daywalt vs. corp de pp agustinos

7/26/2019 Daywalt vs. Corp de PP Agustinos

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[No. 13505. February 4, 1919.]

GEO. W. DAYWALT, plaintiff and appellant, vs. LACORPORACIN DE LOS PADRES AGUSTINOSRECOLETOS ET AL., defendants and appellees.

CONTRACTS DAMAGES FOR BREACH LIABILITY OFTHIRD PARTY.Whatever may be the character of theliability, if any, which a stranger to a contract may incurby advising or assisting one of the parties to evade

performance, he cannot become more extensively liable indamages for the nonperformance of the contract than theparty in whose behalf he intermeddles.

ID. ID. MEASURE OF DAMAGES FOR BREACH OFCONTRACT.The damages recoverable upon breach ofcontract are, primarily, the ordinary, natural and in asense the necessary damage resulting from the breach.Other damages, known as special damages, arerecoverable where it appears that the particular

conditions which made such damages a probableconsequence of the breach were known to the delinquentparty at the time the contract was made. This propositionmust be understood with the qualification that, if thedamages are in the legal sense remote or speculative,knowledge of the special conditions which render suchdamages possible will not make them recoverable. Specialdamages of this character cannot be recovered unlessmade the subject of special stipulation.

ID. ID. ID. DAMAGES FOR BREACH OF CONTRACTFOR SALE OF LAND.The damages ordinarilyrecoverable against a vendor

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588 PHILIPPINE REPORTS ANNOTATED


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Daywalt vs. Corporacin de PP. Agustinos Recoletos.

for failure to deliver land which he has contracted todeliver is the value of the use and occupation of the landfor the time during which it is wrongfully withheld.

APPEAL from a judgment of the Court of First Instance of

Manila. Ostrand, J.The facts are stated in the opinion of the court.

C. C. Cohnand Thos. D. Aitkenfor appellant.Crossfield & O'Brienfor appellee.

STREET, J.:

In the year 1902, Teodorica Endencia, an unmarriedwoman, resident in the Province of Mindoro, executed acontract whereby she obligated herself to convey to Geo. W.

Daywalt, .a tract of land situated in the barrio ofMangarin, municipality of Bulalacao, now San Jose, in saidprovince. It was agreed that a deed should be executed assoon as the title to the land should be perf ected byproceedings in the Court of Land Registration and aTorrens certificate should be procured therefor in the nameof Teodorica Endencia. A decree recognizing the right ,ofTeodorica as owner was entered in said court in August1906, but the Torrens certificate was not issued until later.

The parties, however, met immediately upon the enteringof this decree and made a new contract with a view tocarrying their original agreement into effect. This newcontract was executed in the form of a deed of conveyanceand bears date of August 16, 1906. The stipulated pricewas fixed at P4,000, and the area of the land enclosed inthe boundaries defined in the contract was stated to be 452hectares and a fraction.

The second contract was not immediately carried intoeffect for the reason that the Torrens certificate was not yet

obtainable and in fact said certificate was not issued untilthe period of performance contemplated in the contract hadexpired. Accordingly, upon October 3, 1908, the partiesentered into still another agreement, superseding the old,by which Teodorica Endencia agreed, upon

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receiving the Torrens title to the land in question, todeliver the same to the Hongkong and Shanghai Bank inManila, to be forwarded to the Crocker National Bank inSan Francisco, where it was to be delivered to the plaintiffupon payment of a balance of P3,100.

The Torrens certificate was in time issued to TeodoricaEndencia, but in the course of the proceedings relative tothe registration of the land, it was f ound by official surveythat the area of the tract inclosed in the boundaries statedin the contract was about 1,248 hectares instead of 452hectares as stated in the contract. In view of thisdevelopment Teodorica Endencia became reluctant totransfer the whole tract to the purchaser, asserting thatshe never intended to sell so large an amount of land andthat she had been misinformed as to its area.

This attitude of hers led to litigation in which Daywaltfinally succeeded, upon appeal to the Supreme Court, inobtaining a decree for specific performance and TeodoricaEndencia was ordered to convey the entire tract of land toDaywalt pursuant to the contract of October 3, 1908, whichcontract was declared to be in full force and effect. Thisdecree appears to have become finally effective in the earlypart of the year 1914.

