Findlay v. Howard

Findlay v. Howard
Collection
Supreme Court Judgments
Date
1919-05-19
Report
(1919) 58 SCR 516
Judges
Davies, Louis Henry; Idington, John; Anglin, Francis Alexander; Brodeur, Louis-Philippe; Mignault, Pierre-Basile
On appeal from
Quebec
Subjects
Evidence
Decision Content
Supreme Court of Canada
Findlay v. Howard, (1919) 58 S.C.R. 516
Date: 1919-05-19
John Findlay (Defendant). Appellant;
and
Sydney P. Howard (Plaintiff). Respondent.
1919: March. 20, 21; 1919: May 19.
Present: Sir Louis Davies C.J. and Idington, Anglin, Brodeur and Mignault JJ.
ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.
Evidence—Admissibility—Breach of contract—Action in damages—Facts posterior to institution of action.
In an action for damages for loss of future profits arising out of a wrongful breach of partnership contract, events which happened between the date of the commission of the wrong and the time of the trial must be taken into account in estimating the loss for which the plaintiff is entitled to compensation and in determining what actually was the value of the contract to him at the date of the breach. Brodeur J. dissenting.
APPEAL from a judgment of the Court of King's Bench, appeal side[1], Province of Quebec, varying a judgment of the Superior Court, sitting in review, at Montreal[2], and maintaining the plaintiff's action.
The plaintiff sued to recover damages from the defendant for a breach of a five year partnership contract in a real estate business in Montreal, about twenty-one months before it would have terminated by effluxion of time. The plaintiff's claim was for $350 000. The trial judge assessed his damages at $80,000; the Court of Review reduced them to $22,000 and the Court of King's Bench gave judgment for $40,000. The appellant seeks the restoration of the judgment of the Court of Review; and the respondent, by way of cross-appeal, demands the restoration of the judgment of the trial judge. An important question of law was in issue: Is the court, in assessing damages for wrongful termination by a partner of a partnership, entitled to consider facts subsequent to the action, or must it ignore them and assess the damages according to conditions existing at the date of the action? The trial judge adopted the second alternative and the Court of Review the first; the Court of King's Bench did not expressly pass upon the question, although appearing to have proceeded on the principle laid down by the Court of Review.
Eug. Lafleur K.C., Aimé Geoffrion K.C. and G. H. Montgomery K.C. for the appellant.
W. N. Tilley K.C., J. L. Perron K.C. and Cook K.C. for the respondent.
The Chief Justice.—I agree with the principles stated by Mr. Justice Lamothe (now Chief Justice of the Court of Appeal of Quebec) in delivering his reasons for judgment in this case in the Court of Review[3], as to the proper method of estimating and assessing damages in such a case as the present. I would myself, however, in applying those principles have increased the amount of the damages somewhat, but I will not dissent on that ground alone and I concur in a lowing the appeal with costs and restoring the judgment of the Court of Review.
Idington J.—The appellant had established a real estate business in Montreal. On the 26th May, 1910, there was incorporated a company to carry on said business under the name of "Findlay & Howard." On the 22nd of August, 1910, an agreement was entered into between the parties hereto who were in fact the substantial members of the aid incorporation, wherein it was stated that in reality the said company was formed by the said parties hereto for the sake of enabling them to more conveniently carry on their business, but as between themselves they intend to operate the said company in somewhat the same manner as if they were co-partners carrying on business under the name of "Findlay & Howard" and not merely officers of the company.
This agreement was to have continued in force for five years.
They carried on business under said name accordingly until the 11th of September, 1913, when appellant requested a termination of same.
There ensued a correspondence between them which terminated on the 12th December, 1913, by the forcible ejection of respondent by appellant from the premises wherein the business was carried on.
Immediately thereupon the respondent instituted this action for damages for breach of the said agreement.
Meantime, on the 7th October, 1913, a company was incorporated under the name of "John Findlay, Limited," to carry on the business of dealing in real estate and under cover of that name appellant took possession gradually of the entire business which the parties hereto had carried on as aforesaid and continued thereafter to exclude the respondent from any interference therewith, save and except such rights as conceded to him by a partial settlement of their difficulties.
All the pretensions of appellant in way of justification for his conduct have been decisively rejected and are not now in question. All that is in question herein is the amount of damages which respondent is entitled to.
