153 U.S. 540
ANVIL MIN. CO.
HUMBLE et al.
May 14, 1894
This was an action by John Humble, Joseph H. Johns, and James Johns, partners as Johns Bros. & Humble, against the Anvil Mining Company, to recover for work done under a contract, and for damages for an alleged breach thereof by defendant. The action was commenced in a state court, but was removed to the circuit court by defendant. Joseph H. Johns having died, the action was revived in the name of the surviving partners. Verdict and judgment were rendered for plaintiffs, and defendant sued out this writ of error.
On May 1, 1888, John Humble, Joseph H. Johns, and James Johns, who were partners doing business under the firm name of Johns Bros. & Humble, entered into a contract with the Anvil Mining Company for mining iron ore. [153 U.S. 540, 541] The provisions of the contract, so far as they are material, are that:
This contract was subsequently extended by the following stipulation, dated the 10th day of July, 1888:
The firm commenced the work soon after this contract was entered into, and continued it until the 11th of October of that year. On February 11, 1889, they began this action in the circuit court of the state of Michigan for the county of Gogebic to recover for work done and damages sustained. The defendant removed the case to the federal court, where issue was joined, and the case went to trial before a jury, which, on September 16, returned a verdict for the plaintiffs in the sum of $5,943.79. Pending the proceedings in the trial court one of the plaintiffs, Joseph H. Johns, died, and the suit was revived in the name of John Humble and James Johns, the surviving partners. Upon the verdict as returned judgment was entered, and to reverse such judgment the defendant sued out this writ of error.
Dan H. Ball and James G. Flanders, for plaintiff in error.
[153 U.S. 540, 546] Edwin F. Uhe, for defendants in error.
Mr. Justice EREWER, after stating the facts in the foregoing language, delivered the opinion of the court.
The claims of the respective parties, as stated by the court in its charge to the jury, are briefly these: Plaintiffs claimed- [153 U.S. 540, 547] First, an amount unpaid for ore mined in September and October; second, wages which they had paid during certain periods when they were delayed in the prosecution of the work by the fault of the defendant; and, third, the profits which they would have made if the defendant had not prevented them from completing the contract. On the other hand, the defendant claimed- First, excessive freights paid by reason of a failure on the part of the plaintiffs to produce the ore seasonably; second, damages for a failure to bring out that per cent. of the ore which by the contract plaintiffs had agreed to take out of the mine; and, third, damages on account of the unskillful working of the mine.
The first claim of the plaintiffs, to wit, for ore mined in September and October, is not disputed. With regard to the second, the court accepted the rule of law agreed upon by counsel for both parties, and therefore there is no dispute as to that. The controversy is in respect to plaintiffs' claim for profits, and here many questions are discussed by counsel. We shall, in our examination of them, follow the order in which they are presented in the brief of defendant's counsel. The first objection to any recovery under this claim is that by the very terms of the contract the defendant was at liberty to terminate it at any time, and hence it is insisted that, even if it did so, plaintiffs were not entitled to recover any profits which they might have made had it not been terminated; that coupled with the right to terminate was a special provision, to wit, an award of referees for estimating the damages which the plaintiffs should sustain in consequence of such termination, and that no attempt to secure such an award was alleged or proved. To this it may be replied that the contract did not give to the defendant a right arbitrarily to terminate the contract, but only when it determined that the caving system was 'prejudicial to the future welfare and development of the mine,' and that there is no pretense that it ever made such determination. On the contrary, the defendant set up as a defense that the plaintiffs abandoned the work, and thus broke the contract, and that it suffered great damage thereby, and on the trial the whole [153 U.S. 540, 548] scope of its testimony in this respect was in denial of the charge that it had stopped the plaintiffs from continuing the mining of ore, or in any manner sought to terminate the contract. For aught that appears to the contrary in this record, the defendant now, as ever, believes that the caving system is not only not prejudicial, but the best method of working the mine, and broke the contract with plaintiffs only for the sake of giving it to another party.