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The defendant, La Corporacin de los Padres Recoletos,

is a religious corporation, with its domicile in the city ofManila. Said corporation was formerly the owner of a largetract of land, known as the San Jose Estate, on the islandof Mindoro, which was sold to the Government of thePhilippine Islands in the year 1909. The same corporationwas at this time also the owner of another estate on thesame island immediately adjacent to the land whichTeoderica Endencia had sold to Geo. W. Daywalt and formany years the Recoletos Fathers had maintained largeherds of cattle on the farms referred to. Their

representative, charged with the management of thesefarms, was

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1 Daywalt vs. Endencia, R. G. No. 7331, decided November 16, 1912,

not published.

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father Isidoro Sanz, himself a member of the order. FatherSanz had long been well acquainted with TeodoricaEndencia and exerted over her an influence andascendency due to his religious character as well as to the

personal friendship which existed between them. Teodoricaappears to be a woman of little personal force, easilysubject to influence, and upon all the important matters ofbusiness was accustomed to seek, and was given, the adviceof Father Sanz and other members of his order with whomshe came in contact.

Father Sanz was fully aware of the existence of thecontract of 1902 by which Teodorica Endencia agreed to sellher land to the plaintiff as well as of the later important

developments connected with the history of that contractand the contract - substituted successively for it and inparticular Father Sanz, as well as other members of thedefendant corporation, knew of the existence of the contractof October 3, 1908, which, as we have already seen, finallyfixed the rights of the parties to the property in question.When the Torrens certificate was finally issued in 1909 infavor of Teodorica Endencia, she delivered it forsafekeeping to the defendant corporation, and it was thentaken to Manila where it remained in the custody and

under the control of P. Juan Labarga the procuradorandchief official of the defendant corporation, until the deliverythereof to the plaintiff was made compulsory by reason ofthe decree of the Supreme Court in 1914.

When the defendant corporation sold the San JoseEstate, it was necessary to bring the cattle off of thatproperty and, in the first half of 1909, some 2,368 headwere removed to the estate of the corporation immediatelyadjacent to the property which the plaintiff had purchased

from Teodorica Endencia. As Teodorica still retainedpossession of said property Father Sanz entered into anarrangement with her whereby large numbers of cattlebelonging to the def endant corporation were pasturedupon said land during a period extending from June 1,1909, to May 1, 1914.

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Under the first cause stated in the complaint in the presentaction the plaintiff seeks to recover from the defendantcorporation the sum of P24,000, as damages for the use andoccupation of the land in question by reason of thepasturing of cattle thereon during the period stated. The

trial court came to the conclusion that the defendantcorporation was liable for damages by reason of the use andoccupation of the premises in the manner stated and fixedthe amount to be recovered at P2,497. The plaintiffappealed and has assigned error to this part of thejudgment of the court below, insisting that damages shouldhave been awarded in a much larger sum and at least tothe full extent of P24,000, the amount claimed in thecomplaint.

As the def endant did not appeal, the propriety ofallowing damages f or the use and occupation of the land tothe extent of P2,497, the mount awarded, is not now inquestion and the only thing here to be considered, inconnection with this branch of the case, is whether thedamages allowed under this head should be increased. Thetrial court rightly ignored the fact that the defendantcorporation had paid Teodorica Endencia f or use andoccupation of the same land during the period in questionat the rate of P425 per annum, inasmuch as the final

decree of this court in the action for specific performance isconclusive against her right, and as the defendantcorporation had notice of the rights of the plaintiff underhis contract of purchase, it can not be permitted that thecorporation should escape liability in this action by provingpayment of rent to a person other than, the true owner.

