plaintiff up to the capacity of its (the defendant's) plant. I am not satisfied that the defendant's capacity to produce was exhausted by the business it actually did but, on the contrary, I believe that, had it been called upon to fill the orders which the plaintiff did get as well as those which it, the defendant, obtained, it would have been able to produce all of the furniture required. Evidently it thought it could because, in addition to the New York contracts which it obtained, it submitted bids for all those which the plaintiff got.
It is obvious that, had the contract not been breached, the plaintiff's volume of business would have been a great deal larger than it was. True, the plaintiff could not have obtained furniture from outsiders but, for all practical purposes, there was no limit to the amount it could get from the defendant. The plaintiff here would not be put in the position which it would have had if the contract had been carried out if it were allowed no more than the difference between the profit which it would have made on the business done by the defendant in violation of the contract and the profit which it did make using other suppliers. It is apparent that it would have been able to obtain the contracts which the defendant obtained as well as the same ones it got. Even in cases where the plaintiff obtained business in direct competition with the defendant, it appears that in all but a small number the defendant's bid was the next lowest responsible bid so that the defendant would have obtained the business in the absence of the competition of Willred, and it follows that the plaintiff would have done that business if it had been representing the defendant. Thus, even in these instances of direct competition a deduction for the business done by the plaintiff is not justified.
Under these circumstances, the applicable rule is that stated in Section 336 of the Restatement of Contracts, comment c., 'Gains made by the injured party on other transactions after the breach are never to be deducted from the damages that are otherwise recoverable unless such gains could not have been made had there been no breach. * * * manufacturing facilities can usually be expanded to meet all demands; therefore profit made on the manufacture and sale of a second article is not deducted.'
I am unable to allow the plaintiff any recovery for additional lost profits based on its theory that, with the defendant as a supplier, it would have earned more than it did with its substituted suppliers, Norcor and Emeco. The claim in this regard is not unreasonable, but the difficulty with it is that there is no evidence in the record from which the Court can determine with any reasonable degree of certainty whether the arrangements which it had with Norcor and Emeco were any less advantageous than the terms which it could have obtained from the defendant. The contracts between the plaintiff and Norcor and the plaintiff and Emeco were not produced, although it appears that they were in writing, and no explanation was forthcoming as to why the plaintiff did not put them in evidence. The testimony relating to them makes it clear that they contain certain terms differing widely from those of the Westmoreland contract. There is insufficient evidence as to the extent and significance of these differences to meet the plaintiff's burden of proof as to this item of its claim. It is, therefore, disallowed.
One other transaction calls for comment. The plaintiff, in order to build up a volume of business for Norcor, submitted a bid to the New Britain school board and obtained a contract, with the understanding with Norcor that it (the plaintiff) would take no profit on the contract unless Norcor was able to establish a plant in the East, which it never did. The plaintiff now claims from the defendant the profit which it did not make. The claim must be disallowed. The transaction was not entered into with the idea of making a profit and, in effect, amounted to no more than the plaintiff's placing its sales force at Norcor's disposal, gratis, in order to obtain future business advantages. If such transactions could give rise to damages, there would be nothing to prevent the injured party from selling his goods at any sacrifice price he chose, relying upon being able to collect his profits from the person who wrongfully breached the contract.
Having found the amount of business which the plaintiff lost as a result of the defendant's breach of the contract, our next problem is to find the profit which it would have made on that volume of business. Williston on Contracts, Section 1346A, points out various methods of proving prospective profits (cited with approval in Massachusetts Bonding & Ins. Co. v. Johnston & Harder, Inc., 343 Pa. 270, 279, 22 A.2d 709). One method is, 'Evidence of past profits in an established business furnish a reasonable basis for estimating future profits.' The methods are not mutually exclusive, and the Court may consider more than one in arriving at a conclusion, nor do they exclude from the Court's consideration any other relevant evidence which may throw light upon the question. In the present case, the plaintiff having had an established business covering a five year period extending both before and after the breach, the percentage of profit which it actually realized will be the chief consideration. This figure can be obtained by referring to the plaintiff's income tax returns for its fiscal years 1953, 1954, 1955, 1956, and 1957. These returns should give a better picture of what profit, was received on the business done than any method of accounting devised for the purposes of this lawsuit. They are as follows:
Fiscal Year Ending May 31, Cost of Goods Sold Net Profit
1953 $ 116,260.82 $ 11,447.28
1954 $ 229,612.33 $ 6,095.28
1955 $ 306,973.59 $ 2,290.34
1956 $ 199,433.45 $ 17,220.72
1957 $ 529,781.99 $ 2,090.53
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