The last clause of the respondent's declaration which, I think, for reasons I am about to state, seems to have been overlooked, reads as follows:— 41. The plaintiff expressly reserves his right to recover his share and proportion of the assets of Findlay & Howard, Limited, and further expressly reserves his right to take such other proceedings in the premises as may be necessary or advisable for the protection of his interests.
Inasmuch as the business carried on by the parties hereto was carried on in the name of "Findlay & Howard, Limited," and the fruits thereof passed to it, though the subsidiary agreement, on which in a technical sense their action rests, provided for the term of five years' control, and distribution of profits of said corporate business, we should not have to concern ourselves with anything but such loss of profits as the respondent suffered by his exclusion.
Yet I suspect there has, by a confusion of thought, entered into the estimate thereof much that should not have done so.
All the profits made by the carrying on of the business of "Findlay & Howard, Limited," became part of the assets thereof and should not enter into consideration in determining the problem of how much the respondent's share of its profits has been impaired by the wrongful conduct of the appellant.
It is that problem and nothing else that we have to solve.
The remarkable diversity of judicial opinion which this litigation has developed impresses me with the need of emphasizing this proposition which I have laid down for my guide.
It sometimes happens that when partners disagree and one excludes the other, the community in which they live take sides and thus the business is seriously impaired.
The respondent seems to have possessed so much strong common sense that he did not lend himself to anything necessarily productive of such results. He relied upon this action properly taken, if he could not have obtained an injunction, to preserve his rights and recover his share of whatever loss of profits the business sustained by his exclusion.
The learned trial judge finds the business though carried on, after the exclusion, under the name of "John Findlay, Limited," was the same business, only the name being changed.
The same staff (substituting one Parker for respondent), the same kind of business and the same prestige, and admittedly the same clientele should, under a continuation of same circumstances, have produced same results in way of profits. But everyone knows the circumstances had changed so remarkably that to estimate the profits on the basis of former years must be illusory.
If the trial had been postponed for nine months and appellant then had been forced to produce his books a nearly absolutely correct assessment of damages could have been arrived at.
The misfortune is that the trial was too early for that and hence necessarily the result had to be determined by evidence which, in any such like case, must be more or less of a speculative character.
Added to this was the view of the law taken by the learned trial judge which has not been shared in by any of the other judges who have had to consider the case. Hence his judgment for $80,000 has been set aside
The Court of Review reduced that to $22,000 upon an entirely different view of the law which has been given expression to by Mr. Justice Lamothe, with whose main point of view I agree.
In the details thereof I cannot say that I entirely agree. There was before the court an account of the business of "John Findlay, Limited," for the year from the 4th November, 1913, to 30th October, 1914, which was audited by same accountant as had been employed in former years by the parties hereto.
The net profits were shewn thereby to have been $13,353.86 which, if presumed to have continued for the balance of the five years' partnership now in question, would have produced to respondent a great deal less than the Court of Review awarded him.
That court, however, eliminated certain items of expense from that amount and seems to have assumed that the war conditions pending would have resulted in no profit. I am not quite satisfied with the details by which the award thus reached was fixed at $22,000. I think they are open to some criticism yet the substantial result reached is one I should not if in the place of the Court of Appeal have disturbed.
The basis taken was a much more satisfactory one than that taken by the Court of Appeal which took the year ending 30th November, 1913. And apart from other considerations it included many questionable items which should not have entered into a basic computation of the probable profits from current earnings in the following period. Indeed, it seems to me far from furnishing a safe basis for computation.
Had its record been sifted in such a way as to eliminate items in respect of which there could be nothing analogous in the later period now in question and the case threshed out at the trial on some such basis, it might have been made useful, but I hardly think would have justified the result reached by the Court of Appeal.
Again, the Court of Appeal took into consideration the goodwill of the business and in a way that I can find nothing in law or fact to uphold. Goodwill is sometimes a valuable asset of an old partnership. That, however, was the asset of the corporate company and hence excluded by the pleading.
If you choose to imagine a valuable asset in a five year term I much doubt its existence.
I quite agree that the possibility of a more satisfactory result in an amicable dissolution might have been reached, but I cannot say that respondent would have reaped much from that factor in this instance even if the partnership had run its full term.
