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Domestic Fuel Co. v. American Petroleum Corp.

Decided: March 19, 1951.


On appeal from the Middlesex County Court, Law Division.

For affirmance -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- None. The opinion of the court was delivered by Ackerson, J.


The defendant, American Petroleum Corporation, appeals from an adverse judgment entered in the Middlesex County Court, Law Division, on a jury verdict in favor of the plaintiff, Domestic Fuel Co.

The parties are dealers in fuel oil and this litigation arose out of a contract between them for a supply of that commodity by the defendant, a wholesaler, to the plaintiff, a retailer, for resale to the latter's customers. The complaint, as amended, is in two counts. The first alleges that by a written contract dated June 1, 1947, defendant agreed to sell and plaintiff to buy at a specified price 2,000,000 gallons of Calso No. 2 heating oil and 1,000,000 gallons of Calso No. 5 heating oil in monthly quantities apportioned among the months from June, 1947, through May, 1948. It is further alleged that the defendant delivered to the plaintiff during the contract period only 968,160 gallons of No. 2 oil and only 229,149 gallons of No. 5 oil and by reason of defendant's failure to deliver the quantities specified in the contract the plaintiff was damaged (as the demand was moulded by the pretrial order) by being deprived of the profit to which it would have been entitled from the resale of the oil at the prevailing retail price. The second count of the complaint alleged that defendant had overcharged

for the oil actually delivered to the plaintiff and claim was made for such overcharges in the amount of $4,267.18. The defendant's amended answer consisted of a general denial and five separate defenses with which we are not presently concerned.

The evidence adduced at the trial shows that the plaintiff first experienced difficulty in obtaining its monthly quotas of oil in September, 1947 -- several months after the contract had been executed. The market supply of oil became critical. That condition continued throughout the remaining term of the contract and from December, 1947, through February, 1948, the shortage of heating oil was particularly acute. Plaintiff's evidence tended to show that there was no supply of oil available to it during this period, except to a certain extent on the "spot" or "gray" market (not considered as an open, normal or regular market) at premium prices above that at which the plaintiff could sell it to its customers and make a profit.

At the close of all the evidence, the defendant seller, pursuant to Rule 3:50, moved for judgment in its favor and the motion was denied. At the same time the trial judge, on plaintiff's motion, directed judgment in its favor on the second count of the complaint in the amount of $625.55, plus interest, representing overcharges (less credits) for the months of September through December, 1947, concerning which there appears to have been no dispute and from which judgment there has been no appeal. The case was then submitted to the jury on the first count resulting in a verdict for the plaintiff of $38,185.90. From the judgment entered thereon the defendant appealed to the Appellate Division and, while pending there, the cause was certified here on our own motion.

The appeal is rested solely upon the assertion that the trial court erred in denying defendant's motion for judgment and the only reason now advanced in support of this contention relates to an alleged deficiency in the plaintiff's proof of damages. The plaintiff sought to recover as lost profit, and the court so instructed the jury, the difference between the contract price for the oil and the general market resale consumer's

price in the commodity less the plaintiff's cost of delivery. The defendant insists, however, that this claim for lost profits is a demand for special damages not within the contemplation of the parties at the time the contract for the sale of the oil was made as a natural and probable consequence of its breach, and therefore not recoverable, unless the seller knew at the time the agreement was made that there would be no available open market in which the buyer could procure that commodity for resale to its customers in the event of the seller's default, and that there is no proof in the case that the defendant seller had such knowledge. The defendant's position is tersely stated in its brief as follows: "A sine qua non of the seller's liability for loss of profits was knowledge on its part, at the time of the making of the contract, that the buyer could not procure No. 2 and No. 5 oil elsewhere. This was not proven."

However, it is unnecessary for us to consider the merits of this contention concerning the alleged missing factor in the proof of damages for the reason that the only point now relied upon for the reversal of the judgment below was not specified in defendant's motion for judgment as a ground for its allowance. The defendant bases its present contention entirely on the fourth ground stated in its motion for judgment as follows:

"On the further ground, if your Honor please, that the plaintiff has failed to prove its case insofar as damages is concerned in accordance with the established ...

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