Rizzi, J.d.c. (temporarily assigned).
This is an action for breach of contract by defendant in which plaintiff seeks damages for loss of profits under a written contract entered into between the parties under date of August 15, 1958. Plaintiff is in the business of leasing various types of merchandise machines, and on the above date the parties entered into a written agreement whereby machines were to be placed by plaintiff into defendant's bowling alley premises for a period of five years. This contract gave plaintiff the exclusive privilege of placing its machines for the purpose of selling the merchandise described therein at defendant's location during the existence of the contract. The case was tried by the court without a jury and, after the trial was completed, the court pronounced its findings of fact and conclusions of law which included, inter alia , that defendant had breached the contract on or about July 28, 1959 by having closed down plaintiff's machines and having commenced the sale of various items of merchandise through other methods on the premises in question. There was also the finding of fact that defendant's bowling alley premises had been completely destroyed by fire on March 24, 1961 and had never been reconstructed thereafter. Plaintiff claimed damages for loss of profits that he would have enjoyed during the five-year period commencing on August 15, 1958 and continuing until August 15, 1963.
The issues remaining to be decided were whether the contract became impossible of performance by the fire of March 24, 1961, and if so, whether such impossibility, in the face of the prior breach of the said contract, would disentitle plaintiff to damages for the full five-year period or until August 15, 1963, or whether such damages would be limited to the time before the fire.
It is defendant's contention that the destruction of the premises on which the contract was to be performed thereby
made the contract impossible of performance as of that date, and that plaintiff is only entitled to collect damages for loss of profits from the date of the contract to the date of the fire. Plaintiff contends that at the time of the fire defendant had already breached the contract, and therefore defendant's liability would continue during the full life of the contract, namely, until August 15, 1963, notwithstanding the destruction of the premises aforesaid. It has been conceded by the parties that if plaintiff is entitled to recover damages for the full five-year period, he will obtain a judgment for the sum of $7,924.21; but if plaintiff is limited in damages to the date of the fire aforesaid, he will be entitled to a judgment in the amount of $2,507.27.
The general rule has been stated in 12 Am. Jur. 372 to be that:
"Where the subject matter of a contract has been destroyed by an event occurring after the making of the contract rendering its performance impossible, which event could not reasonably be supposed to have been within the contemplation of the parties at the time of the contract, the promisor is discharged from the performance of the contract or the obligation to answer in damages for its non-performance."
This general rule has been followed by the courts of the State of New Jersey. Middlesex Water Co. v. Knappmann Whiting Co. , 64 N.J.L. 240, 251 (E. & A. 1899); Perlee v. Jeffcott , 89 N.J.L. 34 (Sup. Ct. 1916); Matthews Const. Co. v. Brady , 104 N.J.L. 438 (E. & A. 1928).
I therefore find no difficulty in concluding as a matter of law that the destruction of the bowling alley premises on March 24, 1961 made the contract impossible of performance on that date.
Plaintiff urges, however, that the contract was already in breach on the day of the fire and that its damages should be measured during the entire five-year life of the contract. The court has already concluded that such breach occurred on or about July 28, 1959, when defendant had ceased the use of plaintiff's machines and had commenced the use of
other facilities for the sale of merchandise described in the contract. The diligent research of counsel has failed to produce any precedent by the courts of the State of New Jersey that deal directly with the factual situation herein described. The case of Von Waldheim v. Englewood Heights Estates , 115 N.J.L. 220 (E. & A. 1935), touches upon the problem. That case involved an installment contract for the sale of real estate, in which the buyer had been in default of payments at various times. After the contract had been entered into by the parties, the property was condemned by the State of New Jersey, the entire award having been paid over to the seller, who still held the legal title at the time of condemnation. The buyer started a suit against the seller for ...