Opinion
No. 3453.
Decided March 7, 1944.
In awarding special damages for breach of contract, compensation is given for only those injuries that the defendant had reason to foresee as a probable result of his breach when the contract was made. The term "as is" when contained in a memorandum of purchase and sale means that the seller sells and the purchaser buys the specific chattel in its then existing physical and mechanical condition, and without warranty as to quality or fitness for a particular purpose.
ASSUMPSIT, to recover for the alleged breach of a contract relating to the purchase and sale of a steam shovel. Trial by a referee. The defendants excepted to the denial of their motion for a nonsuit, to the refusal of the Court to strike out the evidence of special damage, and to the ordering of a verdict for the plaintiff in the sum of $325 in accordance with the findings and rulings of the referee. The preliminary findings may be summarized as follows:
The shovel in question was twenty-five or thirty years old and had not been in use for many years. The Amoskeag Industries had sold it to the defendants, who were dealers in scrap metal, for the sum of $75, and on May 29, 1939, the defendants agreed to sell it to the plaintiff for $225. The terms of the agreement were embodied in the following memorandum: "May 29, 1939, Manchester, N.H. Sold to Homer A. Johnson, Hampton, N.H. One steam shovel located at Amoskeag Industries Yard as shown as is and where is for Two Hundred Twenty-Five ($225.00) Dollars. Received $25.00 on account and $200.00 to be paid before shovel is moved. Waisman Bros. By S. Waisman."
Early in August, 1939, the plaintiff entered into a contract with the Swamburg Construction Company to do certain excavation work for a new school building in Hampton. He then sent Linwood Bailey, a mechanic, and another man to Manchester to install certain grates which he had purchased and to "put the shovel in shape." Bailey informed one of the defendants that he had come to get the shovel but was told that the plaintiff would have to pay for it before it was moved. Bailey stated that the plaintiff would come the next day and make payment. He and his companion then worked on the shovel for several hours, after which the defendant Saul Waisman "told Bailey that the bill had been long overdue" and that the "agreement was off." A day or two after these events, the plaintiff went to see the defendants and offered to pay the $200. They "refused to take it and told him that he couldn't have the shovel."
The referee found that the plaintiff informed Samuel Waisman on May 29 that he "wanted the shovel to use on a contract job because his other shovel was out of condition" and that "so far as appears," the job he then "had in mind" was this job with the Swamburg company; that he "had to have a shovel in order to carry out his contract" with the Swamburg company and that he "relied upon the steam shovel he had bought" of the defendants "to do that"; that when the defendants "refused to deliver it to him he had to hire a shovel, which he did," and that because of this fact he was damaged to the extent of $300; that "the shovel was worth just what the plaintiff agreed to pay for it"; that the plaintiff "did not agree to make the payment of $200 within any stated time and that his offer of payment was made within a reasonable time; that he "fulfilled his obligation under the contract and was entitled to receive the shovel at the time that he offered to make the final payment."
The referee made the following rulings and recommendations:
"The referee rules that the damages resulting to the plaintiff from the defendants' refusal to deliver, included the loss which he suffered because he was forced to hire a shovel for the Swamburg contract; plus the $25 which he paid at the time the writing was signed.
"If the referee's ruling that the measure of damages includes the loss on account of the Swamburg contract is sustained by the court, he finds the damages to be $325 and recommends that judgment be entered accordingly.
"If, on the other hand, the court should rule that the loss on the Swamburg contract should not have been included, the referee finds the damages to have been $25 and recommends that judgment be entered for that sum."
The defendants' bill of exceptions was allowed by Lorimer, J.
William H. Sleeper, for the plaintiff.
Osgood Osgood (Mr. Anson G. Osgood orally), for the defendants.