With ref erence to the rate at which compensationshould be estimated the trial court came to the followingconclusion:

"As to the rate of the compensation, the plaintiff contends that thedefendant corporation maintained at least one thousand head ofcattle on the land and that the pasturage was of the value of fortycentavos per head monthly, or P4,800 annually, for the wholetract. The court can not accept this view. It is rather improbablethat 1,248 hec-

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tares of wild Mindoro land would furnish sufficient pasturage forone thousand head of cattle during the entire year, and,considering the locality, the rate of forty centavos per headmonthly seems too high. The evidence shows that after having

recovered possession of the land the plaintiff rented it to thedefendant corporation for fifty centavos per hectare annually, thetenant to pay the taxes on the land, and this appears to be areasonable rent. There is ,no reason to suppose that the land wasworth more for grazing purposes during the period -from 1909 to1913, than it was at the later period. Upon this basis the plaintiffis entitled to damages in. the sum of P2,497, and is under noobligation to reimburse the defendants for the land taxes paid byeither f them during the period the land was occupied by thedefendant corporation. It may be mentioned in this connection

that the Lontok tract adjoining the land in question andcontaining over three thousand hectares appears to have beenleased for only P1,000 a year, plus the taxes."

From this it will be seen that the trial court estimated therental value of the land for grazing purposes at 50 centavosper hectare per annum, and roughly adopted the period offour years as the time for which compensation at that rateshould be made. As the. court had already found that the

defendant was liable for these damages from June, 1, 1909,to May 1, 1914, or a period of four years and elevenmonths, there seems some ground for the contention madein the appellant's first assignment of error that the court'scomputation was erroneous, even accepting the rule uponwhich the damages were assessed, as it is manifest that atthe rate of 50 centavos per hectare per annum, thedamages for f our years and eleven months would beP3,090.

Notwithstanding this circumstance, we are of the

opinion that the damages assessed are sufficient tocompensate the plaintiff for the use and occupation of theland during the whole time it was used. There is evidencein the record strongly tending to show that the wrongfuluse of the

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land by the defendant was not continuous throughout theyear but was confined mostly to the season when the forage obtainable on the land of the defendant corporationwas not sufficient to maintain its cattle, for which reason itbecame necessary to allow them to go over to pasture on

the land in question and it is not clear that the whole ofthe land was used f or pasturage at any time.Considerations of this character probably led the trial courtto adopt four years as roughly being the period duringwhich compensation should be allowed. But whether thiswas advertently done or not, we see no sufficient reason, inthe uncertainty of the record with reference to the numberof the cattle grazed and the period when the land was used,for substituting our guess for the estimate made by thetrial court. In the second cause of action stated in thecomplaint

the plaintiff seeks to recover f rom the def endantcorporation the sum of P500,000, as damages, on theground that said corporation, for its own selfish purposes,unlawfully induced Teodorica Endencia to refrain from theperformance of her contract f or the sale of the land inquestion and to withhold delivery to the plaintiff of theTorrens title, and further, maliciously and withoutreasonable cause, maintained her in her defense to the

action of specific performance which was finally decided infavor of the plaintiff in this court. The cause of action herestated is based on a liability derived from the wrongfulinterference of the defendant in the performance of thecontract between the plaintiff and Teodorica Endencia andthe large damages laid in the complaint were, according tothe proof submitted by the plaintiff, incurred as a result ofa combination of circumstances of the following nature: In1911, it appears, the plaintiff, as the owner of the landwhich he had bought from Teodorica Endencia entered into

a contract (Exhibit C) with S. B. Wakefield, of SanFrancisco, for the sale and disposal of said lands to a sugargrowing and milling enterprise, the successful launching ofwhich depended on the ability of

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Daywalt to get possession of the land and the Torrenscertificate of title. In order to accomplish this end, theplaintiff returned to the Philippine Islands, communicatedhis arrangement to the defendant, and made repeatedefforts to secure the registered title for delivery incompliance with said agreement with Wakefield. Teodorica

Endencia seems to have yielded her consent to theconsummation of her contract, but the Torrens title wasthen in the possession of Padre Juan Labarga in Manila,who refused to deliver the document. Teodorica also was inthe end prevailed upon to stand out against the performance of her contract with the plaintiff with the resultthat the plaintiff was kept out of possession until theWakefield project for the establishment of a large sugargrowing and milling enterprise fell through. In the light ofwhat has happened in recent years in the sugar industry,

we feel justified in saying that the project above referred to,if carried into effect, must inevitably have proved a greatsuccess.

