Opinion
No. 12991.
October 24, 1980. Rehearing Denied December 23, 1980.
APPEAL FROM DISTRICT COURT, FIFTH JUDICIAL DISTRICT, CASSIA COUNTY, GEORGE GRANATA, JR., J.
Ronald G. Carter of Carter, Gines Rice, Boise, for plaintiffs-appellants.
Herman E. Bedke of Nielson Bedke, Burley, for defendants-respondents.
On March 26, 1974, Joe Lamb and Priscilla Lamb, husband and wife, (plaintiffs-appellants, hereinafter referred to as Lamb), as lessors, entered into a written lease with J.T. Robinson and Marguerite Robinson, husband and wife, (defendants-respondents, hereinafter referred to as Robinson), as lessees, involving approximately 800 acres of farm land near Mountain Home, Idaho. Under the lease, Robinson contemplated growing approximately 400 acres of potatoes and 400 acres of wheat. The lease called for a cash rental per acre for the different crops. Among other provisions the lease required Lamb, as lessor, to furnish "water, power, the pumping equipment and the pipe line for the proper irrigation. . ." of the land leased. It was also contemplated under the lease that Lamb would "use his best efforts to obtain circle type irrigation equipment to cover approximately 360 acres of the approximate 860 acres which this lease covers."
Lamb, as lessor, had on the leased premises a sprinkling irrigation system consisting of hand lines, main line, and additional equipment. Robinson, the lessee, however, preferred to have a pivot or circular type system and he prevailed upon Lamb to make efforts to obtain such a system. Shortly after the lease was signed the parties together contracted with a third party supplier for delivery of two pivot systems. An order was also placed with the power company to provide the electricity to the pumps.
The land had never been cultivated. It had been cleared of sage brush and planted to crested wheat grass. Robinson prepared the ground and planted the wheat during the month of April, 1974. Subsequently, a series of machinery malfunctions or mishaps occurred depriving Robinson of equipment sufficient to provide enough pressure to adequately furnish water to the hand lines to irrigate the wheat. Thereafter the potato ground was prepared and the potatoes were planted in what Robinson called "dust." Although water was in the creek flowing past the property from which the hand lines were fed, due to lack of pumping equipment, no pre-irrigation water was supplied to the ground prior to planting the potatoes, and none was available to the potatoes until after the planting was completed or until after May 25, 1974, at which time Lamb furnished a diesel engine attached to a generator, motor and pump. Meanwhile, due to the mechanical malfunctions or mishaps mentioned, the wheat appeared to be suffering from lack of water. After extensive negotiations between the parties, the lessor, Lamb, ultimately took back the wheat crop in lieu of rental of the wheat land. Robinson continued to cultivate and attempt to produce a crop of potatoes. Whereas both parties contemplated that the pivot sprinkling system would be in place and ready to perform in the forepart of June, it was not until July 4 or 5 that such system was put into operation. There was evidence it was not until August that the water had penetrated the ground sufficient to meet the root zone of the potatoes thereby sustaining the growth of the crop.
Lamb filed suit against Robinson seeking damages in connection with the crop of grain and for other work that Lamb had done for Robinson. Robinson counter-claimed against Lamb for damages to his potato crop. The court found that Lamb had sustained no damage to his grain crop which could be attributed to Robinson and made an allowance to Lamb for services performed and for other miscellaneous charges. The court further found that Robinson could have reasonably expected a crop yield of approximately 300 sacks of potatoes per acre; that the harvest yielded approximately 173 sacks per acre by reason of Lamb's failure to provide a sufficient irrigation system; that Robinson had contracted all of his potatoes at a price of $4.00 per sack and awarded damages to Robinson as lessee on his counter-claim in an amount of $193,751 after deducting the offsets due Lamb for his claims. From this judgment Lamb has appealed.
At the outset it should be observed that the appellants' brief is markedly lacking in compliance to the rules set down by this Court for appellant procedure. However, the Court can glean that the appellant appears to have assigned two matters as error: one, that the trial court erred in holding the plaintiff-appellant breached the lease in failing to furnish an adequate irrigation system; two, the trial court erred in awarding damages to defendant-respondent for crop loss on farm land which had never been cultivated prior thereto.
Since the latter issue as to damages is determinative of the matter at this stage, we choose to consider that issue first. Appellant Lamb urges that the rule barring evidence of damages for lost prospective profits from a business which is not established, but one merely contemplated, should apply in the instant case where the alleged damages are for lost crops from land which had not been heretofore cultivated. H.J. Wood Co. v. Jevons, 88 Idaho 377, 400 P.2d 287 (1965); C.R. Crowley, Inc. v. Soelberg, 81 Idaho 480, 346 P.2d 1063 (1959); Head v. Crone, 76 Idaho 196, 279 P.2d 1064 (1955).