A man might, by misconduct, so wreck a firm as to give rise to such a claim, but here it is something intangible.
The field was just as open for the respondent at the expiration of the term from all that appears as it ever would have been I imagine.
As an outside man, as it were, he never had the same chance of securing a share of the clientele in the end as the inside man who had founded the business as appellant had.
As to the respondent not seeking some other occupation or business this was not a case in which any such rule or principle as relied upon can be properly applied.
If nothing else, his position as outside man had become such that when the stage of decline in business had been reached he would have been, if staying on in that event, almost in the condition of a gentleman of leisure, as his active occupation would have been gone, and he was entitled to reap that reward with other earnings which his energetic efforts in the outside field had helped to make so successful.
I would allow the appeal and restore the judgment of the Court of Review, but I should hesitate to give costs.
The cross-appeal should be dismissed. Anglin J.—The plaintiff Howard sues to recover damages from the defendant Findlay for what the latter now admits to have been an unwarranted breach by him of a five year partnership contract on the 30th November, 1913, about twenty-one months before it would have terminated by effluxion of time. The plaintiff's claim was for $350,000, and he expressly excepted from this action, and reserved his right to recover, his share and proportion of the assets of the partnership, and to take such other proceedings as might be necessary or advisable for the protection of his interests. The trial judge assessed his damages at $80,000; the Court of Review, on an appeal by the defendant, at $22,000; and the Court of Appeal, on appeal by the plaintiff, at $40,000. From the latter assessment the defendant appeals to this court seeking a restoration of the judgment of the Court of Review, from which he had not appealed. By a cross-appeal the plaintiff demands the restoration of the judgment of the trial judge.
Although "Findlay & Howard, Limited," was an incorporated company, by an agreement between the plaintiff and the defendant it was arranged that they should
operate the said business in somewhat the same manner as if they were co-partners carrying on business under the name of "Findlay & Howard" and not merely as officers of the company.
This action has, therefore, been treated as a claim made by one partner against his co-partner; and I shall so deal with it. Although the defendant's notice of termination of partnership was given on the 11th of September, 1913, to take immediate effect, for convenience the date of breach has been treated as the 30th of November, 1913—the actual date of the closing of the books of the partnership.
While it does not formulate a definite basis for the assessment of the damages, the Court of Appeal appears to have proceeded on the principle laid down by the Court of Review and to have differed merely in its application to the facts in evidence. On the other hand, the difference in principle between the Court of Review and the learned trial judge is fundamental.
A considérant in the judgment of the trial judge reads in part as follows:—
Considérant que le juge doit, quand il rend sa sentence, se rapporter à l'état de chose existant, au moment de la demande, et placer les parties, dans la situation où elles se seraient trouvées respectivement, s'il avait pu statuer immédiatement, les plaideurs ne devant pas souffrir des lenteurs de la justice, qui ne leur sont pas imputables, et que de même que des dommages réclamés par suite d'une rupture illégale de contrat, ne sauraient recevoir d'augmentation, par suite de circonstances subséquentes, comme une législation nouvelle, ou de récentes découvertes de la science apportant de nouveaux moyens d'exploitation, de même qu'ils ne sauraient recevoir de diminution, par suite de circonstances subséquentes et d'une nature temporaire, comme le relachement des affaires ou une guerre soudaine, et que si la rupture du contrat que le défendeur a voulu dissoudre, malgré les protestations de son associé, n'a pas été aussi fructueuse qu'il se l'était imaginé, par suite d'évènements qu'il n'a pas su ou n'a pas pu prévoir, il ne saurait en avoir le bénéfice, et que le demandeur a droit aux dommages causés par le défendeur et existant, autant qu'il est possible de les constater, à la date du 11 septembre 1913, jour de la rupture violente par le défendeur du contrat de société.
Very early in the course of the trial the learned judge said:—
We have to decide the right of the parties at the date of the pleadings, so that what happens subsequently to that we have nothing to do with.