The determination of the issue presented in this secondcause of action requires a consideration of two points. Thefirst is whether a person who is not a party to a contract forthe sale of land makes himself liable for damages ,to thevendee, beyond the value of the use and occupation, bycolluding with the vendor and maintaining him in the

effort to resist an action for specific performance. Thesecond is whether the damages which the plaintiff seeks torecover under this head are too remote and speculative tobe the subject of recovery.

As preliminary to a consideration of the first of thesequestions, we deem it well to dispose of the contention thatthe members of the defendant corporation, in advising andprompting Teodorica Endencia not to comply with thecontract of sale, were actuated by improper and maliciousmotives. The trial court found that this contention was not

sustained, observing that while it was true that thecircumstances pointed to an entire sympathy on the part

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of the defendant corporation with the efforts of Teodorica


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Endencia to defeat the plaintiff's claim to the land, the factthat its officials may have advised her not to carry thecontract into effect would not constitute actionableinterference with such contract. It may be added that whenone considers the hardship that the ultimate performanceof that contract entailed on the vendor, and the doubt inwhich the issue was involvedto the extent that the

decision of the Court of the First Instance was unfavorableto the plaintiff and the Supreme Court itself was dividedthe attitude of the defendant corporation, as exhibited inthe conduct of its procurador, Juan Labarga, and othermembers of the order of the Recollect Fathers, is notdifficult to understand. To our mind a fair conclusion onthis feature of the case is that father Juan Labarga and hisassociates believed in good faith that the contract could notbe enf orced and that Teodorica would be wronged if itshould be carried into effect. Any advice or assistance

which they may have given was, therefore, prompted by nomean or improper motive. It is not, in our opinion, to bedenied that Teodorica would have surrendered thedocuments of title and given possession of the land but forthe influence and promptings of members of the defendantcorporation. But we do not credit the idea that they were inany degree influenced to the giving of such advice by thedesire to secure to themselves the paltry privilege ofgrazing their cattle upon the land in question to the

prejudice of the just rights of the plaintiff.The attorney for the plaintiff maintains that, byinterfering in the performance of the contract in questionand obstructing the plaintiff in his efforts to secure thecertificate of title to the land, the defendant corporationmade itself a co-participant with Teodorica Endencia in thebreach of said contract and inasmuch as father JuanLabarga, at the time of said unlawful intervention betweenthe contracting parties, was fully aware of the existence ofthe contract (Exhibit C) which the plaintiff had made with

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S. B. Wakefield, of San Francisco, it is insisted that thedefendant corporation is liable for the loss consequent uponthe failure of the project outlined in said contract.


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In this connection reliance is placed by the plaintiff uponcertain American and English decisions in which it is heldthat a person who is a stranger to a contract may, by anunjustifiable interference in the performance thereof,render himself liable f or the damages consequent uponnon-performance. It is said that the doctrine of these caseswas recognized by this court in Gilchrist vs. Cuddy (29

Phil. Rep., 542) and we have been earnestly pressed toextend the rule there enunciated to the situation herepresented. Somewhat more than half a century ago theEnglish Court of the Queen's Bench saw its way clear topermit an action for damages to be maintained against astranger to a contract wrongfully interfering in itsperformance. The leading case on this subject is Lumley vs.Gye ([1853], 2 El. & Bl., 216). It there appeared that theplaintiff, as manager of a theatre, had entered into acontract with Miss Johanna Wagner, an opera singer,

whereby she bound herself for a period to sing in theplaintiff's theatre and nowhere else. The defendant,knowing of the existence of this contract, and, as thedeclaration alleged, "maliciously intending to injure theplaintiff," enticed and procured Miss Wagner to leave theplaintiff's employment. It was held that the plaintiff wasentitled to recover damages. The right which was hererecognized had its origin in a rule, long familiar to thecourts of the common law, to the effect that any person who

entices a servant from his employment is liable in damagesto the master. The master's interest in the service renderedby his employee is here considered as a distinct subject ofjuridical right. It being thus accepted that it is a legalwrong to break up a relation of personal service, thequestion now arose whether it is illegal for one person tointerfere with any contract relation subsisting betweenothers. Prior to the decision of Lumley vs. Gye [supra] ithad been supposed that the liability here

