Borden v. Chesterfield Farms, Inc. , 27 A.D.2d 165 ( 1967 )

McNally, J.

In this action for damages for the breach of oral contracts to establish, finance and service afternoon household milk delivery routes in the Borough, of The Bronx, City of New York, the appeal of defendant-appellant raises questions as to the validity of the contracts and the proof of damages. The production and distribution of milk is regulated. (Agriculture and Markets Law, art. 21.) Plaintiffs and defendant-appellant Chesterfield Farms, Inc. are licensed dealers. Plaintiffs are Class C dealers, limited to the purchase of milk from Chesterfield for sale to retail customers in the County of Bronx. Chesterfield is a Class B dealer authorized to sell milk to Class C dealers. Prior to January, 1962, plaintiffs, as Class C dealers certified to Chesterfield, had successfully and profitably operated night routes. At or about this time negotiations between them resulted in the establishment of afternoon routes. The negotiations preceding the commencement of the routes included matters relative to the boundaries of the routes, the cost of developing and canvassing them; the supply of milk, the extension of credit therefor and the duration of the enterprise. Appellant Chesterfield contends the alleged contracts are invalid for uncertainty as to credit and quantity, and, in addition, the contracts were terminable at will.

There would have been substance to the points of the appellant, were it not for the prior course of dealings between the parties, the marketability of the Class C routes certified to the appellant, and the practical construction of the alleged contracts established by this record. The jury was enabled to find that the contracts were to subsist so long as the parties remained in business, on .the terms and conditions established by the practical construction of the,parties in the light of their prior experience and that Chesterfield failed to perform the contracts as alleged. (Hedeman v. Fairbanks, Morse & Co., 286 N. Y. 240; Ehrenworth v. Stuhmer & Co., 229 N. Y. 210; Mar-Bond Beverage Corp. v. Dublin Distrs., 9 A D 2d 951; Suslak v. Rokeach & Sons, 269 App. Div. 779, affd. 295 N. Y. 799.)

The trial court properly denied appellant’s belatecj. motion during the trial to amend its answer to allege by way of defense the Statute of Frauds (former Personal Property Law, § 31, now General Obligations Law, § 5-701). Moreover, the statute is inapplicable. (Suslak v. Rokeach & Sons, supra, p. 780; Ehreworth v. Stuhmer & Co., supra, p. 220; Mar-Bond Beverage Corp. v. Dublin Distrs., supra, p. 952; Jones v. Demuth Glass Works, 271 App. Div. 840.) A¥e have considered the other points made by the appellant and find them without substance, except on the question of damages.

The breach of a contract entitles the injured party to compensation measured by damages reasonably contemplated by the parties at the time of contract and definitely related to the breach. (Spitz v. Lesser, 302 N. Y. 490; Cramer v. Grand Rapids Show Case Co., 223 N. Y. 63; Orester v. Dayton Rubber Mfg. Co., 228 N. Y. 134; Witherbee v. Meyer, 155 N. Y. 446; Todd v. Gamble, 148 N. Y. 382.) In the case at bar profits from the operation of the afternoon routes were within the contemplation of the parties. The rules are well established. Their application, however, presents as many problems as there are varying circumstances. The difficulty in the instant case is that plaintiffs’ proof of damages includes expenses in establishing and developing the afternoon routes as well as the market value of the routes based on the number of cases of milk sold. The charge enabled the jury to award damages in both categories. Plaintiffs may recover the development expenses (Berstein v. Meech, 130 N. Y. 354) or the market value of the routes at the time and place of the breach. They are not entitled to both items of damages. The trial court, although recognizing that recovery of the market value of the routes should preclude recoupment of the cost of development, ruled this was not so in the case at bar because the routes were not long-established. The evidence of market value of the routes reflects many factors including the cost of their establishment and development. Plaintiffs may advance the basis for damages most favorable to them and the appellant may adduce countervailing evidence thereon. (Slater v. Kane, 275 App. Div. 648.) If the plaintiffs elect to utilize market value they may not, in addition, seek to recover developing costs which give rise to the market value.

The cause has been fully and exhaustively presented and tried under the careful, skillful and painstaking supervision of the learned trial court. In the circumstances, the judgment should be reversed, on the law and the facts and in the exercise of discretion, without costs, and a new trial directed limited to the issue of damages. (Mercado v. City of New York, 25 A D 2d 75.)