Stott v. Johnston

Alleging a breach of warranty by reason of the sale of defective paint for use in his business, plaintiff, a painting decorator, recovered judgment upon a verdict against defendant Thomas Johnston, doing business as Johnston Paint Company, in the sum of $10,000. On appeal, defendant argues: (1) that the evidence was insufficient to establish any liability on the part of defendant; and (2) that the evidence was insufficient to sustain the amount of damages awarded. An examination of the record in the light of applicable principles of law leads to the conclusion that the judgment should be affirmed.

Plaintiff, a painting contractor of some ten years’ experience, had been engaged continuously in the business of painting houses in Alameda County since January, 1945. One Jack Hendricks, salesman for defendant, called upon plaintiff in February, 1946, for the purpose of interesting him in the use of Pervo paints. At that time plaintiff told Hendricks that he was using “Rich paint,” and Hendricks replied, “We have as good a paint, if not better.” Wanting some assurance with respect to the quality of Hendricks’ paint, plaintiff testified that he asked Hendricks about the “company policy” in the event of “any paint going bad at any time,” and that Hendricks replied, “We would reimburse you a hundred percent for labor and materials for any paint that goes bad”; “If anything went wrong with it, they would stand behind me one hundred percent.” Thereupon plaintiff purchased paint from Hendricks and during the following months painted some

In about October, 1946, plaintiff began to receive complaints from customers whose buildings had been painted with the Pervo “Fume Proof” paint. He took Hendricks and Johnston to one of the buildings and after examining the job, Hendricks stated that there was “definitely something wrong with the paint.” Johnston also agreed that there was “something wrong with it, ’ ’ and proceeded to explain to plaintiff and the owners of the building that it was not plaintiff’s fault that the paint was cracking and peeling off the walls, but that plaintiff had just received “a bum patch of paint.” Johnston further stated that his company would “stand behind [the] job,” and told plaintiff to “do it over,” giving him precise instructions as to how and when it should be done.

With the beginning of the year 1947, plaintiff received more and more complaints. He testified that about March, 1947, he reported to Hendricks that many of his customers were complaining “on this paint, peeling” on their jobs, and that Hendricks replied, “I know the paint is no good, but I would appreciate it ... if you wouldn’t go telling it around town that our paint is no good, because it would hurt my sales terrible.” About two weeks later, Hendricks told plaintiff that Johnston “just got back from Los Angeles,” where he had a “talk with the Pervo Company,” and that “they have O.K.’d to go ahead and do these jobs all over as they come in.” However, plaintiff was told to get in touch with Hendricks or Johnston before redoing any job, so that they could first “verify each and every job.” Hendricks and plaintiff agreed that Johnston would pay plaintiff $3.50 an hour for the labor to clean and paint the jobs.

About April 5, 1947, plaintiff returned to the Johnston Paint Company all the Pervo paint that he had in stock, some 276 gallons. At about the same time, plaintiff told Hendricks that he had received complaints on about 20 jobs. Hendricks then said that he did not know “whether the company will

Plaintiff testified that in August, 1947, Johnston told him that the company would stand behind him “one hundred percent.” In October, 1947, plaintiff telephoned Johnston at his Berkeley store and told him that he [plaintiff] had “a lot more complaints . . . about 40 ’ ’ and he wanted something done about it. Johnston replied that the company “can’t stand for that” and declared, “I don’t intend to maintain your jobs.” Pursuant to their arrangement then made, Johnston went with plaintiff on November 4, 1947, to inspect the jobs. They looked at the first house, Johnston “walked over to a window sill . . . scratched off the paint,” and then admitted that it was “definitely over-pigmented.” Plaintiff then told Johnston that he had painted a number of houses with that same paint, that “if it is over-pigmented, all these houses will start peeling off like this one” and his business reputation would be ruined. Johnston replied that he would “take care of” the people who sued, and not to worry about the rest, as people forget very easily and plaintiff’s reputation would not be damaged in any way. Dissatisfied with Johnston’s apparent indifference as to plaintiff’s undertaking with his customers, plaintiff threatened to sue Johnston. Then plaintiff suggested that they look at some more of the jobs if Johnston had any doubt as to the importance of plaintiff’s having customers satisfied with the work, and the men proceeded on their round of inspection. At the next stop, Johnston again agreed and stated to the owner that the paint was “a poor batch,” and that it was “not [plaintiff’s] fault.” But from then until the tour was completed, Johnston visibly changed his attitude. Upon their inspection of each job thereafter, he told plaintiff that the trouble lay in “surface condition,” and that the houses plaintiff was painting were so old that they were not worth painting and “should be burned down.”