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under consideration was limited to the cases of theenticement of menial servants, apprentices, and others towhom the English Statutes of Laborers were applicable.But in the case cited the majority of the judges concurred


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in the opinion that the principle extended to all cases ofhiring. This doctrine was f ollowed by the Court of Appealin Bowen vs. Hall ([1881], 6 Q. B., Div., 333) and inTemperton vs. Russell ([1893], 1 Q. B., 715), it was heldthat the right of action for maliciously procuring a breachof contract is not confined to contracts f or personalservices, but extends to contracts in general. In that case

the contract which the defendant had procured to bebreached was a contract for the supply of building material.Malice in some form is generally supposed to be an

essential ingredient in cases of interf erence with contractrelations. But upon the authorities it is enough if thewrongdoer, having knowledge of the existence of thecontract relation, in bad faith sets about to break it. up.Whether his motive is to benefit himself or gratify his spiteby working mischief to the employer is immaterial. Malicein the sense of ill-will or spite is not essential.

Upon the question as to what constitutes legaljustification, a good illustration was put in the leadingcase. If a party enters into contract to go for another upon ajourney to a remote and unhealthful climate, and a thirdperson, with a bona fidepurpose of benefiting the one whois under contract to go, dissuades him from the step, noaction will lie.. But if the advice is not disinterested andthe persuasion is used for "the indirect purpose ofbenefiting the defendant at the expense of the plaintiff,"

the intermedler is liable if his advice is taken and thecontract broken.The doctrine embodied in the cases just cited has

sometimes been found useful, in the complicated relationsof modern industry, as a means of restraining the activitiesof labor unions and industrial societies when improperlyengaged in the promotion of strikes. An illustration of theapplication of the doctrine in question in a case of this kind

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is found in South Wales Miners Federation vs.GlamorganCoal Co. ([1905], A. C., 239). It there appeared that certainminers employed in the plaintiff's collieries, acting underthe order of the executive council of the defendantfederation, violated their contract with the plaintiff by


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abstaining from work on certain days. The federation andcouncil acted without any actual malice or ill-will towardsthe plaintiff, and the only object of the order in questionwas that the price of coal might thereby be kept up, a factorwhich affected the miner's wage scale. It was held that nosufficient justification was shown and that the federationwas liable.

In the United States, the rule established in England byLumley vs.Gye [supra]and subsequent cases is commonlyaccepted, though in a few of the States the broad idea thata stranger to a contract can be held liable Upon it isrejected, and in these jurisdictions the doctrine, if acceptedat all, is limited to the situation where the contract isstrictly for personal service. (Boyson vs. Thorn, 98 Cal.,578 Chambers & Marshall vs. Baldwin 91 Ky., 121Bourlier vs.Macauley, 91 Ky., 135 Glencoe Land & GravelCo. vs.Hudson Bros. Com. Co., 138 Mo. 439.)

It should be observed in this connection that, accordingto the English and American authorities, no question canbe made as to the liability of one who interf eres with acontract existing between others by means which, underknown legal canons, can be denominated an unlawfulmeans. Thus, if performance is prevented by force,intimidation, coercion, or threats, or by false or defamatorystatements, or by nuisance or riot, the person using suchunlawful means is, under all the authorities, liable for the

damage which ensues. And in jurisdictions where thedoctrine of Lumley vs.Gye [supra] is rejected, no liabilitycan arise from a meddlesome and malicious interferencewith a contract relation unless some such unlawful meansas those just indicated are used. (See cases last abovecited.)

