BUXBOM v. SMITH (1942)

Further consideration of this appeal leads us to the conclusion that all points raised were adequately and correctly treated by the District court of Appeal, Second District, Division Three, in the opinion prepared by Judge Shaw, sitting as a justice pro tempore of that court. Said opinion is therefore adopted as the opinion of this court as follows:

‘In bringing this action plaintiff labeled his complaint as one for ‘breach of contract of employment.’ The defendants, appealing from a judgment against them, complain that the trial court awarded plaintiff damages that could be allowed if at all, only in some action sounding in tort.

‘The complaint alleges two contracts and the breach of both of them as the basis for the action. One was a contract by which defendants employed plaintiff for a term of six months to handle the publication of a ‘newspaper,’ so-called, which was to carry free of charge all advertising of a chain of markets owned and operated by defendant Smith and to carry advertising of other markets at reasonable rates, plaintiff to receive 25 per cent of the gross advertising receipts for his services. By the other contract alleged, defendants employed plaintiff, for six months, to distribute the newspaper above mentioned at the rate of $5 per thousand copies. The defendants canceled both the above-mentioned contracts soon after they were made, and refused to perform them further, both cancellations being without plaintiff's consent. It is also alleged that at the time of making the contracts plaintiff was the owner of a distributing business and was engaged in distributing handbills, newspapers and advertising matter in the region where this newspaper was to be circulated, and that after the contracts were made plaintiff enlarged his distributing crews, employed additional supervisors and prepared to handle 40,000 copies of said newspaper. The complaint also alleges ‘that by reason of the said breaches of contract by defendants and proximately caused thereby, plaintiff has suffered damages as follows,’ setting forth seven items, two of which are substantially the same, except in amount, as the two damage items hereinafter quoted from the findings.

‘After trial the court made findings in plaintiff's favor which substantially followed the language of the complaint above outlined, except as to damages. The court denied plaintiff any commissions for sale of advertising, gave him two other small items of damage for breach of the publication contract, and found ‘that as a result of defendants' violation of the terms of said contracts, the plaintiff has suffered damage as follows: ‘In the sum of $1,121.40 representing the profit which would have been derived by plaintiff from the distribution of said paper for the remainder of the term of said distribution contract. * * * In the further sum of $4,000 for the loss of plaintiff's trained organization, supervisors, good will and for general damages to plaintiff's business.’

‘The defendants object to the damage item of $4,000 thus awarded as not a proper element of damage at all under the complaint or for breach of such contracts as plaintiff has alleged, and further as not shown in this case to have resulted from the breach. We think these contentions must be sustained.

‘There can be no doubt, from the allegations of the complaint as well as the title given it by plaintiff, that the action is solely one for two breaches of contract, and the damages sought are claimed to have resulted from those breaches of contract alone. It is equally clear from the findings that the damages awarded are given only by reason of those breaches of contract. Obviously the item for loss of plaintiff's distributing organization, etc., can have no relation to the breach of the contract for managing the publication of the newspaper. For the purpose of performing that contract plaintiff needed no such organization and could use none, and defendants' refusal to perform that contract could not have affected it.

‘It is also plain to us that this item is not a proper element of damages for breach of the distribution contract. That contract was for the distribution of papers at a definite price, and by defendants' acts plaintiff was prevented from performing it after a short period of time. He was fully paid for the performance rendered, so that the question here affects only his damages for the performance prevented. In such a case the rule, as stated in 25 C.J.S., Damages, § 78, p. 575, is: ‘Where, without fault on his part, one party to a contract who is willing to perform it 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 expenditure toward performance, and the anticipated profits which he would have derived from performance.’ In conformity to this rule see sections 1512 and 3300 of the Civil Code; also Connell v. Higgins, 1915, 170 Cal. 541, 549, 150 P. 769; Cederberg v. Robison, 1893, 100 Cal. 93, 98, 34 P. 625; Caspary v. Moore, 1937, 21 Cal.App.2d 694, 699, 70 P.2d 244; Spitzer v. Pathe Exchange, Inc., 1933, 132 Cal.App. 612, 620, 23 P.2d 308; Blair v. Brownstone Oil & Refining Co., 1917, 35 Cal.App. 394, 170 P. 160. In the case of Overstreet v. Merritt, 1921, 186 Ca. 494, 200 P. 11, on which plaintiff strongly relies to support the judgment, the plaintiff, who had given up an established business in order to engage in a new business with defendant, which defendant then refused to establish, was allowed to recover his loss from the giving up of his old business. This is merely an application of the first part of the measure of damages stated in the rule above quoted, that is, the ‘reasonable outlay or expenditure toward performance.’ In the case at bar there is no showing under this part of the rule, either in the pleadings, the findings or the evidence. It is alleged and found that the plaintiff, in anticipation of performing the contract, enlarged his distributing organization, and there is some evidence to the same effect, but it nowhere appears that he expended any money in so doing, or that he devoted any particular amount of time thereto, or that his time, if so spent, was of any particular value. Moreover, the finding does not purport to award anything for such an item. The plaintiff is fully compensated for the second element of damages stated in the rule by the award of the profits which, the court found, he would have made if allowed to complete the distribution contract. As far as this contract is concerned there is no room for further items of damage. If the plaintiff has suffered a damage by the loss of his organization it has not resulted from the breach of this contract, but from some other cause.