The general rule is:
"profits which would have been realized if a contract had been performed may be recovered as damages for its breach, provided they are susceptible of being ascertained with reasonable certainty and their loss may reasonably be supposed to have been within the contemplation of the defaulting party at the time the contract was made as a probable result of its breach." 22 Am.Jur.2d, Damages, § 174, p. 246.
In commenting on this rule this Court has previously indicated that damages need be proved only with reasonable certainty or, in other words, that the existence of damages must be taken out of the realm of speculation. Anderson Nafziger v. G.T. Newcomb, Inc., 100 Idaho 175, 595 P.2d 709 (1979); Big Butte Ranch, Inc. v. Grasmick, 91 Idaho 6, 415 P.2d 48 (1966).
Furthermore, it is basic law that contractual damages for lost profits must have been within the contemplation of the parties. Hadley v. Baxendale, 9 Ex. 341, 156 Eng.Rep. 145 (1854). In this connection the lease involved in this case provides as follows:
"If the lessor's negligence causes the irrigation system to be insufficient to irrigate the entire 860 acres, more or less, then there shall be a prorate reduction in the rental price of the property.
"If there is any crop loss whatsoever, it shall be the responsibility of the lessee."
If these provisions are suggestive of what was in the minds of the parties at the time the lease was entered into, it appears that the provisions are subject at least to the interpretation that any loss of crops should be the responsibility of the lessee, obviously placing upon the shoulders of the lessee or the man who raised the crops the ultimate burden of responsibility, except where the lessor's negligence contributed to such loss. If the lessor's negligence contributed to the irrigation system being insufficient, then the damages should be a pro-rate reduction in the rental price of the property. (All rentals have been fully settled between the parties.) This is a measure of damages much different than the loss of profits for which defendants sought recovery under the counter-claim.
Since it appears that the issue of lessor's negligence was not considered and that perhaps the incorrect measure of damages was applied, it is necessary to remand this case to the district court to make determination as to what damages were contemplated by the parties in the event of a breach and whether or not the negligence of the lessor contributed to the insufficiency of the irrigation system, the trial court having made a specific finding that the irrigation system was insufficient.
On remand, if it is found that the lease does not provide the controlling measure of damages, it should be considered whether evidence of damage should be barred as being too speculative (as urged by appellant) or whether another measure such as that set out in Casey v. Nampa and Meridian Irrigation Dist., 85 Idaho 299, 379 P.2d 409 (1963) is applicable. Casey held:
"[T]he measure of damages for injury to a growing crop is the difference between the value of the crop actually raised upon the land and the crop which would have been raised upon it under normal conditions for the year in question, less the cost of maturing, harvesting and marketing such additional portion of the crop,-the difference in value between the probable yield, and the actual yield, less the probable cost of placing the additional crop in a marketable condition and marketing it." 85 Idaho at 304, 379 P.2d at 411.
Casey cited with approval Kingsbury v. Bacon, 38 Idaho 701, 224 P. 438 (1924), wherein total loss of crops were discussed: "[T]he value of a growing crop . . . must be determined from evidence of the probable yield. . . ." 85 Idaho at 304, 379 P.2d at 412.
Additionally, the district court's findings as regards the insufficiency of the irrigation system should be clarified. The appellant has raised the issue that the insufficiency of the system was not in the quantity of water available to be placed on the land, but the manner in which the water was distributed, that is, that the water is applied would run off and not penetrate, and that only when it was applied properly would it effectively accomplish the results the parties desired. Whereas the trial court made a finding that the irrigation was insufficient for a proper irrigation practice, a specific finding should also be made as to what would be a proper practice in the application of the water.
Reversed and remanded for further proceedings consistent with this opinion. Costs to appellants.
DONALDSON, C.J., McFADDEN, J., and SCOGGIN, J. Pro Tem., concur.
The Court not only reverses the trial judge on issues which were not raised on the appeal, but on issues which were not raised at trial in the district court.
The only issues raised on appeal, according to the appellants' brief, are three:
I.
"Lamb did not breach his contractual duty. In fact, he more than adequately performed as per the lease and within the contemplation of the parties.
II.
"Robinson has not shown by any convincing evidence that a lack of water was the proximate cause of his low crop yield.
III.
"Since the land in question had never previously been farmed, Robinson's measure of damages is unsubstantiated. Respondent has not shown beyond conjecture that he suffered any damage as a result of late delivery of water."