A second matter of dispute, and one which bears upon the rightfulness of the conduct of the respective parties pending the work, arises on the construction to be given to the stipulation of July 10th. The original contract provided that the ore should contain at least 56 per cent. of metallic iron, and that no ore of lower grade should be accepted or paid for by the company. The contention of the defendant is that this stipulation modified the contract so that thereafter all the ore taken from the mine, in order to be accepted, must contain at least 58 per cent. of metallic iron, while the plaintiffs insist that this only applied to the ore from the second and third levels; that from the first level being subject to the provision of the original contract, to wit, 56 per cent. of metallic iron. We agree with the plaintiffs in their construction of the stipulation. The original contract was only for removing ore from the first level, the company having, however, the option to extend it to the second and third levels. This stipulation provides for such an extension, but it is made expressly subject to 'an exception.' The use of the word 'exception' indicates that something is taken out from the principal matter provided for in the clause or paragraph in which the word is found, and not that something is taken out of or changed from other provisions in other clauses of the entire contract. It will be borne in mind that this is an independent agreement, made at a subsequent time, though supplemental to and in extension of the original contract; and while, for a full understanding of the scope of the obligations created by it, the original contract must be referred to, yet in determining the import of the language used it is to be construed as an independent agreement, and when it [153 U.S. 540, 549] makes an extension of the obligations of the plaintiffs to a new matter anything which is stated as an exception is to be taken as an exception to the obligations assumed in respect to this additional matter. If the intent was to change the stipulation as to the first level, some other word than 'exception' would unquestionably have been used. It is unnecessary to refer to extrinsic testimony, of which there was some, and of great significance, in order to establish the meaning of this stipulation; for, standing by itself, the fair and reasonable construction is that the stipulation as to the increased per cent. was applicable only to the ore taken from the second and third levels, while as to the first level there was no change.
A third proposition of defendant is that, 'under the facts in this case, the damages claimed for loss of profits were too uncertain, contingent, and conjectural to found a verdict upon.' Profits which are a mere matter of speculation cannot be made the basis of recovery in suits for breach of contract, while profits which are reasonably certain may be. As said by Mr. Justice Lamar in Howard v. Manufacturing Co., 139 U.S. 199, 206 , 11 S. Sup. Ct. 500: 'But it is equally well settled that the profits which would have been realized had the contract been performed, and which have been prevented by its breach, are included in the damages to be recovered in every case where such profits are not open to the objection of uncertainty or of remoteness, or where, from the express or implied terms of the contract itself, or the special circumstances under which it was made, it may be reasonably presumed that they were within the intent and mutual understanding of both parties at the time it was entered into.' See, also, Cincinnati Siemens-Lungren Gas Illuminating Co. v. Western Siemens-Lungren Co., 152 U.S. 200 , 14 Sup. Ct. 523.
Now, there was in this case testimony to show the cost of mining each ton of ore, and also the amount of ore remaining in the first level of the mine at the time the work stopped. From these figures the profit which would have been made by the plaintiffs if they had completed the work of mining all the ore on the first level is a mere matter of multiplication. [153 U.S. 540, 550] It is true that the cost of mining the remaining ore might differ from that of mining the ore which had already been taken out; but still proof of the cost of taking out that which had been mined, and of the condition of the mine as it was left, furnished a basis upon which a reasonable estimate could be made as to the cost of extracting the remaining ore. Equally true is it that there was no mathematical certainty as to the amount of ore remaining in the mine; yet both plaintiffs and defendant furnished testimony as to such amount, and testimony which, while not such as to put it beyond doubt, was sufficient to enable the jury to make a fair and reasonable finding in respect thereto. The case is one, therefore, in which the profits are not open to the objection of uncertainty, and certainly not to that of remoteness, for they would have been the direct result of carrying on the contract to a completion, and were obviously within the intent and mutual understanding of both parties at the time it was entered into.
Again, it is insisted that there was no evidence that the plaintiffs were stopped and prevented from going on with the contract, but this is a mistake. While there is no pretense that the plaintiffs were forcibly removed from the mine, there was testimony that they were directed to quit. One of the plaintiffs, John Humble, gave this account of a conversation held in October with the defendant's superintendent, and their action in consequence thereof:
In view of the verdict of the jury, which is equivalent to a finding that the defendant had broken the contract, it is unnecessary to inquire as to whether there was any error in the instructions of the court as to damages recoverable by the defendant in case the jury should find that the plaintiffs had broken the contract. It may also be remarked in passing that the court excluded from the consideration of the jury the amount of ore remaining in the second and third levels, and limited the recovery to the profits which the plaintiffs would have made if they had been permitted to continue the work so far as to remove all the ore from the first level.
