City of Ludlow v. Peck-Williamson Heating & Ventilating Co.

Opinion op the court by JUDGE BARKER Reversing. The appellee is a corporation organized under the laws of the State of Ohio. In 1890 its corporate name was Bennett & .Peck Heating and Ventilating Company — subsequently changed by law — and in that year it entered into a contract with appellant by which it agreed to manufacture and install in a public school building then contemplated being erected by the municipality a system of- air furnaces for the purpose of heating it in winter, for which it was to be paid the sum of $2,170. At the same time it made another contract with appellant, by which it agreed to place in the school building a dry-closet apparatus, for which it was to be paid the sum of $495. These contracts were in writing, and are hied as exhibits with the petition. They contain the following guaranty: “We guarantee the castings, and will furnish repairs for the same, which may be needed, free of cost for a period of ten years following.” “We guarantee' to heat all — 613 — parts of the building to 70 degrees; Fahr., or comfortable occupancy in the coldest winter weather.” “We guarantee to change the air in the. whole building at least four times per hour, or, in other words, to keep up continuous supplies of fresh air in -each room, so that the same shall be replaced once in every fifteen minutes.” “We guarantee that there shall be no' back-draughtsi from the dry closets into the school rooms, and that there shall be no connection between the ventilation of the rooms and the ventilation of the dry closets.” On March 3, 1893, the appellee addressed the following letter to appellant: “To the Mayor and Board of Council, Ludlow, Ky. — Gentlemen: We have been holding for some time a contract given us by your Honorable Body, for erecting our complete system of warming, ventilation and dry closet in the proposed new school building which your city proposes to erect. We wish to notify you of our readiness at any time to carry out this contract, and hope that the new Board, which we understand has just been elected, can now see their way clear to commence the erection of the building. We will be glad to hear from you in this connection. Very truly yours, George Peck, Pres’t.” To which the following response was made: “City, Clerk’s Office, Ludlow. Ky. April 29, 1903. Bennett & Peck; Heating and Ventilating Co., Cincinnati, Ohio — Gentlemen: Your letter of récent date advising us that you are holding contract for the placing of your system of heating and ventilation in the proposed new school house in this city came duly to hand. 1 am instructed, as city clerk, to inform you that your system will not be'adopted nor placed in said schoolhouse when we order. Yours truly, J. O. Richardson, City Clerk.” After the receipt of this letter, appellee instituted this -action in the Kenton Circuit Court, setting out the contract, and its breach, and praying judgment for damages therefor in the — 614 — sum of $1,840. To this appellant filed an answer, setting out a number of defenses, to some of which demurrers were sustained; and finally, under order of court, it filed a reformed answer, in which it denied the incorporation of appellee, or that it had ever been ready or willing to comply with its contract, and alleging that the contract had been mutually abandoned, and had become null and void; that the same had been entered into • with reference to the issuance of certain bonds of the city, from the proceeds of which funds were to be raised to carry out the contract, and that afterwards the city had been required, by an act of the General Assembly of the Commonwealth oí Kentucky, to turn over the entire proceeds of the bonds to the board of education of the city, and that it now had no funds with which to carry out the same; that the entire matter of building and furnishing the school building in question had, since the making of the contract, been placed by law in the hands of the'Board of Education. The answer further denied that appellee had been damaged in the sum of $1,840, or in any other sum. The issue having been made up by a reply, a trial was had by jury, which resulted in a verdict in favor of appellee in the sum of $1,165, of which appellant is now complaining. The' making, of the contract and the authority so to do at the time it was entered into by the parties, was not, and could not be, denied. The proper incorporation of appellee under the laws of the State of Ohio, while placed in issue by the pleadings, was abundantly established by uncontradicted evidence. The municipality having authority to make the contract in question, and having made it, no subsequent legislation could abrogate or invalidate it, and therefore no change by legislative enactment in the status of the city, with reference to the control of the school building, could alter — 615 — its responsibility to appellee under tlie contract. This has been elementary since the Dartmouth College case. Appellee fully established its willingness and ability to perform the contract, and as to this there was no contrariety in the evidence. There is no allegation of fraud or corruption in reference to the making of the contract, either in the pleading or the proof; and the breach, so far a:s the record shows, was wanton and arbitrary. The court, at the close of the testimony, properly instructed the jury peremptorily to find for appellee, and there was no error ’ in its refusal either to allow evidence or to instruct the jury upon the question as to whether or not the furnaces could or would, if built and installed in the school, carry out the terms of the contract. This contention of appellant is based upon the guaranty that the furnaces, when installed, would keep the building sufficiently heated for comfortable occupancy during the coldest winter weather. We think.this question too vague and speculative for consideration. Appellee had guarantied in the contract what its furnaces would do when installed in the building. This guaranty had been accepted by appellant as sufficient. It could not, in the face of its arbitrary and wanton breach of the contract, go into a speculation as to whether or not the furnaces would have complied with the guaranty. But we think the court erred in giving the measure of damages in instruction No. 2, which is as follows: “The measure of damages is the difference between the contract price and what it would have cost to complete the work by plaintiff at the date of the breach of the contract.” There should have been added to this: “Less such a sum as will be «reasonably sufficient to furnish repairs for the castings of the furnaces, operated with ordinary care, for a. period of ten years.” In Sedgwick on Damages (section 618) it is — 616 — said: “'Where one engaged in the performance of a contract is wrongfully prevented by the employer from completing it, the measure -of damages is the difference between the price agreed to be paid for the work and what it would have cost the plaintiff to complete it. Differently stated, the rule in such a case is recompense to the plaintiff for the part performed and indemnity for his loss in respect to the part unexecuted. The plaintiff .is to be placed in the same condition he would have been in if he had been allowed to proceed without interference.” In the Am. & Eng. Encycl. of Law (2d Ed.) 1116, the rule is thus stated: “In the cases of contract for the sale of articles' to be manufactured, the actual damages suffered are the measure of recovery, and is frequently the difference between the cost of manufacturing and delivering the goods and the contract price; that is, the profit which the plaintiff would have made if the contract had been.fully, performed.” In the case of Hauser, Brenner & Fath Co. v. Tate & Co., 105 Ky., 701, 20 R., 1716, 49 S. W., 475, the court said: “The general rule is that the measure of damages for breach of an ex-ecutory contract includes loss of profits which grow out of the‘contract, and which would have been realized from its full performance.” In the light of these authorities, which we deem to state the correct rule, what would have been appellee’s profit on the contract if it had been allowed to proceed to its full performance? Manifestly, it would have been the difference between the cost to it of properly installing its system of heating and ventilation, etc., in the school building and the contract price, less such a sum as would reasonably keep the castings of the furnaces in repair during the contract period of ten years. Tikis cost of repairing the castings is neither vague nor speculative. Common experience teaches that they would need repairs — 617 — from year to year, and under the contract this expense was to be borne by appellee. Its profit upon tbe .whole contract, therefore, can not be ascertained without deducting the reasonable value .of these repairs during the contract period. We think, therefore, the court erred in refusing to submit the question of repairs of the castings in the instructions to the jury. For the reasons indicated, the judgment is reversed for proceedings consistent with this opinion.