‘The complaint alleges that, after canceling the distributing contract, the defendants ‘employed plaintiffs' distributing crews, and supervisors in said area,’ and the findings repeat this statement and add that ‘defendants took over and appropriated the plaintiff's distributing organization.’ Plaintiff insists that this conduct was a breach of the contract, but he points to no provision of it which is so breached. The contract, as pleaded and found, says nothing of a distributing organization; it does not require plaintiff to provide such an organization, or to render any personal services at all, but would permit him to subcontract the entire work to others, if he so desired. The evidence on this point goes no further than the pleading. If the findings above quoted tend toward any cause of action in plaintiff against defendants it is not one for breach of either of the contracts sued on, but one for some independent tort. No such cause of action is completely stated, however, in either complaint or findings. Thus, ‘it is actionable for a third person, having knowledge that an employé is working under contract, to induce such employé to break his contract.’ (Patterson Glass Co. v. Thomas, 1919, 41 Cal.App. 559, 566, 183 P. 190, 193); to same effect, see 39 C.J. 1370; and many cases cited in note 84 A.L.R. 77. On inducing breach of contract, generally, see Imperial Ice Co. v. Rossier, 1941, 18 Cal.2d 33, 112 P.2d 631. Such conduct is a tort, not a breach of contract. (39 C.J. 1373; Bloom v. Bohemians, Inc., 1921, 223 Ill.App. 269; Huff v. Watkins, 1883, 20 S.C 477, 480.) But knowledge by the defendant of the contract of employment, breach of which is induced by him, is essential to a cause of action of this kind. 39 C.J. 1372. The complaint and findings do not show such knowledge here. Except in rather general fashion they do not even show that there were any such contracts, and the evidence leaves the matter even more doubtful.

‘The defendant Wright further contends that he is not liable at all in this action. It appears without conflict that he acted in all the matters involved herein as the agent of defendant Smith and that this fact was at all times known to plaintiff. Wright was therefore not personally liable on either of the contracts and the judgment against him is erroneous, unless one of the conditions to the personal liability of an agent specified in section 2343 of the Civil Code is met. In his brief plaintiff concedes this proposition and admits, as he must under the evidence, that the first two subdivisions of that section are not applicable, but contends that Wright is liable for the $4,000 award under subdivision 3, which makes an agent liable ‘when his acts are wrongful in their nature.’ Since we have already held that this item of damage cannot be recovered from any defendant under the complaint and findings this argument must fail.

‘It is argued by defendant Smith that the evidence does not support the findings and judgment against him, particularly in that there is no evidence of Wright's authority to act for him in making the contracts sued on. But the plaintiff testified that before these contracts were made, and at a time when he was negotiating with Wright on the subject, he saw Smith and told him he had been talking to Wright about distributing circulars, and discussed the newspaper, ‘and he seemed rather busy; and he said ‘No, you take all those matters up with Mr. Wright; he handles all that; and anything you do with him is all right for the company.’' Plaintiff made no further effort to deal with Smith directly but made his arrangements with Wright. This was sufficient to show at least an ostensible authority in Wright to make, in behalf of Smith, the contracts in question. The evidence conflicts on the question whether any such contracts were made at all, but that of plaintiff and another witness called by him is sufficient to support the findings that they were made.

‘No complaint is made of any items of damage other than the $4,000; and the judgment here, if modified to exclude it, will not be conclusive on plaintiff's right to recover it in a proper action. Hence there seems no reason to order a new trial as to defendant Smith. We cannot, however, order judgment for Wright on the findings because they assert that he personally entered into the contracts sued on.’

The judgment against the defendant Wright is reversed. The judgment against defendant Smith is modified by reducing the amount stated in paragraph 1 thereof from $5,156.40 to $1,156.40, and as so modified it is affirmed. Each of the parties will bear his own costs on appeal.

PER CURIAM.