Navarro v. Jeffries

Defendant Jeffries Truck Parts and Equipment, Inc. (hereinafter called “defendant”), ap

Early in 1955, certain officials of defendant corporation, a truck parts distributor, conceived the idea of producing in quantity and selling a crank case oil pan for use on a certain type of diesel truck engine. A salable finished pan involved two major operations: (1) a foundry production of raw castings from a special mold; and (2) finish machining and installation of a certain steel insert.

After discussing quantity easting costs with various foundries and quantity machining cost with plaintiff and other machine shops, on Hay 24, 1955, defendant ordered 500 castings from a foundry to be produced to conform to sample. The same day plaintiff and defendant signed an untitled and undated document, the construction and effect of which is the basis of this litigation. The document was prepared by the plaintiff in the defendant’s office and obviously is not the product of a scrivener of legal documents.

The opening paragraph thereof reads as follows: “Received of Jeffries Truck Parts & Equipment, Inc., the sum of $775.00 as payment to be applied on the manufacture of drilling jigs and deposit on machine work. The portion of the aforementioned sum that will be applied toward payment of the machine work will be $500.00, the balance of the sum, or $275.00 will be applied to the cost of the jigs. The $500.00 machine work deposit will apply toward payment of the machining of the last 32 castings of a 500 piece order.’’

The document then goes on to provide that the $275 will be the total cost of the drilling jigs which will be the property of defendant; that the machine work will be equal to sample, that the machining and part installation charge per casting will not exceed $15.50; that plaintiff will replace improperly machined or damaged castings without cost to defendant; that the machining will be completed by plaintiff within five days after receipt of raw castings provided that the plaintiff has 25 such castings on hand and that the maximum machining production will be limited to 25 castings per day. The final paragraph provides that payment will be due on the first day of each month for work performed the preceding month.

Approximately one month following the execution of the foregoing document, the first raw cast pan was delivered to plaintiff for machining and which raw casting the plaintiff

During the latter part of August, 1955, defendant, without advising plaintiff thereof, directed the foundry to cease casting the oil pans and no further raw castings were thereafter delivered to plaintiff for machining. Plaintiff inquired of defendant from time to time when other castings would be delivered to him for machining but was put off with various excuses. It was not until the summer of 1956 that the plaintiff was finally advised by the defendant that there would be no more castings for plaintiff to machine.

In the findings of fact, replete with evidentiary facts and rulings on motions to amend the pleadings, there are findings of ultimate facts that the document referred to is an unconditional order for 500 castings to be machined by plaintiff to conform to sample; that plaintiff received and machined 30 castings in compliance with the contract; that by stopping production of the raw castings, the defendant rendered performance by plaintiff impossible; that plaintiff was ready, willing and able to perform the balance of the contract and that by reason of defendant’s prevention of performance the plaintiff was damaged for loss of profits in the sum of $3,753.16, and was damaged in an additional amount of $1,445.20, the depreciation on certain equipment and parts purchased by the plaintiff to perform said contract.

Defendant’s principal assignment of error is the admission by the trial court, over defendant’s objection, of extrinsic evidence tending to show that the written instrument was a bilateral agreement for the machining by plaintiff of 500 castings to be furnished by the defendant.

Defendant urged in the trial court, as it urges here, that the written instrument was merely an option, entitling defendant to require the plaintiff to machine at $15.50 each, such number of castings as defendant chose to have finished. Plaintiff, on the other hand, urged in the trial court, and

The following established principles are governing: (1) When the language used in a written agreement is fairly susceptible to one of two constructions, extrinsic evidence may be considered, not to vary or modify the terms of the agreement, but to aid the court in ascertaining the true intent of the parties. Such evidence is received, not to show that the parties meant something other than what they said, but to show what they meant by what they said. (Beneficial etc. Ins. Co. v. Kurt Hitke & Co., 46 Cal.2d 517 , 524 [ 297 P.2d 428 ] ; Barham, v. Barham, 33 Cal.2d 416 , 422-423 [ 202 P.2d 289 ] ; Brookes v. Adolph’s, Ltd., 170 Cal.App.2d 740 , 745 [ 339 P.2d 879 ].) (2) Where any doubt exists as to the purport of the parties’ dealings as expressed in the wording of their contract, the court may look to the circumstances surrounding its execution—including the object, nature and subject-matter of the agreement, (Barham v. Bar

No contention is made by defendant that the extrinsic evidence received by the court, if properly admissible, is insufficient to sustain the interpretation placed on the contract by the court. Hence, no lengthy recital thereof is indicated. It is clear from the extrinsic evidence, including defendant’s order to the foundry for 500 castings and the defendant’s negotiations with the plaintiff prior to the execution of the agreement that the parties intended by what they said in a rather ineptly drawn agreement to enter into a bilateral contract for the machining by plaintiff of 500 castings to be furnished by the defendant at a production rate of $15.50 per casting.

