Newby v. Atlantic Coast Realty Co.

AlleN, J. There is no exception in the record requiring the consideration of the application of the statute of frauds to the contract on which the defendants declare, and the case, has been tried on two questions — the existence of a contract and its terms, and the amount of damages in the event of a breach. The first of these questions is one of fact, and is not complicated by any legal questions except as to the admissibility of evidence, but the second involves the rule for the measurement of damages, which cannot be correctly ■ laid down without a clear apprehension of the nature of the contract. In the first place, the plaintiffs are not asking to recover damages for breach of contract to convey land. If they had done so, and the contract had been in writing, the rule laid down by his Honor would have been the true measure of damages, being one-half of the difference between the option price and the market value of the land at the time of the breach, but being by parol if one to convey the land, the statute of frauds would be a complete defense. The plaintiffs are asking to recover damages for breach of a contract by the terms of which, as they allege, the defendants agreed to furnish the money to take up the option, which expired on 1 January, 1919, and to sell the land and pay the plaintiffs one-half the profits less one-half the expenses of sale, and to furnish the money for the cultivation of the lands for the year 1919, under the management of one of the plaintiffs, and to pay the plaintiffs one-half the profits from the crops. What, then, is the measure of damages for the breach of the contract sued on? *54 Damages are awarded as a compensation for the breach. “Generally speaking, the amount that would have been received if tbe Contract- bad been kept, and wbicb will completely indemnify the injured party is the true measure of damages for its breach. Benjamin v. Hilliard, 23 How., 149; Mace v. Ramsey, 74 N. C., 14. When one violates his contract he is liable for such damages, including gains prevented as well as losses sustained, which may fairly be supposed to have entered into the contemplation of the parties when they made the contract, that is, such as might naturally be expected to follow its violation, and they must be certain both in their nature and in respect to the cause from which they proceed.” Machine Co. v. Tobacco Co., 141 N. C., 289. “The amount which would have been received if the contract had been kept is the measure of damages if the cpntract is "broken, and this means the value of the contract, including the profits and advantages which are its direct results and fruits.” 8 R. C. L., 452. “As a general rule, a party not in default is, in case of a breach of contract due to the fault or omission of the other party, entitled to recover profits which would have resulted to him from performance.” 17 C. J., 788. In other words, the plaintiffs are entitled to be put in the same position they would have been in if the contract had been performed, and to recover only what has been lost by nonperformance, and tested by this principle instead of being entitled to the difference between the option price and the market value of the land on 1 January, 1919, they ought to recover, if they sustain, their contentions, one-half the profits which would have been made upon a resale of the property .in the exercise of reasonable care and judgment. His Honor has fixed the date for the ascertainment of the damage as of 1 January, 1919, the time when the option expired, when it was not within the contemplation of the parties that the land should be sold at that date or that any profit should then be realized, and when) according to the plaintiffs, it had been agreed that the land should be sold at a later date, and the profits then divided. The market value of the lands, when the lands could be reasonably sold under the contract, will be material, but not controlling, and other circumstances, such as the size of the land, the opportunity to secure purchasers for so large a body of land, the condition of the money market, may properly be considered. We are therefore of opinion that there has been substantial error committed against the defendants. His Honor also permitted the witness, T. B. Waters, to testify that he heard Mr. Charles Whidbee, who held an -option on the land prior *55 to the option secured by the plaintiffs, say that he would take $150,000 for the land, and that if the witness would take it for that price he could easily get that for it. Mr. Whidbee had been examined as a witness in behalf of the defendants, but he did not testify as to the value of the land, and this declaration, therefore, had no tendency to contradict him, and was incompetent as an unsworn declaration. The plaintiffs were also permitted to introduce evidence tending to show a breach of the first contract by the defendants when the plaintiffs testified that this contract had been abrogated, which was erroneous. Evidence as to the first contract was only permissible as matter of inducement to show the relation of the parties at the time of making the second contract, and the reasons for- entering into it. There must, therefore, be a New trial.