He accordingly assessed the plaintiff's damages on the assumption that but for the defendant's breach the partnership would have endured for nineteen months longer (the learned judge was somewhat in error in this computation of time), and that its profits during that period would have been proportionate to the $104,000 earned by it during the twelve months immediately preceding the breach; and on that footing he valued the plaintiff's loss of his share of the profits of the partnership business at $80,000. The following passages from the formal judgment of the Court of Review, on the other hand, indicate the basis on which it proceeded:—
Considérant que dans l'estimation des dommages-intérêts réclamés par le demandeur, la cour doit tenir compte du passé de la dite société, des profits qu'elle avait faits jusqu'à la dissolution et des profits qu'elle devait rapporter aux associés, et cela en prenant en considération non seulement les faits qui existaient lors de la dissolution, mais encore les faits survenus depuis la dite dissolution, qu'il était possible d'établir au moment où s'est faite l'enquête;
Considérant qu'il est établi par la preuve que depuis 1911 jusque vers le printemps de 1913, le commerce d'immeubles que faisait la société a été très prospère, mais que depuis cette époque le commerce a subi une dépression graduelle jusqu'à la déclaration de guerre qui a eu lieu au commencement d'août 1914;
* * * * *
Considérant que les tribunaux sont censés connaítre l'existence de l’état de guerre et sa continuation;
Mr. Justice (now Chief Justice) Lamothe, in his opinion, thus states the view of the court:—
L'action a été intentée en décembre 1913; et la Cour Supérieure a posé en principe qu'elle ne devait pas prendre connaissance des faits postérieurs à cette date. Ce principe existe; il doit recevoir son application dans toutes les causes où la réclamation est basée purement sur des faits arrivés ayant fixé d'une manière définite la responsabilité des parties. Mais dans les cas où la réclamation est faite pour des dommages futurs, dommages basés sur des faits futurs et probables (savoir sur la continuation présumée d'une certaine série de faits et de circonstances), la cour doit s'éclairer à la lumière des faits survenus subséquemment, et, alors, au lieu de simples probabilités, la cour a devant elle des faits certains.
He also points out certain misleading elements included in the statement of earnings for the twelve months' period before the breach relied on by the learned trial judge. The formal judgment discloses the method of calculation by which the court reached its assessment of $22,000. Of this I shall have something further to say when discussing the quantum of the damages.
The Court of King's Bench, without disapproving of the basis of assessment in the Court of Review, finds:
Que le cour de première instance lui a accordé un montant trop élevé et que la cour de révision a accordé un montant insuffisant; and after alluding to certain alleged oversights in the estimate made by the Court of Review continues:—
Considérant que le montant le plus probable et le plus équitable, devrait être un juste milieu entre le montant accordé par la Cour Supérieure et celui alloué par la cour de révision, ce qui ferait une somme d'à peu-près $50,000; mais que, à tout événement, il est certain, vu la preuve, que le demandeur appelant droit à un chiffre minimum de $40,000;
While claiming by his cross-appeal the restoration of the judgment of the trial court, counsel for the respondent in his factum appears partially to admit the soundness of the basis of assessment adopted by the Court of Review in this passage:—
It is not pretended that the past profits must be taken as a fixed and settled basis for settling the amount of future profits, for naturally all business is subject alike to periods of prosperity and depression and revenue from business in hand must necessarily be considered as subject to the ordinary trade contingencies, but the earnings of the firm in the past, especially if such earnings cover a period of years, are a good criterion of probable earnings in the future and deserve most serious consideration.
Citing the case of Wakeman v. Wheeler & Wilson Manufacturing Co.[4], he quotes these two sentences from the judgment:—
When the contract is repudiated the compensation of the party complaining of its repudiation should be the value of the contract. * * * His damages are what he lost by being deprived of his chance of profits.
The same principle is enunciated by the Judicial Committee in Wertheim v. Chicoutimi Pulp Co.[5]:—
The general intention of the law in giving damages for breach of contract is that the plaintiff should be placed in the same position he would have been in if the contract had been performed.
An apt illustration of the application of these principles is afforded by the House of Lords in British Westinghouse Electric & Manufacturing Co. v. Underground Electric Railways Co. of London[6], the head note of which is as follows:— Held, that the pecuniary advantage which the railway company derived from the superiority of the substituted turbines (i.e., substituted for turbines supplied by the defendant which were deficient in value), was relevant matter for the consideration of the arbitrator in assessing damages.
In Mayne on Damages, 8th ed., at p. 141, the author says:—
Where the action is to recover damages for some loss arising from the defendant's acts, evidence is admissible to shew that the injury is not so great as would at first appear.
