Imbriani, J.s.c. (temporarily assigned).
Is a freight carrier subject to liability for special damages when notice of special circumstances occasioning special losses is communicated to the carrier after the parties entered into a contract?
Plaintiff ordered specially manufactured steel plates from Allegheny Ludlum Steel Corporation. The plates were manufactured in Pennsylvania and, admittedly, placed upon a truck of defendant for transportation to plaintiff's plant in New Jersey. The shipment, for reasons unknown, never reached plaintiff.
When advised that the shipment had not arrived defendant requested that plaintiff withhold reordering from Allegheny so that defendant could attempt to locate the shipment. Plaintiff waited 29 days, then reordered when it appeared that defendant was unable to locate the shipment. Plaintiff actually received the shipment 36 days after reordering.
Defendant admitted liability for $1,432.32, being the cost to plaintiff to reorder the lost steel plates.
The dispute is over the plaintiff's right to special damages. Plaintiff seeks $200 as its costs for time spent pursuing the lost order and processing its replacement, and $1,369 which it alleges represents the cost of interest on capital idled due to nondelivery of the steel plates for 36 days.
Ordinarily, one who breaches a contract is chargeable only for such damages as are reasonably foreseeable at the time the contract was entered into. Marcus & Co. v. K.L.G. Baking Co., Inc. , 122 N.J.L. 202 (E. & A. 1938); N.J.S.A. 12A:1-106, 12A:2-715 (2)(a). Special damages, i.e. , special losses likely to arise from a breach, may not be awarded unless special circumstances were made known at the inception of the contract as the probable consequences of a breach. The foundation for this rule being that
The basic rule goes back to Hadley v. Baxendale , 9 Exch. 341, 156 Eng. Rep. 145, 5 Eng. Rul. Cas. 502 (1854), which held that damages recoverable for a breach of contract are only those that may "reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it." Accord: Restatement, Contracts (1932), § 329, comment a.
Liability of a carrier for damages arising from an interstate shipment is controlled by the Interstate Commerce Act, 49 U.S.C.A. § 20 (11), commonly referred to as the Carmack Amendment, which established a single and uniform federal standard to determine the obligations of a carrier operating in interstate commerce. Southeastern Exp. Co. v. Pastime Amusement Co. , 299 U.S. 28, 57 S. Ct. 73, 81 L. Ed. 20 (1936); Rocky Ford Moving Vans v. United States , 501 F.2d 1369 (8 Cir. 1974).
Federal law does not establish a new or different measure of damages but simply requires that the law of the state where the breach occurred be applied, and prohibits a carrier from limiting its common law liability. F.J. McCarty Co. v. Southern Pacific Co. , 428 F.2d 690 (9 Cir. 1970).
The crux of plaintiff's claim for special damages is that the steel plates could not be obtained elsewhere since they had to be specially manufactured. As a result of their loss a considerable ...