[No. 946.]

JONES ET AL vs. NATHROP, ADM'X.

Opinion Filed December 4, 1883.

Damages-When Recoverable.-Damages for breach of a contract can be recovered only when they are the natural, direct and certain results of the breach, excluding probable profits and speculative damages.

What Profits Recoverable.-Profits which would have been realized but for the defendant's default, are recoverable. Those which are speculative or contingent, are not.

Error to District Court of Saguache County.

STONE, J.-The plaintiffs in error were sued in the court below for the sum of $2,000 claimed for the use of a steam saw-mill from December, 1880, to June, 1881. In their answer they admit the use for the time.charged, but deny indebtedness therefor. They then allege that there was a written agreement for the sale to them of the saw-mill, and also a shingle mill, with stipulated terms of payment. They also charge false and fraudulent representations respecting the machinery, and further aver that no shingle mill was ever delivered to them, and that Nathrop, at the time of the sale, did not have a shingle mill. By way of cross-complaint they allege that Nathrop wrongfully took away the mill from them, and they claim damages for loss of profits which they would have made on lumber in the sum of $5,000; for the wrongful removal of the saw-mill, $1,000; for loss of shingle timber, cut but not used, $1,000; and for loss of profits on. shingles, which they would have made if they had been furnished the shingle mill as agreed, the further sum of $1,500; total, $8,500.

The claims of $5,000 and $1,500 for loss of profits on lumber and shingles, were demurred to. The demurrer was confessed as to the lumber claim, and overruled as to the claim forprofits on shingles.

There was a replication admitting the written agreement of sale, but alleging that it contained a condition that the machinery was not to be moved out of the County of Chaffee without the consent of Nathrop, and avers that plaintiff in error did move the saw-mill out of the said county, and that thereupon said Nathrop took possession of the same, as by the terms of said agreement he had full power and lawful authority to do. The replication then denies the alleged false and fraudulent representations; denies the wrongful retaking of the mill; denies any damages by reason of such retaking, and denies any damage for loss of shingle, timber. The cause was tried to a jury, who found a verdict for defendant in error, Nathrop, of $180, and judgment was rendered accordingly.

The grounds of reversal are: First, that suit was brought on an implied contract and the defense pleads a written contract; hence, there was no good cause of action, since there can not be both an implied and an express contract for the same cause of action at the same time; second, that the cross-claims of $1,500 for shingle profits, and $1,000 for shingle timber, were uncontroverted, and hence, the plaintiffs in error were entitled to a judgment, notwithstanding the verdict.

The suit was brought upon an implied liability and promise to pay for the use of the saw-mill. The right to recover did not rest on the written agree

ment for sale of the mill. The latter while set up as a defense to the action, presented no valid defense. On the contrary, as set out in the pleadings, it was evidence merely of an agreement to sell the machinery upon certain terms therein specified, without any provision respecting the use in case the sale should not be completed. The sale was not to be complete until the last payment was made, upon which there was to be a bill of sale executed and delivered. This agreement, moreover, provided that the mill should not be taken out of the County of Chaffee, and in case of a violation of this condition Nathrop should have the right to retake possession of the mill as his own property. This condition having been violated, as admitted by the pleadings, Nathrop, having retaken the property, sued for the use since, the plaintiffs in error, although admitting the use for the time claimed against them, had paid nothing on account of either the sale or the use of the mill.

As to the second ground of reversal, that the items of $1,500 damages claimed for loss of profits on shingles and $1,000 for value of shingle timber were uncontroverted by the pleadings, and that therefore plaintiffs in error were entitled to a judgment for $2,500 non obstante veredicto, we think the point not sustained, since the record shows that these items do not "stand uncontroverted" as argued. The replication expressly denies the item of loss of shingle timber. As to the item for loss of profits on shingles the demurrer to this item as pleaded should have been sustained. The averment was in effect, that if plaintiff below had delivered to defendants a shingle mill as he agreed to, said defendants would have made a large quantity of shingles, which they might have marketed at a profit, and that therefore as they aver, they have "sustained a loss of $1,500 as profit on the shingles which they would have made, if plaintiff had furnished said shingle mill." These damages, as alleged are too remote and merely speculative.

Damages for breach of a contract can only be recovered when they are averred and proved as the natural, direct and certain result of the breach, excluding probable profits and prospective or speculative damages.