This brings us to the decision made by this court in

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Gilchrist vs.Cuddy (29 Phil. Rep., 542). It there appearedthat one Cuddy, the owner of a cinematographic film, let itunder a rental contract to the plaintiff Gilchrist for aspecified period of time. In violation of the terms of thisagreement, Cuddy proceeded to turn over the film alsounder a rental contract, to the defendants Espejo and


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Zaldarriaga. Gilchrist thereupon restored to the Court ofFirst. Instance and procured an injunction restraining thedefendants from exhibiting the film in question in theirtheater during the period specified in the contract of Cuddywith Gilchrist. Upon appeal to this court it was in effectheld that the injunction was not improperly granted,although the defendants did not, at the time their contract

was made, know the identity of the plaintiff as the personholding the prior contract but did know of the existence of acontract in f avor of someone. It was also said arguendo,that the defendants would have been liable in damagesunder article 1902 of the Civil Code, if the action had beenbrought by the plaintiff to recover damages. The force ofthe opinion is, we think, somewhat weakened by thecriticism contained in the concurring opinion, wherein it issaid that the question of breach of contract by inducementwas not really involved in the case. Taking the decision

upon the point which was really decided, it is authority forthe proposition that one who buys something which heknows has been sold to some other person can be restrainedfrom using that thing to the prejudice of the person havingthe prior and better right.

Translated into terms applicable to the case at bar, thedecision in Gilchrist vs. Cuddy (29 Phil. Rep., 542),indicates that the def endant corporation, having notice ofthe sale of the land in question to Daywalt, might have

been enjoined by the latter from using the property forgrazing its cattle thereon. That the defendant corporationis also liable in this action for the damage resulting to theplaintiff from the wrongful use and occupation of theproperty has also been already determined. But it will beobserved

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that in order to sustain this liability it is not necessary toresort to any subtle exegesis relative to the liability of astranger to a contract for unlawful interference in theperformance thereof. It is enough that defendant used theproperty with notice that the plaintiff had a prior andbetter right.

Article 1902 of the Civil Code declares that any person


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who by an act or omission, characterized by fault ornegligence, causes damage to another shall be liable for thedamage so done. Ignoring so much of this article as relatesto liability f or negligence, we take the rule to be that aperson is liable for damage done to another by any culpableact and by "culpable act" we mean any act which isblameworthy when judged by accepted legal standards. The

idea thus expressed is undoubtedly broad enough to includeany rational conception of liability for the tortious actslikely to be developed in any society. Thus considered, itcannot be said that the doctrine of Lumley vs.Gye [supra]and related cases is repugnant to the principles of the civillaw.

Nevertheless, it must be admitted that the codes andjurisprudence of the civil law furnish a somewhatuncongenial field in which to propagate the idea that astranger to a contract may be sued for the breach thereof.

Article 1257 of the Civil Code declares that contracts arebinding only between the parties and their privies. Inconformity with this it has been held that a stranger to acontract has no right of action for the nonfulfillment of thecontract except in the case especially contemplated in thesecond paragraph of the same article. (Uy Tam and Uy Yetvs.Leonard, 30 Phil. Rep., 471.) As observed by this courtin Manila Railroad Co. vs. Compaa Trasatlntica, R. G.No. 11318 (38 Phil. Rep., 875), a contract, when effectually

entered into between certain parties, determines not onlythe character and extent of the liability of the contractingparties but also the person or entity by whom theobligation is exigible. The same idea should. apparently beap-

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plicable with respect to the person against whom theobligation of the contract may be enforced for it is evidentthat there must be a certain mutuality in the obligation,and if the stranger to a contract is not permitted to sue toenforce it, he cannot consistently be held liable upon it.

If the two antagonistic ideas which we have just broughtinto juxtaposition are capable of reconciliation, the processmust be accomplished by distinguishing clearly between


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to damages. Indemnification for damages resulting fromthe breach of a contract is a right inseparably annexed toevery action for the fulfilment of the obligation (art. 1124,Civil Code) and it is clear that if damages are not soughtor recovered in the action to enforce performance theycannot be recovered in an independent action. As toTeodorica Endencia, therefore, it should be considered that

the right of action to recover damages for the breach of thecontract in question was exhausted in the prior suit.However, her attorneys have not seen fit to interpose thedefense of res judicatain her behalf and as the defendantcorporation was not a party to that action, and suchdefense could not in any event be of any avail to it, weproceed to consider the question of the liability of TeodoricaEndencia for damages without reference to this point.