Defendant’s only other contention on appeal involves the quantum of damages. As earlier pointed out, the total judgment was $5,198.36 which was made up of $3,753.16 loss of profits and $1,445.20 depreciation on the value of equipment specially purchased by plaintiff in anticipation of performance. The amount of lost profits was arrived at by computing the machining of 500 castings at $15.50, making a total of $7,750, less plaintiff’s anticipated wages, overhead and cost of steel inserts, amounting to $3,031.84, leaving a computed loss of profits of $4,718.06, less payments on account of $965, or a net profit loss of $3,753.16. Plaintiff does not urge any error in the method of computing plaintiff’s loss of profits.

Defendant attacks this item of damages on two grounds. First, that the purchase of the equipment was essential to plaintiff’s performance and had the contract been fully performed, the plaintiff’s net profits would have been reduced by the cost of the equipment, therefore he is not entitled by reason of defendant’s breach to such costs. Second, that a judgment for lost profits precludes any further judgment for the costs of making such profits.

The first contention is untenable for the reason that the court did not award plaintiff the whole or any part of the cost of the equipment as an expenditure incurred by plaintiff in preparation of performance, but awarded plaintiff the depreciation thereon as a loss sustained by him in holding the equipment in readiness for performance which was prevented by the defendant. Even in this regard the general rule is that where, without fault on his part, one party to a contract who is willing to perform is prevented from doing so by the other party, the primary measure of damages is the amount of his loss, which may consist of his reasonable outlay or expenditures toward performance and the anticipated profits which he would have derived from performance. (Buxbom v. Smith, 23 Cal.2d 535 , 541 [ 145 P.2d 305 ] ; James v. Herbert, 149 Cal.App.2d 741 , 749 [ 309 P.2d 91 ].)

Defendant’s second contention, that loss of profits is the sole measure of damages upon a breach consisting of prevention of performance is equally untenable. The measure of damages for defendant’s breach of contract is the amount which will compensate plaintiff “for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.” (Civ. Code, § 3300.) Plaintiff is entitled to all the benefits which he would have obtained if the contract had been performed by both parties. (Cry Code, § 1512.) One of the benefits

The primary measure of damages of a contractor upon prevention of performance by a contraetee is the amount of the contractor’s loss proximately resulting from the breach. (Civ. Code, §3300; United States v. Behan, 110 U.S. 338 [ 28 L.Ed. 168 ]; Buxbom v. Smith, supra, p. 541; James v. Herbert, supra, p. 549.) In addition to loss of profits, losses resulting from enforced idleness are part of the detriment sustained by reason of the breach of contract. (United States v. Behan, supra, 28 L.Ed. 168 , 170; Cederberg v. Robison, 100 Cal. 93 , 97 [ 34 P. 625 ].) Cf. Douglass v. Guardian Holding Corp., 132 Cal.App. 585 [ 23 P.2d 80 ]. “Expenditures caused by contractor’s delay of performance would seem to be recoverable either with or without a recovery of lost profits.’’ ( 17 A.L.R. 2d 1347 .) In Douglass v. Guardian Holding Corp., supra (hearing denied), the court sustained as an item of damages occasioned by defendant’s delay in performance, an amount equivalent to the difference between the plaintiff’s purchase and subsequent sale price of certain equipment bought in anticipation of defendant’s performance. There the plaintiff sold the depreciated equipment, the difference between the cost and the sale price representing the depreciation. Here the plaintiff retained the depreciated equipment and received an award equivalent to the difference between the cost and the sales value, or its depreciation.

Cederberg v. Robison, supra, page 99: “ ‘It does not lie in the mouth of the party who has voluntarily and wrongfully put an end to the contract to say that the party injured has not been damaged, at least to the amount of what he has been induced fairly and in good faith to lay out and expend . . . unless he can show that the expenses of the party injured have been extravagant and unnecessary for the purpose of carrying out the contract. . . . The party who voluntarily and wrongfully puts an end to a contract and prevents the other party from performing it is estopped from denying that the injured party has not been damaged to the extent of his actual loss and outlay, fairly incurred.’ (United States v. Behan 110 U.S. 338 [ 28 L.Ed. 168 ]).”

Judgment affirmed.

Fox, P. J., and Ashburn, J., concurred.