As is self-evident, the appellants' challenge to the trial court determination rendered against them is predicated wholly on claimed insufficiency of the evidence as to proximate cause of respondents' damages, and claimed insufficiency and incompetency of the respondents' proof on damages suffered. Appellants' brief argues these contentions; appellants' oral argument in turn was but an oral presentation of the contents of their brief. Respondents in their brief point out that appellants have made "no objection to specific findings of fact by the trial court," and that the brief of appellants argues their contentions "without reference either to specific findings or the transcript." Respondents in their brief set forth eleven findings made by the trial court upon which appellants' liability was predicated, none of which is attacked or given any specific attention by appellants. Respondents conclude their brief with the statement that "[a]ll findings of fact and conclusions of law are substantiated by the evidence and the law and should be upheld by this court." The Court's opinion, however, does not reach a determination of the issues as presented, other than to cite several cases cited by respondents, and to quote the general rule as found in 22 Am.Jur.2d, Damages § 174 at 246 (1965).
Appended hereto are the trial court's amended findings of fact and conclusions of law which well serve to illustrate both the issues presented and the court's carefully drawn findings thereon.
At the commencement of the trial the trial court advised counsel that both parties would be entitled to submit briefs at the conclusion of the trial, and both parties would be entitled to submit proposed findings of fact which were believed to be substantiated by the evidence. Presumably both parties did so. The trial judge made and entered his own findings and conclusions four months after the trial concluded.
Strangely, from there the Court turns to and quotes two paragraphs of the lease which are given no mention whatever in the briefs of the parties:
"`If the lessor's negligence causes the irrigation system to be insufficient to irrigate the entire 860 acres more or less, then there shall be a prorate reduction in the rental price of the property.
"`If there is any crop loss whatsoever, it shall be the responsibility of the lessee.'"
From there the Court digresses into speculation as to the possible effect of those provisions upon the issue of damages:
"[I]t appears that the provisions are subject at least to the interpretation that any loss of crops should be the responsibility of the lessee, obviously placing upon the shoulders of the lessee . . . the ultimate burden of responsibility, except where the lessor's negligence contributed to such loss. If the lessor's negligence contributed to the irrigation system being insufficient, then the damages should be a pro-rate reduction in the rental price of the property . . . . This is a measure of damages much different than the loss of profits for which defendants sought recovery under the counter-claim."
From there the Court muses that "it appears that the issue of lessor's negligence was not considered and that perhaps the incorrect measure of damages was applied . . .," necessitating reversal and remand for a new trial which will comport with the manner in which the Court believes the case should have been tried. (My emphasis.)
The trial judge, however, did not decide the issues on the basis that appellants' negligence was the cause of the insufficiency of the irrigation system. In a manner most specific, and hence commendable as well, the trial court's conclusion of law no. 5 was couched in terms of appellants' breach of the agreement:
"5. That plaintiff breached the terms of Plaintiff's Exhibit 1 in failing to repair the canal so that the maximum amount of water could be stored in the reservoir, in failing to timely provide for the pumping equipment to enable defendant to pre-irrigate the potato ground, in failing to provide adequate pumping equipment on the wheat ground, and in failing to provide adequate pumping equipment to irrigate the potato ground until July 4, 1974."
My reading of the respondents' counter-claim discloses that they made no claim of negligence against the appellants. After alleging the very acts of which the trial judge found the appellants guilty, respondents with particularity alleged that:
"By reason of the plaintiffs' intentional acts of refusing to prepare the inlet to the reservoir, delaying in repairing or replacement of the necessary pump equipment, and their failure to furnish adequate sprinkling equipment for the raising of the potatoe crop, the defendants' potatoe crop has been damaged in the amount of $320,000.00, which said damages should be paid by the plaintiffs to the defendants."
As for the statement, found in a single paragraph, that "[i]f there is any loss whatsoever, it shall be the responsibility of the lessee," apparently it must have been the thought of the parties that crop loss as to mechanical failures and as to insufficiency of the system having been given special attention, crop loss from other sources would indeed be the responsibility of respondents. Obviously the "lessors negligence" clause had to do with, and only with, any insufficiency of the system. That this is so reasonably follows from the fact that appellants in filing their pleading responsive to the counterclaim did not seek to stand on the sentence in question, nor does it appear to have been an issue relied upon at trial, and for certain is not an issue that was raised or argued in this Court.
Other causes of crop loss in the "whatsoever" classification might include fire, hail, wind, flood, locusts, and crop disease.
Feeling that the Court today does much mischief in its disposition of this case on an unpleaded, unraised and untried issue, and observing that the parties themselves in the first instance, their counsel in the second, and the trial court in the third, had a better opportunity for understanding the theories upon which the parties litigated than does this court, I respectfully dissent.