Plaintiff testified that at the conclusion of their tour of inspection, he told Johnston that he wanted the jobs done over and $20,000 damages, and that Johnston just laughed and said, “We might give you $5,000 and pacify these people, but we sure wouldn’t give you twenty.” Plaintiff then threatened to sue, and Johnston said, “Now, we don’t have to go into that. We will call in the license inspector and if the license inspector says we are wrong, we will stand good for the jobs.” Plaintiff immediately agreed to the proposal to “leave it up to the license inspector.” About two weeks later

Plaintiff brought this action for breach of warranty, seeking damages upon these three claims: (1) $5,468.15, representing $6,185, the amount plaintiff paid for the allegedly defective paint, less a credit of $716.85 for the return of the paint not used; (2) $50,000, as the cost necessary to repaint the buildings he had painted with defendant’s defective paint; and (3) $40,000, for the loss of customers and good will. On the trial, at the conclusion of plaintiff’s case, counsel and the court, in chambers outside of the presence of the jury, discussed the subject of recoverable damages. The court stated that in its opinion there was no basis for recovery on the first two items. Accordingly, only the third item of loss, the issue of damage to good will, was submitted to the jury, and it returned the verdict of $10,000 damages against defendant Johnston.

In denial of his liability, defendant first contends that the alleged statements of Hendricks and Johnston were not express warranties but only amounted to “puffing talk.” To that point he cites Steen v. Southern California Supply Co., 74 Cal.App. 265 [ 239 P. 1098 ]. That case is clearly distinguishable as it involved only general “puffing” statements concerning quality, unaccompanied by any definite promises, Here, on the contrary, Hendricks not only gave assurance as to the high quality of the paint but promised that defendant would reimburse plaintiff “a hundred percent for labor and materials for any paint that goes bad” and that “ [i]f anything went wrong with it, they would stand behind [plaintiff] one hundred percent.” Plaintiff testified that he wanted “an assurance” before changing from the paint which he was using to defendant’s paint, and that it was the receipt of this assurance which prompted him to try the Pervo paint. (Cf. Chamberlain Co. v. Allis-Chalmers Mfg. Co., 74 Cal.App. 2d 941 , 943 [ 170 P.2d 85 ].)

“Any affirmation of fact or amy promise by the seller

In view of our conclusion that defendant’s liability may be sustained by reason of his breach of an express warranty, it becomes unnecessary to discuss plaintiff’s further claim that defendant’s liability might likewise be predicated upon the breach of an implied warranty. (Civ. Code, § 1735.)

There now remains for consideration defendant’s contention that the evidence as to damages is insufficient to support the judgment. In testing the propriety of plaintiff’s recovery, these provisions of section 1789 of the Civil Code are pertinent: “ (6) The measure of damages for breach of warranty is the loss directly and naturally resulting in the ordinary course of events from the breach of warranty; (7) In the case of breach of warranty of quality, such loss, in the absence of special circumstances showing proximate damage of a greater amount, is the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.”

Defendant first argues that as a matter of law, there can be no recovery for loss of business good will in that such item is regarded as “too remote, uncertain and speculative.”

The record shows that plaintiff was using the “Rich” paint in his painting business and was satisfied with it; that defendant’s salesman, Hendricks, told plaintiff that defendant’s paint was “the best money [could] buy,” that it was “as good ... or better” than the paint plaintiff was using, and that “if anything went wrong with it, they would stand behind [him] one hundred percent.” The record also shows, as above recited, that defendant’s paint was admittedly defective. However, despite these factors indicating defendant’s liability to plaintiff for breach of warranty in the sale of the paint in question, defendant argues that he is not subject to damages for any loss of good will plaintiff may thereby have sustained because such damages were not contemplated by the parties in their dealings. To this point defendant claims that it was expressly agreed that defendant’s liability should extend no further than reimbursement for “labor and materials needed to do over any jobs involving defective paint.” As embracing analogous considerations in the measure of recoverable damage for breach of warranty, defendant relies on the general rule that compensation for the detriment occasioned by the loss of future profits may be allowed only where such damages “may fairly be supposed to have entered into the contemplation of the parties when they made the contract.” (Grupe v. Glick, 26 Cal.2d 680 , 688 [ 160 P.2d 832 ]; also, Morello v. Growers Grape Prod. Assn., 82 Cal.

The question then arises as to the state of the evidence in support of the damage award for plaintiff’s loss of good will. Plaintiff’s accountant testified that the following figures accurately represented plaintiff’s earnings for the years 1946-1948:

Years Gross Income Net Profit

1946 .......................... $65,317.83 $2,865.92

1947 .......................... 78,514.31 4,428.88

1948 .......................... 76,258.66 4,920.17

It thus appears that plaintiff’s gross income showed a decided increase in 1947—some $13,000 or approximately 20 per cent—coincident with the postwar building boom, but in 1948 there was a decrease of more than $2,000; and that plaintiff’s net profits increased in 1947 nearly $1,600 as contrasted with an increase of but $500 for the succeeding year, when the repercussions from the many complaints received by plaintiff on his paint jobs began to be felt. These figures assume particular significance in the light of plaintiff’s testimony concerning his efforts to expand his business during