In Arnold on Damages, at p. 23, after referring to the authorities, the learned author says:—
The conclusion to be arrived at is that where a contract is broken the cause of action at once accrues. The plaintiff may immediately sue for damages, and the measure of damages must be assessed as being the loss or injury sustained at the date of the breach of contract. But for the purpose of estimating the present loss, probable future events must be considered, and if the bringing of the action be delayed, evidence as to actual subsequent consequential damage or subsequent relevant facts in mitigation of damage may be given.
In Batten v. Wedgwood Coal & Iron Co.[7] where a solicitor acting for a receiver failed to fulfil a duty to have money invested in consols he was held liable for loss of interest which would have been earned by the investment, but he was allowed to set off a gain to the client resulting from a fall in the price of consols between the date that the investment should have been made and the date of hearing. The receiver is only entitled to be recouped what he has actually lost.
In Laishley v. Goold Bicyle Co.[8], in allowing an appeal from Ferguson J., Garrow J.A., speaking for the Ontario Court of Appeal, thus discusses, at p. 324, the proper basis for the computation of damages analogous to those here claimed:—
The breach is clear and admitted, and the only reason, apparently, for not permitting the ordinary consequences of adequate damages being adjudged to the plaintiff, is because such damages are, it is said, too vague and conjectural, which is the question to be determined on this appeal. Damages are very seldom capable of exact calculation, and yet I think many cases can be found in which damages have been awarded where the basis for a calculation was less certain than in this case. To begin with, there is the undisputed fact of the plaintiff's past earnings from commissions in 1898 and 1899; certainly some evidence of what he would probably have earned in 1900 and, indeed, in my opinion, strong evidence, unless affected by counter evidence on the part of the defendants to shew that these past earnings were abnormal, or that the business had depreciated or come to an end. But we have here not merely the past earnings but the fact that the bicycle business was continued under the new company after the plaintiff's dismissal, during the year 1900, but with, it is said, a diminished market. The manager for the new company puts this depreciation at about 40% of the previous year's demand; and another witness called by the defendants at about 50%. Giving credit to these witnesses, it appears to me that there is proper and even sufficient material for a reasonably correct calculation of the amount of the damages in question to which the plaintiff is entitled, having regard, of course, to what the situation and outlook were at the time of the breach in November, 1899.
The decision of this court in Cockburn v. Trusts & Guarantee Co[9], proceeds on the same view of the aw as does also our decision in Wood v. Grand Valley Railway Co.[10].
I have cited the foregoing authorities decided upon English law because many of them are relied on by the parties and because there appears to be a dearth of French authority on the matter under consideration. The principles under which damages are awarded under the law of Quebec in a case such as this are to be found in the following passages from the Civil Code:—
Art. 1065.—Every obligation renders the debtor liable in damages in case of a breach of it on his part * * * .
Art. 1073.—The damages due to the creditor are in general the amount of the loss which he has sustained and of the profit of which he has been deprived * * *
Art. 1074.—The debtor is liable for the damages which have been foreseen, or might have been foreseen, at the time of contracting the obligation, when his breach of it is not accompanied by fraud. Art. 1075.—In the case even in which the inexecution of the obligation results from the fraud of the debtor, the damages comprise only that which is an immediate and direct consequence of its inexecution.
Before proceeding to consider the quantum of damages justified by an application of these principles to the facts in evidence, I shall say a word on the merits, merely to indicate how far they influence me in the assessment. The trial judge found that
la société qui a été en existence entre les parties pendant environ trois ans et demi, avec un succès phénoménal, a été dissoute par le defendeur, illégalement, sans raison ni cause, d'une façon brutale, in juste, déloyale et malhonnête, que le défendeur, volontairement et délibérément, a renversé le superbe édifice élevé par l'activité, le zèle, l'industrie et l'habilité des associés, afin d'en faire sortir le demandeur, qui en était le propriétaire conjoint, et en devenir le seul maître et propriétaire, etc.
The Court of Review held
que le demandeur a prouvé l'allégation essentielle de sa demande, à savoir; que le défendeur a mis fin, sans cause légitime, au dit contrat de société, et que le défendeur n'a pas établi ses allégations sur ce point.
