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ON THE MEASURE OF DAMAGES.
Ir is proposed in this chapter to state and illustrate concisely the leading principles on which courts and juries are bound to estimate the damages which are recoverable by a plaintiff in an action of contract or tort. Such a chapter, although a new element in a work on evidence, is conceived to be strictly in its place, and to form a fit appendix to a branch of the subject in which the substance of the issue and the relevancy of evidence have been treated. If an additional reason is required for its insertion, it will be found in the fact that no modern English treatise has investigated the subject; and that courts and counsel are frequently obliged to rely on the excellent, but foreign, authority of an American-Mr. Sedgwick. But, although our English cases are still undigested, they are numerous and important. Even since the present writer has collected the materials for this chapter, the growing interest in the subject has been proved by a slight, but valuable sketch on it in the Law Magazine for April, 1855, which notices also this gap in our legal literature.
The measure of damages is still a department of presumptive evidence. It rested originally, and it still rests in many cases, on an undefined conception of the extent of an injury. The rule necessarily operates at times as a standard founded on merely hypothetical, conventional, and even gratuitous assumptions. It originates in the lex talionis, or law of retaliation, which has always prevailed in uncivilized communities. But it has always been the first effort of legislators to with
draw the adjustment of compensation for an injury from the arbitration of individuals and even juries, and to regulate it by principles of written law. This task is comparatively easy as long as a community is in the infancy of its development. The law which prescribes an eye for an eye, and a tooth for a tooth ;" and the law which punishes all injuries to life or limb by a fixed standard of money compensation, may suffice for a primitive state; but is clearly insufficient for and inapplicable to the wants of a complicated system of civilization. The institution of penalties is found as unsuitable as the general principles of law are occasionally found to be to the equity of particular cases. It is also seen that the principles on which damages should be estimated are peculiarly equitable in their nature; and that there is no province of common law which more manifestly requires to be tempered by the infusion of equitable principles. It has, therefore, long been the practice in civil cases to leave the assessment of damages to the decision of a jury. But it has also been found that a certain amount of mathematical accuracy may be embodied in rules for the guidance of their discretion. It is the province of a judge to direct a jury to calculate and award damages according to these rules; and to tell them that they must not trust to the vague justice of impulsive computation. When these rules are wanting, or inapplicable, juries must still trust to their conscientious appreciation of claims in each particular case. But as the objects of English law are pre-eminently clearness and precision; the intervention of such rules, whenever they are applicable, will always be regarded, even by the assessors, as a safeguard against the contingency of damages being either excessive or insufficient.
The measure of damages, and the rules by which they should be computed, will be considered as applicable to-1st, actions of contract; and, 2nd, to actions of tort.
THE MEASURE OF DAMAGES IN ACTIONS OF CONTRACT.
In Alden v. Keighley, Pollock, C. B., said :-" All questions of damages are, strictly speaking, for the jury; and however clear and plain may be the rule of law on which the damages are to be found, the act of finding is for them. But there are certain established rules according to which they ought to find; and here there is a clear rule that
LIII. The amount which would have been received, if the contract had been kept, is the measure of damages if the contract is broken."
In the case which produced this expression of a first and fundamental principle, the breach was the nonpayment of the balance of a bill, which the defendant had agreed to discount; and it was held that the plaintiff was entitled to recover the original amount of the bill, minus a sum which the defendant had been authorized to deduct; and minus also such a sum as the jury held to be a reasonable charge for discount. Here the damages were assessed strictly according to the above rule, as qualified by the special evidence; and the deductions from the amount due on the original contract, as defined by the bill, were made according to the express incidents of the contract. But in an earlier case, where A. paid over a sum to B. to provide for a bill due from A. to C.; and B., instead of doing so, retained it for a payment due from A. to B., A's assignees were held entitled in special assumpsit to recover the whole amount of the bill.2
These two cases are examples of the rule of compu
1 15 M. & W. 117.
2 Hill v. Smith, 12 M. & W. 618.
tation where the damages are liquidated and defined by the express terms of the contract. Where they are unliquidated, the rule of the common law is, that—
LIV. Where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed.'
In Robinson v. Harman,2 the breach was the nonperformance of an agreement to grant a lease: and it even appeared that the plaintiff, at the time of the agreement, was aware of a flaw in the defendant's title, in consequence of which the defendant was unable to complete. But it was held that the plaintiff was entitled to adequate damages for the loss of his bargain; according to the recognised principle that, where a person makes a contract and breaks it, he must pay the whole damage sustained. So, in an action, by a lessee against an assignee, subject to a covenant to repair, for re-imbursement of a sum which the lessee had paid the lessor for dilapidations, which were only proved to have occurred at some period intervening between the commencement of the plaintiff's term, and two consecutive assignments of the defendant's interest, the plaintiff was held entitled to substantial damages, computed according to the loss which the lessor would have sustained, if he had sold his reversion during the existence of the dilapidations.3
The measure of damages will not be affected by the fact that the original contract could not be enforced at law. Thus, where it was inoperative, as not being in writing within the Statute of Frauds, it was held that
1 Parke, B., 1 Exch. 855.
2 1 Exch. 850.
3 Smith v. Peat, 9 Exch. 161.
the damages for the breach which disabled the plaintiff from performing a contract with third parties were, notwithstanding, to be assessed according to the measure of profit which the plaintiffs would have received from such third parties, if the defendants had fulfilled their engagements. In that case Alderson, B. is reported to have said:" If a person undertakes to make a certain article for another, and to deliver it to him on a particular day, but fails to do so until a year afterwards, it would be most unreasonable that the latter should not recover any damage because the contract was not in writing. The existence of a contract is evidence of the probable amount of loss sustained. Suppose the plaintiffs had said we should have made such and such a contract if the defendants had performed theirs, and the jury believed that the plaintiffs would have done so;' that would surely have been evidence of the amount of loss occasioned by the defendants' breach of contract."
It might be inferred from this language that the contingency of profit, which might have resulted to a plaintiff if the contract had been fulfilled, may be taken, generally, as a measure of damages for a breach. But such does not appear to be the case: and, as such a principle would clearly operate harshly and unjustly in numberless conceivable cases, it appears that the above doctrine of the learned judge is to be received with restriction, and as applicable merely to cases where juries are satisfied that the grounds of the special damage have been contemplated, at the time of the contract, by both parties, and caused subsequently by the delinquency of the defendant. The reasonable rule on this head appears to be that which is laid down by a distinguished American jurist, that—
LV. Damages for breaches of contract are only those which are incidental to, and
1 Waters v. Towers, 8 Exch. 401.