The most that can be said with reference to the conductof Teodorica Endencia is that she refused to carry out a

contract for the sale of certain land and resisted to the lastan action for specific performance in court. The result wasthat the plaintiff was prevented during a period of severalyears from exerting that control over the property which hewas entitled to exert and was meanwhile unable to disposeof the property advantageously. Now, what is the measureof damages for the wrongful detention of real property bythe vender after the time has come for him to place thepurchaser in possession?

The damages ordinarily and normally recoverableagainst a vendor for f ailure to deliver land which he hascontracted

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to deliver is the value of the use and occupation of the landfor the time during which it is wrongfully withheld. And ofcourse where the purchaser has not paid the purchasemoney, a deduction may be made in respect to the intereston the money which constitutes the purchase price.Substantially the same rule holds with respect to theliability of a landlord who fails to put his tenant inpossession pursuant to a contract of lease. The measure ofdamages is the value of the leasehold interest, or use andoccupation, less the stipulated rent, where this has not


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been paid. The rule that the measure of damages f or thewrongf ul detention of land is normally to be found in thevalue of use and occupation is, we believe, one of the thingsthat may be considered certain in the law (39 Cyc., 1630 24Cyc., 1052 Sedgewick on Damages, Ninth ed., sec. 185.)almost as wellsettled, indeed, as the rule that the measureof damages for the wrongful detention of money is to be f

ound in the interest.We recognize the possibility that more extensivedamages may be recovered where, at the time of thecreation of the contractual obligation, the vendor, or lessor,is aware of the use to which the purchaser or lessee desiresto put the property which is the subject of the contract, andthe contract is made with the eyes of the vendor or lessoropen to the possibility of the damage which may result tothe other party from his own failure to give possession. Thecase before us is not of this character, inasmuch as at the

time when the rights of the parties under the contract weredetermined, nothing was known to any of them about theSan Francisco capitalist who would be willing to back theproject portrayed in Exhibit C.

The extent of the liability for the breach of a contractmust be determined in the light of the situation inexistence at the time the contract is made and thedamages ordinarily recoverable are in all events limited tosuch as might be reasonably foreseen in the light of the

facts then known to the contracting parties. Where thepurchaser desires

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to protect himself, in the contingency of the failure of the

vendor promptly to give possession, from the possibility ofincurring other damages than such as are incident to thenormal value of the use and occupation, he should cause tobe inserted in the contract a clause providing f orstipulated amount to be paid upon failure of the vendor togive possession and no case has been called to ourattention where, in the absence of such a stipulation,damages have been held to be recoverable by the purchaserin excess of the normal value of use and occupation. On thecontrary, the most fundamental conceptions of the law


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relative to the assessment of damages are inconsistent withsuch idea.

The principles governing this branch of the law wereprofoundly considered in the case of Hadley vs.Baxendale(9 Exch., 341), decided in the English Court of Exchequerin 1854 and a few words relative to the principlesgoverning the recovery of damages, as expounded in that

decision, will here be found instructive. The decision inthat case is considered a leading authority in thejurisprudence of the common law. The plaintiffs in thatcase were proprietors of a mill in Gloucester, which waspropelled by steam, and which was engaged in grindingand supplying meal and flour to customers. The shaft of theengine got broken, and it became necessary that the brokenshaft be sent to an engineer or foundry man at Greenwich,to serve as a model for casting or manufacturing anotherthat would fit into the machinery. The broken shaft could

be delivered at Greenwich on the second day after itsreceipt by the carrier It was delivered to the defendants,who were common carriers engaged in that businessbetween these points, and who had told plaintiffs it wouldbe delivered at Greenwich on the second day after itsdelivery to them, if delivered at a given hour. The carrierswere informed that the mill was stopped, but were notinformed of the special purpose for which the broken shaftwas desired to be forwarded. They were not told the mill

would remain idle until the new shaft would be returned,or that the new shaft could not

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be manufactured at Greenwich until the broken one

arrived to serve as a model. There was delay beyond thetwo days in delivering the broken shaft at Greenwich, anda corresponding delay in starting the mill. No explanationof the delay was offered by the carriers. The suit wasbrought to recover damages for the lost profits of the mill,caused by the delay in delivering the broken shaft. It washeld that the plaintiff could not recover.