The Court of Appeal expressed its view in these terms:—
Considérant que l'intimé a mis fin au contrat de société existant entre lui et l'appelant et cela 21 mois avant l'expiration du terme convenu;
Considérant que la conduite de l'intimé sous ce rapport était arbitraire, in justifiable et inexplicable.
Considérant qu'aucune raison n'a été donnée par l'intimé pour justifier sa conduite, lorsqu'il a prétendu mettre fin à la dite société.
Having declined to hear argument by his counsel on the question how far the defendant's conduct should be deemed morally reprehensible, we should not, in my opinion, treat him as deserving of censure more severe than that pronounced by the judgment of the Court of Review in which he acquiesced.
But however gross the violation of the plaintiff's right, however discreditable the defendant's motives, the damages cannot be other than
compensation for pecuniary loss naturally flowing from the breach. No punitive or vindictive consideration may enter into the assessment. Art. 1075 C.C. must be obeyed. In the case of fraudulent breach of contract actual damages sustained, though unforeseen at the date of the contract, must be made good. Where the breach is not accompanied by fraud damage which could not have been foreseen cannot be recovered. Whatever may have been the motive that induced the defendant to break the partnership contract, he took that step freely and deliberately and it must be ascribed to a determination to serve some purpose of his own. In the absence of proof of justification, such a breach should, I think, be regarded as falling within art. 1075 C.C. rather than within art. 1074.
Assuming the conduct of the defendant to merit no more emphatic denunciation than that pronounced by the Court of Review, in regard to such elements of damage as cannot be measured with mathematical exactitude but must be determined on such probabilities as a jury is justified in proceeding upon, he is not entitled to expect that the amount of the plaintiff's compensation shall be weighed in golden scales or to have the sum allowed interfered with on appeal merely because of some trifling error in its computation. On the other hand, he would be entitled to complain of any palpable substantial excess in the award, even were his conduct properly characterized by the vigorous terms employed by the learned trial judge.
Under art. 1075 C.C. the plaintiff would have been entitled to any unforeseen damages which were an immediate and direct consequence of the breach although they would not have arisen but for the happening of some events which could not have been anticipated when the contract was entered into. I have no doubt whatever that events which happened after the breach and would have adversely affected the profits that the plaintiff would have made had the contract been carried out until the end of the five year term must likewise be taken into account in estimating the loss for which the plaintiff is entitled to compensation and in determining what actually was the value of the contract to him at the date of the breach.
The purpose of awarding damages being to compensate for a loss sustained by the plaintiff, it seems to me, with great respect for those who take the contrary view, to be repugnant to common sense that he should be permitted to recover for loss which facts within the cognizance of the court at the time of the trial shew he did not suffer merely because upon the facts as they stood at the date of the commission of the wrong which subjected the defendant to liability, or even at the time the action was begun, it seemed probable that such loss would be sustained.
If there had not been any clear error in the basis of computation in the judgment of the Court of King's Bench, although it increased the amount of the damages allowed by the Court of Review by $18,000, I should have been loath to disturb it on a mere question of quantum, in a case where it is so obviously impossible to ascertain with anything approaching exactitude the amount of the damage actually sustained. But unfortunately for the plaintiff that court, as appears from the opinion of Mr. Justice Pelletier, made the mistake of taking the $104,000 of earnings (which represented $67,000 of profits proper to be taken into account in the opinion of that learned judge) for the year ending the 3rd of November, 1913, the period immediately preceding the breach, as having been received during the year which followed the breach, i.e., the year ending on November 30th, 1914. Proceeding on this erroneous footing the learned appellate judge estimated that the net profits for the latter period, had the plaintiff Howard continued to act as a member of the partnership during it, would have been not the $67,000 actually earned by the defendant, as he understood, but $33 000 more, i.e., $100,000. It was by adding one-hal of this additional amount, $16,500, to the estimated earnings for the twelve months following the breach (November 30, 1913, to November 30, 1914) and a further sum of $9,000 ($750 per month), to cover what would have been Howard's probable share of the earnings for the last year of the partnership term (August, 1914, to August, 1915), for which the Court of Review had allowed nothing, to the $22,000 allowed by that court that Mr. Justice Pelletier reached a sum approximating $60,000 as the amount of the plaintiff's damages which, in order to be "bien sûr de ne pas commettre d'erreur," he fixed at $40,000. The learned appellate judge apparently quite overlooked the fact that the allowance for profits in the $22,000 and $16,500 was based on figures carried down to the 30th of November, 1914, and that the $750 a month, if a proper addition, should, therefore, have been for nine months and not for twelve months. Of course a judgment based on such a manifest and fundamental error as that in regard to the year in which the $104,000 was earned cannot be sustained. There is nothing to shew that had it not been for this mistake the Court of King's Bench would have disturbed the assessment of the damages made by the Court of Review.
