Hitchcock v. Supreme Tent of Knights of the Maccabees of the World

Grant, J. The defendant is a corporation organized under the laws of this State, and authorized to issue endowment certificates, payable on the death of members to beneficiaries selected by them, and is operated under the lodge system, the lodges being known as “ tents.” It was — 42 — incorporated in 1885 by five incorporators, who constituted the board of trustees. A Mr. Boynton was secretary and one of the trustees, and to him was committed the chief management of the association. The organization appears to have met with great favor, and before the close of the first year was in active operation in many states and in Canada. It had from 50 to 75 agents engaged in organizing tents. These agents were compensated by a part of a membership fee, a certificate fee, and a quarterly per capita tax. No tents could be instituted with less than 15 members in places of 5,000 population or under, or with less than 25 members in places of over 5,000 population. Plaintiff was a man of considerable experience in organizing associations of this character. Negotiations between him — 43 — and Mr. Boynton resulted in the execution of a contract dated October 5, 1885, by which plaintiff was given the sole control of instituting and organizing new tents or subordinate bodies in the state of Indiana. The contract fixed the following compensation for his services: “1. Sixty dollars of the charter fee for each tent he or his deputies may institute in said state of Indiana. “2. All the membership fee on all over 15, and under 25, members put in new tents on organization. “ 3. One-half of the membership fee on all members put into new tents on organization, over 25 members. “ 4. All the per capita tax collected by him from the first 15 members in each new tent. “ 5. One-fourth of the annual per capita tax on the entire membership in the state of Indiana shown to be in good standing on the books of the supreme tent at the close of each quarterly term, the said money to be paid to the said Hitchcock within 30 days thereafter. — 44 — “•6. He shall also receive as compensation for -visiting organized tents within the state, with a view of building them up and increasing their membership, all the quarterly per capita tax paid in by new members secured in such work, and also such portion of the membership fee as may be agreed upon between him and the tents. The aforesaid proportion of charter fee, membership fee, per capita tax, etc., shall be full and complete compensation for such services.” It provided, further, that plaintiff should give his full time and services to the work, and execute a.good and — 45 — sufficient bond, in the sum of $500, for the faithful performance of his-duties, and the turning over of all moneys belonging to the supreme tent. It also contained the following provisions: “ It is further agreed between the parties hereto that, ivhenever a great camp is organized in said state, then this agreement shall be null and void, and of no binding force. It is also agreed that, whenever either party to this agreement desires to cancel the same, at least 30 days’ notice — 46 — must be given by tbe party so electing. This agreement cannot be canceled without the consent of all parties to the contract.” No great camp could be organized in any state until there were at least 50 tents and 2,000 members. Plaintiff furnished his bond, received his commission, and immediately entered upon the work. In 13 months he had organized 10 tents, with a total membership of 268. The defendant then broke the contract, early in 1887, and demanded a surrender of plaintiff's original commission, which he refused, and then left its employ. The defendant immediately placed other agents in the state, who established 40 more tents, and brought the membership up to a sufficient number to establish a great camp. Upon the trial the learned circuit judge directed a verdict for the plaintiff, under clause 5, for one-fourth of the annual per capita tax paid in by the members of the 10 tents which he organized, and who continued as members, which, with interest, amounted to $454.25. As to the other damages claimed, the judge held that they were speculative, that there were no certain data from which they could be computed, that they were uncertain of ascertainment, and directed a verdict for the defendant. All questions arising under this contract, except that of damages, have been determined in favor of plaintiff by the verdict and judgment. From this determination defendant has not appealed. The only question, therefore, before this Court, is the ruling of the court below as to the measure of the damages. Plaintiff insists that he introduced and offered evidence from which, the jury might, with reasonable certainty, determine the profits which he might have made, but which were lost to him by the violation of the contract. He gave evidence tending to show the profits made on the contract while he was engaged in the work. He offered to show that the first labor of — 47 — starting the enterprise is more expensive than that which follows, and that after the work is fairly started it is easier to organize tents than at first. He also offered a statement taken from the books of the defendant, showing the organization of 40 tents after the breach of the contract; 125 members in new tents, over 15 and under 25; 66 members in new tents, over 25; and the total number of new members. From this statement he made up his total claim, as follows: Charter fees, 40 tents, $2,400; membership fees under clause 2 of the contract, $625; membership fees under clause 3, $165; per capita tax under clause 