Opinion
November 21, 1949.
January 12, 1950.
Contracts — Damages — Contract terminable upon notice — Notice period.
Where a contract is terminable at any time on notice and it is terminated without notice, the damages which the aggrieved party may recover are limited to the notice period.
Before RHODES, P.J., HIRT, RENO, DITHRICH, ROSS and FINE, JJ. (ARNOLD, J., absent).
Appeal, No. 1, April T., 1950, from judgment of Court of Common Pleas of Allegheny County, Jan. T., 1944, No. 322, in case of William E. Fife v. The Great Atlantic Pacific Tea Company. Judgment affirmed.
Assumpsit.
The facts are stated in the opinion by MCNAUGHER, J., of the court below as follows:
The sole question before us is as to the measure of the damages to which the plaintiff is entitled.
Suit was brought upon a written contract under the terms of which the plaintiff, by the use of his own truck, was to haul merchandise of the defendant from its warehouses to designated retail stores in Pittsburgh and elsewhere. This contract, dated July 12, 1937, contained a ten-day cancellation clause as follows: "This contract, and any renewal thereof, may be cancelled by either party by giving the other party ten days' notice in writing." The evidence offered in behalf of the plaintiff (directly contradicted by the defendant's evidence) was to the effect that the defendant refused to permit the plaintiff to haul any of its merchandise on and after October 13, 1937 and on October 15, 1937 informed him that he was through and that the hauling thereafter would be done by others. It was argued by counsel for the plaintiff, and the plaintiff's testimony as well as his pleadings support the contention, that the defendant breached the contract on October 15, 1937. Paragraph seven of the statement of claim is as follows: "On or about October 15, 1937, the defendant without cause refused to deliver to the plaintiff any of the defendant's goods, wares and merchandise, for transportation, shipment and delivery under said contract, and orally informed the plaintiff, and other truckers in like situation with the plaintiff, that the contract `Exhibit A' and the defendant's similar contracts with other truckers in like situation with the plaintiff, would not be performed by the defendant."
It is undisputed that the plaintiff did not do any hauling for the defendant after October 12, 1937, but, according to the defendant's evidence, that was because, as the plaintiff himself asserted in the trespass case growing out of the same general transaction (reported in 356 Pa. 265), the plaintiff, by a "reign of terror" staged by others, was "intimidated and prevented by fear of destruction of his property and of injury to his person from carrying out said contract, Exhibit A, in accordance with its terms."
The trial judge instructed the jury that if it should find for the plaintiff, the damages must be limited to ten days' net profits which the plaintiff could have made under the contract, together with allowance for detention money. Also, the jury was instructed to return two special verdicts, one for the period from October 15, 1937, to April 26, 1938 (the date when the Public Utility Commission terminated the plaintiff's hauling permit), and the other for the period from October 15, 1937, to July 12, 1938 (the date marking the end of the contract period according to the contention of the plaintiff). Counsel stipulated that for the ten-day period the whole amount involved would be $144.83; for the period ending April 26, 1938, $2,595.66; and for the period ending July 12, 1938, $3,406.12.
The jury found in favor of the plaintiff and, under the court's instruction, awarded damages of $144.83; and in addition it returned the special verdicts indicated.
Counsel for the plaintiff has filed motions for a new trial and for judgment non obstante veredicto for $3,406.12 and for judgment non obstante veredicto for $2,595.66. A number of reasons are assigned but the substance of them is that the trial judge erred in limiting the plaintiff to damages for the ten-day period.
We have examined the case and are in full agreement with the trial judge in his ruling on the question of law.
The situation presented here is the same as in Massachusetts Bonding and Insurance Company v. Johnston and Harder, Inc., 348 Pa. 512. In that case the plaintiff, a surety company, brought suit against the defendant, which had been the plaintiff's general agent in Pittsburgh, to require an accounting of premiums collected. The defendant entered a counterclaim on the basis that the plaintiff had breached its contract by summarily terminating the agency without legal cause. The contract provided that it could be cancelled by either party on thirty days' notice in writing. It appeared by the evidence that it had been summarily terminated and that the plaintiff had transferred the agency to another without complying with the thirty-day clause. The lower court allowed the defendant damages of $27,500.00 but the Supreme Court reduced the amount to $2,811.50, with interest, which represented the net profits for a thirty-day period. Mr. Chief Justice MAXEY said, page 518: "The value of an agency contract with a long period of life before it is one thing; the value of such contract which can be terminated on thirty days' notice is quite another thing."
Further, at page 520: "If this plaintiff had given this defendant the thirty days' notice provided for in the agency contract the defendant would have no cause of action whatsoever. Its cause of action arises solely from the failure to give this notice. Any damages awarded it must be based solely on that failure."
And, at page 521: "We think the defendant Johnston and Harder, Inc. is fairly entitled to recover the profits which would have resulted to it from the performance by the plaintiff of its promise to give thirty days' notice of the cancellation of the agency contract unless it was terminated summarily for just cause. In other words, the plaintiff illegally deprived this agency of thirty days of existence and its damages are what it could have made under its agency contract with plaintiff during that period."