To determine the application of the rule is often a perplexing question but the rule itself is too well settled to require a citation of the numerous and familiar authorities in its support. Sedgewick, Measure of Damages, 72, 76 and note.

One of the numerous illustrations of the application of the doctrine is that cited by Mr. Sedgewick in the note, supra.

Where one had agreed to furnish a steam engine by a certain day to drive a planing and sawing mill and through his default the mill was at a stand still for a time for want of the engine after the stipulated day, it was held by the Supreme Court of New York that a fair price for the use of the engine and machinery during the time lost should be allowed, but the claim for loss of net profits, calculated from the amount of lumber the mill might have cut and planed, allowing usual prices for the work over running expenses and wear and tear, should be rejected as too uncertain.

See the leading American case of Griffin vs. Colver, 10 N. Y. 489, for a full discussion of the subject, and where the rule is concisely stated that "profits which would have been realized but for the defendant's default are recoverable. Those which are speculative or contingent are not."

In the case before us there is no such averment as shows the alleged damages to be the natural, certain and proximate result of the conduct of the party sought to be charged. Nor is there any averment that plaintiffs in error ever demanded the shingle mill after the alleged agreement to deliver it, and hence, the admitted acceptance and use of the saw-mill alone may properly give a presumption that there was an acceptance by plaintiffs in error of the part performance of the agreement and a waiver of the non-delivery of the shingle mill. At all events the case having been submitted to a jury upon the issues made by the pleadings and upon evidence, which is not brought up here by the record, we can not say that the jury in rendering a verdict for defendant in error of $180, instead of the $2,000 sued for, did not allow such proper amount of the counter-claim of plaintiffs in error as the evidence warranted, and the judgment will not be disturbed. Judgment affirmed.

[No. 817.]

L. R. TUCKER, Sheriff, vs. DANIEL E. PARKS, Assignee.

Opinion Filed December 4, 1883.

Attorney at Law.-An attorney at law is not, by reason of his being an attorney, disqualified from acting as the assignee of an insolvent firm.

Sections 50, 57, 72 and 73 Civil Code construed.

Value-Admitted When.-Value of property as alleged in complaint in replevin is admitted, if not controverted by the answer.

Fraud.-Fraud must be specially pleaded in answer as well as in complaint.

Appeal from the District Court of Lake County.

R. D. Thompson, for appellant; Markham & Patterson, for appellee.

BECK, C. J.-The objection to the introduction in evidence of the articles of assignment, was not well taken. It was that the assignee was an attorney at law, and that the instrument provided for the payment to him of counsel fees.

The fact that Parks was an attorney at law did not disqualify him from acting as assignee of an insolvent firm. In the case cited in support of the objection (Nichols vs. McEwen, 17 N. Y. 22), the assignment provided for the payment of "a reasonable counsel fee," in addition to the "expenses, costs, charges and commissions" of executing the assignment, and for that reason was held void. The court regards the attempt to charge an already deficient fund with a counsel fee, in addition to the regular commission authorized by the statute, as indicating a fraudulent intent in the whole transaction.

The language in this instrument is different, however, and does not, we think, attempt to charge the insolvent estate with counsel fees. It is as follows: "That said assignee shall first pay and disburse all the just and reasonable expenses, charges, costs and commissions attending the due execution of these presents, and the carrying into effect of the trust thereby created, together with a reasonable compensation or commission for his own services."

No allusion is made to either professional services, or to professional fees. All that the instrument authorizes the assignee to pay to himself for his own

services is a reasonable compensation or commission. This provision discloses no fraudulent intent, since the assignee, whether lawyer or not would be entitled to a reasonable compensation or commission for the services specified, which is all that is provided.

The most important questions presented by this record arise upon the pleadings, and upon the rulings and instructions relating to the subject of the recovery. The complaint avers that the value of the goods seized upon the writs of attachment is $7,946.20 and that the plaintiff's damages for the detention are $1,000. Neither of these allegations is denied by the answer of the defendant. The plaintiff closed his testimony on the trial without offering proof in support of either averment, whereupon the defendant moved for a non-suit, upon the ground that the plaintiff had proved no value to the property sought to be replevied.

This motion was denied by the court on the theory that defendant's failure to controvert in his answer to the complaint the allegations of value and damages admitted the same to be true as stated.

