Eckington Soldiers' Home Railway Company v. McDevitt/Opinion of the Court

by Melville Fuller

United States Supreme Court

191 U.S. 103

Eckington Soldiers' Home Railway Company  v.  McDevitt

 Argued: January 21, 1903. ---

Assuming that the railway company might have lawfully bound itself to construct and operate this piece of road, the question is presented to what compensation in damages plaintiff below would be entitled if the company found that the traffic did not justify its further maintenance, and ceased to run its cars, or if the public interests required such changes of the lines of the road as rendered the abandonment necessary.

Plaintiff had been reinstated in the possession of her land, freed from the encumbrance of the right of way, and had been discharged from the liability to pay the $500. And as the record stands, it is doubtful if any direct specific damage can properly be held to have been made out. At all events, and conceding that she was entitled to substantial damages for any injurious change of condition, any liability incurred, and any gains prevented, to secure which action had been taken, in reliance on the contract, the instruction as to the measure of damages embraced none of these matters, and was confined to profits only.

The transaction was not a sale of the land where the difference between the price agreed and the market value would represent the measure of loss or gain. Restitution having been made of what plaintiff had parted with, how far could she demand to be compensated for prevented gains or anticipated profits?

The contract did not purport to bind the company to operate its cars over the extension for any designated period, but, considering its terms in relation to the right of way, the trial court held that it was bound in perpetuity, and thereupon that if it ceased to do this in whole or in part at any time, she could order the tracks off her premises, and recover the difference between the value of her land with the cars running and with the expectation that they would continue always to run, and the value without the operation of the cars and with no expectation that they would run in the future.

The instruction was addressed to differences in market value as affected by the running of the cars, with the element added of expectation of continuance or cessation for all time. As thus put the supposed difference in market value amounted to anticipated profits, and these were not recoverable if dependent on uncertain and changing contingencies, and not in contemplation of both parties as a probable consequence of breach. Howard v. Stillwell & B. Mfg. Co. 139 U.S. 199, 35 L. ed. 147, 11 Sup. Ct. Rep. 500; Globe Ref. Co. v. Landa Cotton Oil Co. 190 U.S. 540, 47 L. ed. 1171, 23 Sup. Ct. Rep. 754. Whether prevented gains or prospective profits are or are not too uncertain and contingent to be regarded as probable and contemplated consequences is always a question of difficulty, and as in such cases juries are permitted to exercise a wide discretion in the allowance of damages, great care is required in advising them as to the elements proper to be considered in making up their verdicts.

In a case like this, gain prevented is a more accurate term that loss of profits. And it is said in Sedgwick on Damages, 8th ed. vol. 1, p. 250, § 173: 'Where an injured party claims compensation for gain prevented, the amount of loss is always to some extent conjectural; for there is no way of proving that what might have been, would have been. Thus, when the claim is made for compensation for a deprivation of property, it may be that if the property had remained in the owner's control it would have brought no gain.'

Here the evidence tended to show that a financial depression prevailed at the time of the breach, and that all real estate in the particular locality was unsaleable. Gains, then, were practically impossible; while, on the other hand, there was evidence that some years after the breach the depression passed away and real estate rose in value.

The books contain many illustrations of the uncertainties which will or may defeat recovery of anticipated profits.

In Rockford, R. I. & St. L. R. Co. v. Beckemeier, 72 Ill. 267, it was held, in a suit against a railroad company for the failure to erect a depot building upon plaintiff's farm, as agreed, that any supposed damage to the farm on that account, growing out of anticipated increased value, was too remote.

In Evans v. Cincinnati, S. & M. R. Co. 78 Ala. 341, a railroad company agreed to locate houses for its hands near plaintiff's land, and it was held that possible loss of profits at his store and mill was too speculative.

So, in Missouri, K. & T. R. Co. v. Ft. Scott, 15 Kan. 435, where a railroad company failed to perform its agreement to make the city of Fort Scott the terminus of one division of its line, and erect machine shops there, it was held that an inquiry into the value of real estate and amount of business, in order to show what profits would have been made, was improper; but the city might recover for the value of the buildings to it as taxable property.

Scholten v. St. Louis & S. F. R. Co. (Mo.) 73 S. W. 915, is so far in point that it may well be cited, though not decided by a court of last resort. There the St. Louis court of appeals held that where a railroad's agreement to build and maintain a switch for a private property owner did not affect the performance of the railroad's duties to the public, the railroad was not entitled to allege in an action for illegally destroying the switch, that the contract was void as against public policy; and that as the plaintiff had graded the right of way and furnished the ties, and the agreement did not specify any length of time for the maintenance of the switch, plaintiff was entitled, on the destruction of the switch, to recover the value of the ties, and the cost of grading.

Treating the contract as a simple contract, and the refusal to run the cars as a breach which Mrs. McDevitt could accept as finally determining it, we think she could not recover for deprivation of the speculative gains of a remote future. What might have been made by selling the land at a value enhanced by the operation of the tracks in perpetuity was purely problematical and not naturally in contemplation. And the more so in view of the fact that railroad companies, while private corporations, are quasi-public agencies, engaged in the performance of public duties, and that contracts which prevent them from the discharge of those duties cannot be sustained. It did not follow that the company, because it possessed the power to construct and operate this extension, could contract to operate it forever in so absolute a sense that damages could be awarded for the breach of such a contract, predicated on the expectation of its perpetual operation. Texas & P. R. Co. v. Marshall, 136 U.S. 393, 34 L. ed. 385, 10 Sup. Ct. Rep. 846. Again, in this aspect, the instruction treated the agreement as equivalent to a covenant running with the land, and we are inclined to think that the bearing Mrs. McDevitt's demand that the tracks be removed, and the accepted and complete surrender of the right of way by their removal accordingly, might have had, under all the circumstances, on the question of prospective damages, should not have been excluded from the jury.

We are of opinion that the instruction as given was erroneous, and as it was definite and peremptory in its terms, and as it cannot be said that the jury was not influenced, and perhaps controlled, by it, we hold the error fatal to the judgment. As there must be a new trial we refrain from discussing the suggestions in respect of the acceptance of the deed by the company, a subject much considered in Willard v. Wood, 135 U.S. 309, 34 L. ed. 210, 10 Sup. Ct. Rep. 831, 164 U.S. 502, 41 L. ed. 531, 17 Sup. Ct. Rep. 176, and the discharge of the alleged covenant, made below, but not pressed in argument here.

Reversed and remanded, with directions to reverse the judgment of the Supreme Court of the District, and order a new trial.

Mr. Justice White and Mr. Justice McKenna dissented.

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