4, $300; per capita tax under clause 5, $2,056.83. The rule governing these cases is established by an unbroken line of authorities, — that damages which are purely speculative in character, and dependent on so many contingencies that they cannot be traced with reasonable certainty to the breach of the contract, are not allowable. The difficulty lies in determining whether the facts of a particular case bring it within or without this rule. There is no sounder basis for damages for breach of contracts of this character than the profits, when they' can be determined with proximate and reasonable certainty. In fact, there is no other basis. Their loss is the natural and proximate result of a breach, which the law presumes that each party foresees.. The rule does not require that such data be furnished that they can be computed with mathematical exactness. When one breaks a contract which the other party has partly performed, and the violator then performs the work himself, from which he reaps the profits which the other party might have made, he cannot escape liability for damages, if such other party can show the profits made while he was executing it, and the benefits received from its subsequent completion. The contract in this case was specific and definite in all respects, fixing — 48 — the amount of work and the price. It was contemplated that the plaintiff should make profits, and the defendant was to be benefited by his work. These results were being successfully accomplished when the contract was broken. In case of a breach by plaintiff, defendant could perform the work, and recover as damages the difference between the price agreed upon and the cost of completion. In case of a breach by defendant, the profits lost constitute the legitimate measure of damages. The law is not so blind to justice as not to require the defendant to respond in damages, if there is any reasonable basis for their ascertainment. There is no presumption, legal or otherwise, that the plaintiff could not have completed the work. The defendant was satisfied with the success of the plaintiff. It is a fair presumption that he would have succeeded. It is a fair' inference from the evidence that the defendant's officers broke the contract because of this success, and the belief that they could secure the accomplishment of the work cheaper, which they in fact did. The defendant took advantage of the work which the plaintiff had done, and completed it. The defendant may not now say, “It is true I completed the work, but there is no certainty you could." This is not a case where one party agrees to sell goods-for another for a year, to receive as compensation his share of the profits made; but it is a case where one agrees to sell a certain amount of goods, with no limit as to time, at a given price, and for a given compensation, and also where the goods have been sold at the same price within the agreed territory, and within the time-contemplated. It has been demonstrated, not only that the work could be, but that it has been, done. It is a fair inference that it could have been done as well by the plaintiff as by the defendant. One element of damage is established by the contract, and the evidence from the — 49 — defendant’s own books, viz., the amount agreed to be paid, and the benefits reaped by it. The only other element is tbe cost of doing the work, which, deducted from the amount to be paid, would establish the profits. The expense of what plaintiff did is some evidence upon which to base a judgment of the expense of doing the rest of the work. If that be the only evidence as to the cost, and plaintiff can establish by experience that it is more difficult and expensive to accomplish the first part of the work than the last part, defendant cannot complain if the jury take that as a basis to determine the cost. On the contrary, such basis would be favorable to the defendant; and, if this was the only basis, we think, under the circumstances of this case, it was sufficient to justify a submission of the case to the jury. He who breaks his contract may not deny to the injured party the fair inferences to be drawn from the part performed. In Bagley v. Smith, 10 N. Y. 489, one partner sued another for breach of the partnership articles, and recovered profits lost by the unauthorized dissolution. The court say: “ The loss of profits is one of the common grounds, and the amount of profits lost one of the common measures, of the damages to be given upon a breach of contract.' * * * It is very true that there is great difficulty in making an accurate estimate of future profits, even with the aid of knowing the amount of the past profits. This difficulty is inherent in the nature of the inquiry. We shall not lessen it by shutting our eyes to the light which the previous transactions of the partnership throw upon it. Nor are we the more inclined to refuse to make the inquiry by reason of its difficulty, when we remember that it is the misconduct of the defendant which has rendered it necessary.’’ A review of the vast number of authorities upon this subject would involve a critical statement of the facts of — 50 — each case, and the writing of an opinion of unnecessary length. It is sufficient to say that we think this case comes within, and is ruled by, the following authorities: Wakeman v. Manufacturing Co., 101 N. Y. 205; Treat v. Hiles, 81 Wis. 280; Mueller v. Mineral Spring Co., 88 Mich. 390; Oliver v. Perkins, 92 Id. 304. The case of Wakeman v. Manufacturing Co. is similar in its facts to the present case, and many of the authorities are there collated and discussed. Judgment reversed, and new trial ordered. The other Justices concurred.