Defendant then offered evidence to show the value of the goods, their condition and the amount realized by their sale under the attachment proceedings, which offer was likewise denied.

The court instructed the jury that the value of the goods in controversy was admitted by the pleadings to be $7,946.20, and the damages were likewise admitted to be $1,000. A verdict for the plaintiff was returned accordingly.

Counsel for the defendant insist that the court erred in denying the motion for non-suit, in rejecting the defendant's testimony on the subject of value, and in the instruction referred to.

The correctness of the above rulings depends upon the construction to be given certain sections of our Code of Civil Procedure which we will proceed to consider. Section 57 provides that "the answer of the defendant shall contain a specific denial to each allegation in the complaint intended to be controverted by the defendant's answer."

Section 72 says: "Every material allegation of the complaint or answer not controverted by the answer or replication thereto shall, for the purpose of the action, be taken as true."

On behalf of the appellant, who was defendant below, it is insisted that the averments of the complaint on the subject of value, and damages are not "material allegations," and that a failure to deny them does not admit them to be true. That to entitle the plaintiff to recover in this action, it was essential for him to prove the value of the goods, and the amount of damages sustained. In support of this position, we are cited to the following cases: Newman vs. Otto, 4 Sandf. 668; Sopris vs. Webster, 1 Colo. 507; Connors vs. Meir, 2 E. D. Smith, 314; Jenkins vs. Steark, 19 Wis. 136.

The doctrine of these cases is shown by the following citations from Newman vs. Otto:

"No allegation can be deemed material unless an issue taken upon it will decide the cause, so far as relates to the particular cause of action to which the allegation refers.

"In an action sounding in damages, the defendant, by not denying the allegations as to damages and as to their amount, does not admit them. The

plaintiff must prove the amount thereof, or he will be only entitled to nominal damages; so in trover, a failure to deny the allegation as to the value of the property, does not admit the value as alleged in the complaint."

The case of Connors vs. Meir, supra, was an action in the nature of trover, for illegally detaining plaintiff's watch, alleged to be of the value of $20. In considering the section of the New York Code, which provides that material allegations of the complaint, not denied by the answer, shall be taken as true for the purposes of the action, the court say that the provision is but the re-enactment of a rule as old as the principles of pleading; that every allegation in a pleading was always taken as true if not denied, and that it was in this sense that the term "material allegation" was used in the Code. It means an allegation, without proof of which the plaintiff must fail in his action.

They also say that before the Code the averment of value in such action was matter of form, and could not be made the subject of an issue; that its omission was cured by pleading to the merits; that it need not be proved as laid, and even a plea of justification did not admit it. It was only necessary to prove an illegal detention of the plaintiff's property to maintain the action.

In Jenkins vs. Steark, supra, the Supreme Court of Wisconsin held, that before the Code in that State it was not necessary for the defendant in trover, trespass, or replevin, to deny either the averment of value or damages, and that the Code had not altered the practice in this respect.

Sopris vs. Webster arose under the common law practice which prevailed in the Territory of Colorado before the enactment of the Civil Code, and is to the same effect.

The foregoing adjudications (and many, more of the same tenor might have been cited), are based upon the principles and forms of pleadings as they existed at common law.

All, save Sopris vs. Webster, which was prior to the passage of the Code, construed the Code provision under consideration, as not including allegations of value or damages, in actions of this character. They hold that the effect of a failure to deny such allegations is the same under the Code practice as under the old system. This is to be accounted for part for the reason assigned in Newman vs. Otto, supra, that the Codes referred to had not defined the meaning of the term, “material allegations," as employed therein. Its former technical signification was, therefore, naturally continued by the courts.

Our Code, however, defines the term, and effect must be given to the definition in construing the act. The definition is as follows: Section 73. (§ 76, Code of 1883.) "A material allegation in a pleading is one essential to the claim or defense, and which could not be stricken from the pleading without leaving it insufficient."

Another section authorizes matters not essential to the claim or defense to be stricken from the pleadings on motion. Laws 1879, p. 215, §1; Section 65, Code of 1883.

Let us see now what the plaintiff is required to state, in this class of actions, and what relief he is entitled to under proper allegations. When he seeks the recovery of money or damages, the amount of his claim must be stated in the complaint. Civil Code, § 50; Section 54, Code 1883.