But the plaintiff urges that the Johnston and Harder case is to be distinguished on the ground that there the other party received a notice in writing of the termination of the contract. The answer is that, regardless of its form, the notice given was not in accordance with the provisions of the contract, and the same is true here. According to the evidence in the case at bar, the plaintiff was notified on October 13, 1937, "not to go out", that nothing was being shipped; later the same day he was notified by the vice president of the defendant that no merchandise would be shipped until the trouble was straightened out; and on October 15, 1937, it was stated by a responsible representative of the defendant that he and the other non-union truckers were definitely and permanently through and that the hauling would thereafter be done by the Kenny and Hannon Transfer Companies. (The plaintiff also testified that he was refused further hauling when he made application the latter part of November 1937 and in January of 1938). On or before October 15, 1937, he had specific notice that his hauling contract was terminated. In Johnston and Harder damages were limited to the net profits which could have been earned during the period provided in the cancellation clause of the contract and they must be so limited in this case.
The principle which we are applying is set forth in 25 Corpus Juris Secundum, Damages, section 74 (page 567), as follows: "Where a contract is terminable at any time on notice and it is terminated without notice, the damages which the aggrieved party may recover are limited to the notice period."
A number of decisions in other jurisdictions, as well as that of our Supreme Court in the Johnston and Harder case, support that rule of law: Chevrolet Motor Co. v. McCullough Motor Co., 6 F.2d 212 (C.C.A. 9, 1925); Watson v. Russell, 149 N.Y. 388, 44 N.E. 161 (1896); Bryant Stratton Business College v. Walker, 155 Ky. 707, 160 S.W. 241 (1913); Freiburger v. Texas Co., 216 Wis. 546, 257 N.W. 592 (1934); Louisiana Oil Corp. v. Bryan, 165 Miss. 157, 147 So. 324 (1933); James v. Dayton Rubber Mfg. Co., 57 Ga. App. 511, 196 S.E. 298 (1938); and Stolz v. Wells, 43 S.W. 2nd 163 (Texas, 1931).
Counsel for the plaintiff argues that the defendant's letter of June 14, 1938, offering to provide representation for the plaintiff at a hearing of the Interstate Commerce Commission on plaintiff's application for a permit, and the defendant's letter of July 1, 1938, purporting to cancel the defendant's contract with the plaintiff, had the effect of continuing the contract in full force and of entitling the plaintiff to damages for the whole period to July 12, 1938. As the trial judge indicated at the time these letters were produced, neither of them was material to the issue raised by the plaintiff. Both tended to support the position taken by the defendant throughout the case that it was ready and willing at all times to give hauling to the plaintiff but that the plaintiff was not ready and willing to continue hauling in the face of threats and violence on the part of union sympathizers. The defendant, according to the one letter, was willing to have the plaintiff's application with the Interstate Commerce Commission kept alive as long as there seemed to be any possibility that the plaintiff would resume performance under his contract, and there was testimony that the primary purpose of the letter of cancellation of July 1, 1938, was to clear the dockets of the Commissions under which the plaintiff had held permits when it became evident that performance by the plaintiff would not be resumed. As we have previously stated, the plaintiff's case rested upon the contention that the defendant breached its contract on October 15, 1937. It was on that date, therefore, that the rights and liabilities of the parties became fixed and determined so far as the plaintiff's case was concerned. The letters referred to were material to the defense of the case but were altogether immaterial under the theory presented by the plaintiff. The latter cannot in the same breath be permitted to say that the contract was breached on October 15, 1937, and that it continued in effect until July 12, 1938. If it continued in effect, there was no breach and the plaintiff would not be entitled to any damages. If it was breached on October 15, 1937, letters of the defendant months later could not affect the situation, and under the well-established rule of law, the plaintiff would not be entitled to damages for more than the period provided for in the cancellation clause of the contract.
At the oral argument counsel for the plaintiff was asked how much in damages his client would have been entitled to had the defendant not sent its cancellation notice of July 1, 1938, and he replied "Only ten days' profits. Our case would then have come squarely within the cases cited by counsel for the defendant." He was asked further, "You contend then that because the A. P. sent the formal written notice of cancellation on July 1, 1938, the period for the recovery of damages, which otherwise would have terminated October 25, 1937, was extended to July 12, 1938?" And he replied, "That's right." The inconsistency of that position seems to us apparent. His rights arose and must have been determined at the time the breach of contract occurred. They were not held in abeyance, pending possible later acts or omissions on the part of the defendant.
It is contended that by his instruction to the jury as to the measure of damages, the trial judge deprived the plaintiff of his property without due process of law and violated the constitutional provision against impairing the obligation of a contract. It was the duty of the trial judge to interpret the law as he understood it, his interpretation was in our opinion the correct one, and suffice it to say, in the language of President Judge RICE in American Warming Ventilating Company v. Fayette Lumber Company, 57 Pa. Super. 608, at page 611: "The chance of obtaining a verdict contrary to law is not a right secured to either party to a civil issue by the constitution."
Counsel for the defendant argues that no written point for binding instructions was submitted by the plaintiff at the trial and that therefore his motions for judgment non obstante veredicto cannot be entertained under the Act of 1905, P. L. 286, section 1, as amended (12 PS Section 681). But, beyond anything technical, we find that there is no merit in the substance of the motions.
All of the plaintiff's motions will be refused.
Plaintiff appealed.
Edward O. Spotts, Jr., with him John D. Meyer, for appellant.
William H. Eckert, with him Alexander Black, Jr., Milton W. Lamproplos and Smith, Buchanan Ingersoll, for appellee.
Argued November 21, 1949.
The judgment of the court below is affirmed on the opinion of Judge WILLIAM H. MCNAUGHER for the court in banc composed of himself, and Judges WEISS and ADAMS.