The motion for a nonsuit was correctly denied. The defendants do not urgently contend that it should have been granted but confine their argument chiefly to a discussion of the exceptions relating to the issue of special damages. Both parties agree that their rights, so far as that issue is concerned, are governed by the following rule: "In awarding damages, compensation is given for only those injuries that the defendant had reason to foresee as a probable result of his breach when the contract was made. If the injury is one that follows the breach in the usual course of events, there is sufficient reason for the defendant to foresee it; otherwise, it must be shown specifically that the defendant had reason to know the facts and to foresee the injury." Restatement, Contracts, s. 330. This doctrine has long prevailed in this jurisdiction (see Restatement, Contracts; N.H. Annot., s. 330) and is implicit in section 67 of the Uniform Sales Act (R. L., c. 200, s. 67).
It is the defendants' contention that the evidence does not fairly warrant a finding that the particular loss which the plaintiff claims to have sustained was within the contemplation of the parties at the time the memorandum was signed. See Hurd v. Dunsmore, 63 N.H. 171, 173; Hutt v. Hickey, 67 N.H. 411, 417; Davis v. Company, 77 N.H. 403, 404; Barrett v. Company, 80 N.H. 354, 360; Busick v. Company, 91 N.H. 257, 259.
In the first place it should be noted that there is no evidence on which the referee could properly base his inference that the plaintiff had the Swamburg contract in mind when he informed the defendants that he had a certain job to do. So far as the record discloses, he did not mention that particular job during his negotiations with the defendants and, as a matter of fact, he did not obtain it until two months later. His business was that of farming and trucking. He testified that he owned a gravel pit and bought the shovel for use in the pit and for "any other digging" he had to do. While he stated that he had more than one job in mind, he did not explain the nature of those jobs or say that he informed the defendants that he had in mind any job whatever. Saul Waisman testified: "He said he needed it [the shovel] on a job but I didn't know what kind of work." Samuel Waisman testified: "All he told me was that he had a job to fill in and he had a shovel that wasn't working and he needed another one."
The mere knowledge on the defendants' part that the plaintiff was purchasing the shovel with the general intention of using it "on a job" would not charge them with notice that the loss in question would naturally result from the breach of their agreement. Marcus Co., Inc. v. Company, 122 N. J. Law, 202, 209. See 2 Williston, Sales (2d ed.), s. 599a.
Under his contract with the Swamburg company the plaintiff was required to excavate a cellar for a school building and to dig ditches for sewer- and water-pipes. The shovel had been discarded by its original owner and had stood for many years unused in the Amoskeag yard. The testimony tended to prove that extensive replacement of parts was necessary before it could be used and that even if these parts were supplied, its successful use for the work required by the Swamburg contract was a matter of conjecture.
Furthermore, the plaintiff was not entitled to assume that the shovel would do the work in question. The defendant sold it "as is" and this term, when contained in a memorandum of purchase and sale, means that the seller sells and the purchaser buys the specific chattel in its then existing physical and mechanical condition and without warranty as to quality or fitness for a particular purpose. See 4 Words and Phrases (permanent ed.), 305. It follows that the finding of the referee that the plaintiff "relied upon the steam shovel he had bought" to do the work demanded by the Swamburg contract is immaterial.
Under the foregoing circumstances it could not reasonably be found that the defendants knew or ought to have known, when they signed the memorandum, that their repudiation of the agreement would be likely to entail the particular loss claimed. The defendants' exception to the ordering of a verdict for the plaintiff in the sum of $325 is sustained.
This conclusion makes it unnecessary to consider the defendants' contention that, since the plaintiff did not enumerate the items of his alleged loss, the referee could not determine the extent of that loss with the requisite certainty. See Restatement, Contracts, s. 331.
Whether the referee's alternative recommendation of judgment for the plaintiff for $25 should be adopted is a matter for the consideration of the Superior Court. No reason appears why the plaintiff should not be reimbursed for any loss sustained on the grates which he purchased and for the labor of the men sent to install them. The Superior Court may properly entertain a motion to reopen the case for a determination of these expenditures.
Case discharged.
All concurred.