However, in a case of this kind there must be recognized

While a recovery for loss of good will was denied in Armstrong Rubber Go. v. Griffith, Second Circuit (New York), 43 F.2d 689 , with the statement at page 690 that “knowledge that the goods are to be resold and, if defective, will be the occasion of a loss of profits is not enough to justify an award of special damages, ’ ’ such declaration was made in connection with a claim for damages on a sale- of goods “to be used for the general trade” (p. 691) rather than for a particular purpose, the situation in the distinguished Barrett case. (See Gzarnikow-Rionda Co. v. Federal Sugar Refining Co., 255 N.Y. 33 [ 173 N.E. 913 , 88 A.L.R. 1426 ], and cases collected

The propriety of the allowance of $10,000 to plaintiff for the loss of good will must be considered in relation to the nature of the evidence available to plaintiff in proof of this issue. Analogous considerations have arisen in eases where recovery for loss of future profits was sought, and the courts have been reluctant to reverse a reasonable damage award because the precise amount of damage was not definitely ascertainable. In this regard it appears to be the general rule that while a plaintiff must show with reasonable certainty that he has suffered damages by reason of the wrongful act of defendant, once the cause and existence of damages have been so established, recovery will not be denied because the damages are difficult of ascertainment. (See anno. 78 A.L.R. 858 ; 25 C.J.S. § 28, pp. 493-496.) In Grupe v. Glide, supra, 26 Cal.2d 680 , it was declared at page 692, upon the citation of numerous authorities that “where the operation of an established business is prevented or interrupted, as by a tort or breach of contract or warranty, damages for the loss of prospective profits that otherwise might have been made from its operation are generally recoverable for the

Comparable considerations arose in the application of this principle in the case of Hoag v. Jenan, supra, 86 Cal.App.2d 556 , where plaintiff sought damages for defendant’s breach of contract in failing to complete a specified building within the scheduled time, and so prevented the expansion of plaintiff’s business as contemplated at the time of their agreement. Plaintiff recovered judgment for $15,000. In upholding such damage award, the court observed at page 564 that plaintiff’s business was “in actual operation, its past experience has demonstrated the success of the enterprise, and provides a reasonably certain basis for the ascertainment of the probable loss consequent upon the breach of contract to complete the annex within the time specified.” The only additional evidence appearing in that case as compared with the present record is the fact that plaintiff was forced to turn away prospective customers because of defendant’s failure “to provide [plaintiff] with the necessary space in which to expand his operations.” (P. 560.) Here plaintiff has shown his records of past earnings in his established business, his sizable financial outlay for additional equipment in anticipation of an increase in his painting work coincident "with the postwar building boom, and his expenditure of a considerable sum in promotional activities commensurate with the facilities of his theretofore growing business. While plaintiff did not introduce any evidence as to loss of specific customers by reason of his use of defendant’s defective paint in his business, it is readily arguable that such item of proof may not have been available to plaintiff by reason of the particular nature of his mode of operations as contrasted with another type of business, such as was involved in the Hoag case. Under all the circumstances here, it is difficult to see what additional evidence plaintiff could have introduced on the damage issue. The law only requires that the best evidence be adduced of which the nature of the ease is capable (Steel-duct Co. v. Henger-Seltzer Co., 26 Cal.2d 634 , 651 [ 160 P.2d 804 ]), and the defendant whose wrongful act gave rise to the injury will not be heard to complain that the amount thereof cannot be determined with mathematical precision. (Hacker Pipe & Supply Co. v. Chapman Valve Mfg. Co., 17 Cal.App.2d 265 , 267 [ 61 P.2d 944 ].) As the record here

Under all the circumstances showing the extent of plaintiff's injury by reason of defendant’s breach of warranty, it is clear that the award of $10,000 is a reasonable determination of the damage sustained by plaintiff, and that any error on the part of the trial court in restricting the assessable items to the single issue of loss of good will, as above noted, reacted to defendant’s benefit. In this regard, plaintiff now urges that the judgment in his favor be increased by the amount of $5,468.15, being the sum paid for the defective paint used, a matter of loss “clearly proven with certainty” and “tacitly admitted by defendant.” However, since plaintiff did not appeal from the judgment, the requested modification must be denied. (2 Cal.Jur. § 492, p. 839; Richardson v. Suiter, 74 Cal.App.2d 682 , 688 [ 169 P.2d 252 ]; Hill v. Hill, 82 Cal.App.2d 682 , 702 [ 187 P.2d 28 ]; Nolle v. Nolle, 83 Cal.App.2d 775 , 778 [ 189 P.2d 502 ].)

The judgment is affirmed.

Gibson, C. J., Shenk, J., Edmonds, J., Carter, J., Traynor, J., and Sehauer J. concurred.