The discusion contained in the opinion of the court inthat case leads to the conclusion that the damagesrecoverable in case of the breach of a contract are two sorts,


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namely, (1) the ordinary, natural, and in a sense necessarydamage and (2) special damages.

Ordinary damages is found in all breaches of contractwhere there are no special circumstances to distinguish thecase specially from other contracts. The consideration paidfor an unperformed promise is an instance of this sort ofdamage. In all such cases the damages recoverable are

such- as naturally and generally would result from such abreach, "according to the usual course of things." In casesinvolving only ordinary damage no discussion is everindulged as to whether that damage was contemplated ornot. This is conclusively presumed from the immediatenessand inevitableness of the damage, and the recovery of suchdamage follows as a necessary legal consequence of thebreach. Ordinary damage is assumed as a matter of law tobe within the contemplation of the parties.

Special damage, on the other hand, is such as follows

less directly from the breach than ordinary damage. It isonly found in case where some external condition, apartfrom the actual terms to the contract exists or intervenes,as it were, to give a turn to affairs and to increase damagein a way that the promisor, without actual notice of thatexternal condition, could not reasonably be expected toforesee. Concerning this sort of damage, Hadley vs.Baxendale (1854) [supra] lays down the definite and justrule that before such damage can be recovered the plaintiff

must606



show that the particular condition which made the damagea possible and likely consequence of the breach was known

to the defendant at the time the contract was made.The statement that special damages may be recoveredwhere the likelihood of such damages flowing from thebreach of the contract is contemplated and foreseen by theparties needs to be supplemented by a proposition which,though not enunciated in Hadley vs. Baxendale, is yetclearly to be drawn from subsequent cases. This is thatwhere the damage which a plaintiff seeks to recover asspecial damage is so far speculative as to be incontemplation of law remote, notification of the special


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conditions which make that damage possible cannot renderthe defendant liable therefor. To bring damages whichwould ordinarily be treated as remote within the categoryof recoverable special damages, it is necessary that thecondition should be made the subject of contract in suchsense as to become an express or implied term of theengagement. Horne vs.Midland R. Co. (L. R., 8 C. P., 131)

is a case where the damage which was sought to berecovered as special damage was really remote, and someof the judges rightly placed the disallowance of the damageon the ground that to make such damage recoverable, itmust so far have been within the contemplation of theparties as to form at least an implied term of the contract.But others proceeded on the idea that the notice given tothe defendant was not sufficiently full and definite. Theresult was the same in either view. The facts in that casewere as follows: The plaintiffs, shoe manufacturers at K,

were under contract to supply by a certain day shoes to afirm in London for the French government. They deliveredthe shoes to a carrier in sufficient time f or the goods toreach London at the time stipulated in the contract andinformed the railroad agent that the shoes would be thrownback upon their hands if they did not reach the destinationin time. The defendants negligently failed to forward thegood in due season. The sale was therefore lost, and themarket having fallen, the plaintiffs had to sell at a loss.

607

VOL. 39, FEBRUARY 6, 1919. 607

Ahern vs. Julian.

In the preceding discussion we have considered theplaintiff's right chiefly as against Teodorica Endencia andwhat has been said suffices in our opinion to demonstrate

that the damages laid under the second cause of action inthe complaint could not be recovered from her, first,because the damages in question are special damageswhich were not within contemplation of the parties whenthe contract was made, and secondly, because saiddamages are too remote to be the subject of recovery. Thisconclusion is also necessarily fatal to the right of theplaintiff to recover such damages from the defendantcorporation, for, as already suggested, by advisingTeodorica not to perform the contract, said corporation


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could in no event render itself more extensively liable thanthe principal in the contract.

Our conclusion is that the judgment of the trial courtshould be affirmed, and it is so ordered, with costs againstthe appellant.

Arellano, C. J., Torres, Carson, Araullo, Malcolm,

Avancea,and Moir, JJ.,concur.Judgment affirmed.

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