's business. And the admissibility or the inadmissibility of that evidence is dependent upon the question whether or not the plaintiff’s loss, occasioned by injury to his business, may be deemed a proper element of damages. It may be if there was no intermediate ■efficient cause to which the injury may have been imputed. In such case the result usually may be attributed to the primary as the proximate cause. Such was the case of the lighted squib thrown by the party charged into a crowd of people, and then for self protection thrown by one after another until it injured the party who recovered damages for the injury, Scott v. Shepherd, 2 W. Bl., 892; 3 Wilson, 403; and where the boy in escaping the threatened attack of the party pursuing him, ran against and knocked out the faucet of a cask of wine, the pursuing party was held liable for the loss. Vandenburgh v. Truax, 4 Denio, 464. The injurious results which may or ought to be foreseen of a wrongful or negligent act are also deemed the proximate consequences of it. This was illustrated in the familiar case of the person in the balloon descending into the garden under circumstances which invited people to go to his assistance, and in doing so trampled the vegetables, etc., for which he was held liable. Guille v. Swan, 19 Johns., 381. In those cases and others similar in principle, the damages suffered were deemed the proximate result of the wrongful or negligent acts of the parties charged.

In the present case, so far as the plaintiff’s property was injuriously affected or contaminated by the use of the compound sold him by the defendants, the damages were attributable directly to the act complained of, and to that extent he was properly permitted to recover. Jeffrey v. Bigelow, 13 Wend., 518; Mullett v. Mason, L. R., 1 C. P., 559. Beyond that the damages claimed for injury to business and for loss of profits, which the plaintiff may otherwise have realized from his trade, were special and consequential. The question is whether they were the ■natural and proximate result of the act chargeable to the defendants. In Crain v. Petrie, 6 Hill, 522, the defendant was charged with fraudulently selling diseased sheep to the plaintiff, who was engaged in the butchering business and selling mutton. The plaintiff there gave evidence subject to exception, that one Gage who "had agreed to take mutton from him, also other customers of’the plaintiff, declined to do so in consequence of the report that he had purchased the diseased sheep. The court on review held that the reception of the evidence was error; that so far as related to the refusal of Gage to take mutton, it was a breach of contract for which the plaintiff had his remedy against him; and that the discontinuance of purchases by others ■“ resulted’ from a want of confidence in the care, skill or integrity of the plaintiff himself, the people assuming that he might sell the meat of diseased sheep for a good and merchantable article.” And Chief Justice Nelson there said: “The consequential loss which the plaintiff was allowed to prove at the trial was too remote and speculative to come within any established rule on the subject; ” and that “ to maintain a claim for special damages this must appear to be the legal and natural consequence arising from the tort and not from the wrongful act of a third party remotely induced thereby. In other words, the damages must proceed wholly and exclusively from the injury complained of.”

The proposition there, in its relation to the claim founded upon the refusal of Gage to take mutton as he had agreed, is clearly distinguishable in principle from that in the case at bar. The refusal of Gage was a violation of his contract and it might be treated as the efficient and immediate cause of the damages so occasioned to the plaintiff within the. doctrine that when the original wrong is rendered injurious by reason only of the intervention of some independent wrongful act of another the latter will be treated as the proximate cause of the injury, which will be imputed to it alone. Hoey v. Felton, 11 C. B., N. S., 142; Vicars v. Wilcocks, 8 East, 1; Ward v. Weeks, 7 Bing., 211; Terwilliger v. Wands, 17 N. Y., 54; Lowery v. W. U. T. Co., 60 id., 198. This rule was not applicable to his other customers who for like reason had ceased to buy his meat And apparently there is no distinction in principle between the Crain case in that respect and the present one so far as relates to the claim for special damages resulting from the loss or reduction of the business of the plaintiff. And therefore by giving controlling application to this case of the views of Mr. Chief Justice Kelson as broadly as expressed in Crain v. Petrie, the consequential injury to the plaintiff’s business might not be treated as imputed to the act of the defendants as the legal or proximate cause, but would be deemed attributable in that sense to the want of confidence in the care, skill or integrity of the plaintiff.

As has already been observed, there may be in the causation a succession of dependent acts or events through which may be traced the primary as the proximate cause of the resulting injury; and when injurious consequences, which proceed from a wrongful or negligent act, may, or ought to have been foreseen, the author of it is responsible. A dealer in food products, who is known to use deleterious substances in their production, cannot expect much patronage in that line of trade. And it could with ordinary forecast be- foreseén that the supply to him of poisonous compounds to use for such purpose would, if made public, be materially prejudicial to his business. The publicity of the fact of the purchase by him of poisons to be so used would have an effect in that direction similar to that of the report of his use of them for such purpose, and differing, if at all, in degree only.

In the present case, the published imputation that the plaintiff had sold poisonous ice cream seems to have been justified by the fact. And the compound by which his product was so infected was innocently used by the plaintiff upon the faith of the defendants’ representation that it was wholesome. The disposition made of the Crain case was not dependent upon the exception to evidence offered to prove that the customers, other than Gage, had ceased to deal with Petrie. It could rest upon the proposition that the violation by Gage of his contract was the only cause to which the damages resulting from his refusal to take mutton were legally imputable, and for which he alone was liable to Petrie, the plaintiff in that action at the trial, and defendant in error on the .review. And in view of the legal principles to which advertence has been made, the Crain case may properly, and should be, limited to that proposition in its application to the present one. There was here no intermediate wrongful or negligent act to which the consequential injury to the plaintiff, or the special damages .sustained by him, can be imputed. In view of the facts as found by the jury in respect to the nature of the compound, those damages followed according to the ordinary course of events from the ■cause complained of, and may be deemed the legitimate sequence ■of it.

The judgment should be affirmed.

Judgment affirmed, with costs.

Parker, Brown and Landon, JJ., concur with Follett, Ch. J.; Bradley, J., reads opinion, and Vann and Haight, JJ., concur.  