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Freund v. Washington Square Press, Inc., 314 N.E.2d 419 |
New York Court of Appeals |
1974 |
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Chapter |
20 |
Title |
Contract Remedies |
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Page |
734 |
Topic |
The Goal and Fundamental Principles of Contract Remedies |
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Quick Notes |
o An author entered into an agreement with a publisher to publish his manuscript. If the publisher failed to publish in 18 months, the contract would terminate and all rights would be given back to the author. o Damages are not measured by what the defaulting party saved by the breach, but by the natural and probable consequences of the breach to the plaintiff. |
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Book Name |
Contracts Cases, Discussion, and Problems. ISBN: 978-0-7355-7069-6. |
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Issue |
o What damages are revocable for the Df - failure to publish the Pl - manuscripts? |
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Procedure |
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Trial |
o Awarded $10,000 to the Pl - cost of hardcover publication to plaintiff was the natural and probable consequence. |
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Appellant |
o Affirmed (3 to 2) decision. |
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Supreme |
o Reducing the damage award of $10,000 for the cost of publication to six cents |
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Facts |
Reason |
Rules |
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o Pl - Freund o Df - Washington Square Press What happened? o In 1965, plaintiff, an author and a college teacher, and defendant, Washington Square Press, Inc., entered into a written agreement which, in relevant part, provided as follows. o Plaintiff ("author") granted defendant ("publisher") exclusive rights to publish and sell in book form plaintiff's work on modern drama. Delivery - $2000 o Upon plaintiff's delivery of the manuscript, defendant agreed to complete payment of a nonreturnable $ 2,000 "advance". Terminate with 60 days o Thereafter, if defendant deemed the manuscript not "suitable for publication", it had the right to terminate the agreement by written notice within 60 days of delivery. Publish with 18 months o Unless so terminated, defendant agreed to publish the work in hardbound edition within 18 months and afterwards in paperbound edition. o The contract further provided that defendant would pay royalties to plaintiff, based upon specified percentages of sales. Failed to Publish with 18 months o If defendant failed to publish within 18 months, the contract provided that "this agreement shall terminate and the rights herein granted to the Publisher shall revert to the Author. o In such event all payments theretofore made to the Author shall belong to the Author without prejudice to any other remedies which the Author may have.
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Pl sought to prove (1) delay of his academic promotion; (2) loss of royalties which would have been earned; and (3) the cost of publication if plaintiff had made his own arrangements to publish.
Trial Court 1. Pl had been promoted. (Court says you were not damaged) 2. Lost royalties were denied. 3. The court found, however, that the cost of hardcover publication to plaintiff was the natural and probable consequence of the breach and, based upon expert testimony, awarded $ 10,000 to cover this cost. 4. It denied recovery of the expenses of paperbound publication on the ground that plaintiff's proof was conjectural.
Appellate Court Majority Decision o Finding that the cost of publication was the proper measure of damages. o Majority analogized to the construction contract situation where the cost of completion may be the proper measure of damages for a builder's failure to complete a house or for use of wrong materials. o S.Ct: Said this would be correct if the Pl asked for the printing, binding and delivery of a number of hardbound copies of his manuscript to be sold of as he wished.
Appellate Court DISSENT o The dissent concluded that the cost of publication is not an appropriate measure of damages and consequently, that plaintiff may recover nominal damages only.
New York Court Of Appeals o We agree with the dissent. o We look to the basic purpose of damage recovery and the nature and effect of the parties' contract.
Rule o The law awards damage for breach of contract to compensate for injury caused by the breach that were reasonably foreseeable within the contemplation of the parties, at the time the contract was entered into. o The law attempts to secure to the injured party the benefit of his bargain, subject to the limitations that the injury -- whether it be losses suffered or gains prevented -- was 1. Losses were Foreseeable, 2. The amount of damages claimed be measurable with a reasonable degree of certainty and, 3. The damages could adequately proven.
In This Case (Reason) o Cost of publication would confer a greater advantage than performance of the contract and place him in a far better position than he would have occupied had the Df fully performed.
Expectation o The Pl - received 2000 upon delivery. o Royalties was speculative since there was not a take record. o Notoriety, prestige or other benefits was not argued.
Restitution o Ordering the Df to return the manuscript.
Reliance o None were alleged. o If they were alleged they would need to be foreseeable and ascertainable.
What should have been measure o The specific value to plaintiff of the promised publication was the royalties he stood to receive from defendant's sales of the published book. o Essentially, publication represented what it would have cost the defendant to confer that value upon the plaintiff, and, by its breach, defendant saved that cost.
Error Of the Court o The error by the courts below was in measuring damages not by the value to plaintiff of the promised performance but by the cost of that performance to defendant.
How Damages are Measured Rule o Damages are not measured, however, by what the defaulting party saved by the breach, but by the natural and probable consequences of the breach to the plaintiff.
Holding o Reducing the damage award of $10,000 for the cost of publication to six cents, but with costs and disbursements to the plaintiff.
o Order modified, with costs and disbursements to plaintiff-respondent, in accordance with opinion herein and, as so modified, affirmed.
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Class Notes |
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What he entitled to have the book published? Yes, because he actually made a commitment to publish the guys books.
3 basic limits on expectations
What the Pl - losses foreseeable? o Yes.
Cardozo in Jacobs v. Young (Pipe Case)
Mary wanted a special house
What if Pl - had gotten the book rights back and got somebody else to publish it. o However, we will only give you 5%. o Could the Pl - go back and say the original publisher would have given me 10%. o I am entitled to the difference? 5% or 10% of what. o If you have a track record, then a court could probably have been convinced.
I want the cost of publication? o No because the Df saved the Pl the cost of publication. o If Washington Square published the book, would he get both the royalities and the cost of publication? Hell no, he would get the royalties. |