Security Stove & Manufacturing Co. v. American Railways Express Co.
51 S.W.2d 572, 227 Mo. App. 175 (1932)
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Rule of Law:
Where a carrier has notice of the special purpose of a shipment and delivery is delayed due to its negligence, the shipper may recover wasted expenses incurred in reliance on timely delivery if prospective profits are too speculative or uncertain to be proven.
Facts:
- Plaintiff, a furnace manufacturer, developed a special combination oil and gas burner it wanted to exhibit at a convention in Atlantic City, primarily to attract the interest of the Henry L. Dougherty Company.
- Plaintiff contacted Defendant, American Railway Express Co., on September 18, 1926, explicitly stating that the furnace exhibit needed to be in Atlantic City no later than October 8 for the convention.
- Defendant's representative met with Plaintiff and confirmed that the shipment needed to be picked up by October 4th to meet the October 8th deadline.
- Plaintiff delivered the 21-package shipment to Defendant for transport on October 2nd.
- Plaintiff's president and an employee traveled to Atlantic City to set up the exhibit for the convention.
- Upon arrival, they discovered that a crucial package containing the gas manifold, the most important part of the exhibit, was missing.
- The missing package was located in Defendant's office in St. Louis and did not arrive in Atlantic City until after the convention had ended, preventing Plaintiff from displaying its exhibit.
Procedural Posture:
- Plaintiff sued Defendant in the trial court for damages resulting from a delayed shipment.
- The case was tried before the court without a jury.
- The trial court entered a judgment in favor of Plaintiff for $801.50 plus interest, totaling $1000.
- Defendant, the appellant, appealed the judgment to this court.
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Issue:
Does a shipper, who cannot prove lost profits from a carrier's delayed delivery, have a right to recover expenses incurred in reliance on timely delivery when the carrier had notice of the special circumstances and purpose of the shipment?
Opinions:
Majority - Bland, J.
Yes. A shipper is entitled to recover expenses wasted in reliance upon a contract for timely delivery where the carrier had notice of the shipment's special purpose and lost profits are too speculative to measure. The ordinary measure of damages for delayed delivery is the difference in market value, but where a carrier has notice of peculiar circumstances that will result in unusual loss, it is responsible for the actual damages sustained. Here, Defendant was fully aware that the shipment was for an exhibit at a specific convention and that timely delivery was essential. Because the exhibit's purpose was demonstration rather than direct sales, any potential profits are purely speculative and cannot be proven. To deny recovery of the expenses Plaintiff incurred—such as booth rental, travel, and wages—would be an injustice that deprives Plaintiff of any substantial compensation for Defendant's conceded negligence. Therefore, allowing recovery for reliance damages is the most just and certain method to achieve the fundamental purpose of compensation.
Analysis:
This decision solidifies the principle that reliance damages can serve as an alternative to expectation damages (lost profits) in breach of contract cases. It is particularly significant for situations where the value of performance is not easily quantifiable in terms of profit, such as for promotional activities, exhibitions, or competitions. The ruling establishes that a breaching party, aware of special circumstances, cannot escape liability simply because the resulting damages are not in the form of provable lost profits. This allows courts to provide a fair remedy by compensating the non-breaching party for actual, out-of-pocket losses incurred in reliance on the contract, preventing the breaching party from being unjustly enriched by its failure to perform.