Defendant also complains of the following instruction:
It is insisted, and authorities are cited in support thereof, that a party cannot rescind a contract, and at the same time recover damages for his nonperformance. But no such proposition as that is contained in that instruction. It only lays down the rule (and it lays that down correctly) which obtains when there is a breach of a contract. Whenever one [153 U.S. 540, 552] party thereto is guilty of such a breach as is here attributed to the defendant, the other party is at liberty to treat the contract as broken, and desist from any further effort on his part to perform; in other words, he may abandon it, and recover as damages the profits which he would have received through full performance. Such an abandonment is not technically a rescission of the contract, but is merely an acceptance of the situation which the wrongdoing of the other party has brought about. Generally speaking, it is true that when a contract is not performed the party who is guilty of the first breach is the one upon whom rests all the liability for the nonperformance. A party who engages to do work has a right to proceed free from any let or hinderance of the other party; and, if such other party interferes, hinders, and prevents the doing of the work to such an extent as to render its performance difficult, and largely diminish the profits, the first may treat the contract as broken, and is not bound to proceed under the added burdens and increased expense. It may stop and sue for the damages which it has sustained by reason of the nonperformance which the other has caused.
In the course of the trial a letter was produced, signed by the plaintiffs, and directed to the general manager of the company, in which was a statement that the first level had been practically exhausted of all commercial ore, and that not to exceed 5 per cent. was left in it. The defendant insisted that this letter was conclusive upon the plaintiffs, but the court permitted testimony on their part to the effect that this letter was written at the solicitation of defendant's superintendent, who said to one of them that some one was reporting to the company that 'they were leaving lots of ore in the first level, and he wanted to have this letter written by us to take the blame off of his back,' suggesting at the same time that, if anything good was discovered in the bottom level, to keep it quiet, and that they could make some money out of a speculation in the stock. The court instructed that this letter had 'considerable value,' as being 'a statement in writing' of a party, but also that it was not conclusive, and, if the testimony satisfied the jury that the facts were not as stated, they were [153 U.S. 540, 553] at liberty to so find. We see nothing in this ruling of which the defendant can complain. There was nothing in the way of estoppel in such a letter, and, even if the plaintiff shad written it voluntarily, and without any solicitaion, they would not have been precluded from showing the actual facts. Much more so is this the case if, as stated, the letter was written at the solicitation of the defendant's superintendent, and to accomplish a wrongful purpose on his part.
Another matter is this: The contract provided that 'the amount of ore shipped from said premises, and the amount due said party of the first part, shall be determined by and based upon the weights as ascertained by the reports of the railroad company or companies, made to said party of the second part of the shipment of the ore from said mine.' In the bill of exceptions is this statement of what took place when one of the plaintiffs ( John Humble) was on the witness stand:
It is insisted that there was error in permitting the witness to give the statements of the company's bookkeeper, on the ground that such bookkeeper had no authority to speak for [153 U.S. 540, 554] the company; that his admissions were not the admissions of the company; and that what he said was mere hearsay, and tended to prejudice the jury against the company. There is no force in this objection. By the terms of the contract the amount due the plaintiffs was to be determined by the weigh bills. They were in the possession of the bookkeeper, an officer of of the company, and one of the plaintiffs applied to that officer for those bills. The reply of such officer, in possession of that made by the contract the evidence of the amount due the plaintiffs, was competent testimony. If there were any doubt as to its competency, the objection to it would be obviated by the fact that the next day the superintendent practically assented to the truth of the statement, and if the plaintiffs did not produce the weigh bills, they certainly had a right to show why they were unable to do so, the effects they had made to obtain them, and how it was that they failed.
These are all the questions that we deem it important to consider. We have examined the record very carefully, and find nothing in the rulings of the court of which the defendant can justly complain; and while, in view of the conflicting testimony, there is room for difference of opinion as to what the facts really were, there was testimony which, in amount and character, was sufficient to uphold the verdict of the jury, and, of course, under those circumstances, its determination is conclusive upon those questions of fact. The judgment will be affirmed.