But it does not follow that the amount allowed as damages by the Court of King's Bench was clearly wrong or that the assessment of the Court of Review ought to be restored. The judgment of the latter court has been set aside and before we can restore it we must be satisfied that the respondent is not entitled to a larger sum than it awards. We are simply left without the assistance of the opinion either of the trial court or of the Court of King's Bench as to the quantum of the damages, the assessment of the former having been based on an erroneous conception of the law, and that of the latter on a mistaken view of the facts. Under these circumstances we must determine for ourselves, proceeding largely as a jury, what is a fair amount to compensate the plaintiff for the loss of the profits that he would have received had the partnership business been continued until the 22nd of August, 1915, as the contract of the parties contemplated.
Inasmuch as the judgment of the Court of Review is based on a correct appreciation of the law as to the measure of the damages recoverable and has not been appealed from by the defendant, it might at first blush seem to be not unreasonable to limit the inquiry to ascertaining by what sum, if any, the $22,000 which it awards should be increased. On the whole, however, I think this would not be a satisfactory mode of dealing with the case. The basis on which the Court of Review estimated the plaintiff's profits for the eight months from November 30th, 1913, to August 1st, 1914, at $17,800 seems to me, with respect, to be too fanciful. Moreover, there is a patent mistake in its calculation. Estimating the profits of the business from November 30th, 1913, to November 30th, 1914, at $25,663 (as hereinafter indicated), the court in making its calculation took one-half of this amount, $12,800, instead of $8,500 as the plaintiff's share of them for eight months. I, therefore, incline to think it will not be advisable to take as a starting point the $22,000 assessed by it as the plaintiff's damages.
In arriving at what would probably have been the profits for the year from November 30th, 1913, to November 30th, 1914, however, the Court of Review, very properly in my opinion, added to the $13,353 profits made by the defendant during that period, as shewn by his statement, several amounts which should not have been deducted from the gross earnings as against the plaintiff, thus bringing the profits actually earned by Findlay in that year for the purpose of its calculation up to $25,633. Having regard to the evidence of the witnesses DeCary, Beausoleil, Browne and Davis that the real estate market was, if anything, better between August, 1913, and August, 1914, than it had been during the preceding twelve months and giving due weight to the testimony of Messrs. Peloquin (50% decline in eight months before the war), Short (falling off began in the summer of 1913), Kirkpatrick, Casgrain, Ogilvy and Avard, in view of the enormous earning capacity of Findlay and Howard during the three years when both partners were co-operating, and especially to the profits of at least $67,000, or $33,500 for each partner, made during the twelve months ending November 30th, 1913, I think there should have been allowed for the diminution of earning capacity due to Howard's absence during the latter twelve months over and above the $4,800 salary paid by Findlay to Parker, who replaced him, an additional sum of about $12,000, making the total probable profits for the year from November 30th, 1913, to November 30th, 1914, had Howard continued in the business, $37,633 instead of the $25,633 estimated by the Court of Review. On that basis the plaintiff's share would have been $18,800.
No doubt the sales branch of the real estate business, formerly its most profitable part, amounted to little or nothing during the first year of the war. But, according to the evidence, collections continued to be good. I incline to think that had the partnership business of "Findlay & Howard" been conducted during that year, having regard to the volume of its outstanding business, and its very extended connections, by cutting down expenses and "carrying on" on a conservative basis some substantial profits might have been realized. Placing them at one-fifth of the earnings in the preceding period of one year (obviously the approximation of a juryman), the plaintiff's share for eight months would have been $2,500—about $300 a month in lieu of the $750 a month which Mr. Justice Pelletier was disposed to allow.
If the goodwill of the business of "Findlay & Howard" should not be regarded as one of the partnership assets as to which the plaintiff expressly reserved his rights, I am unable to find any appreciable value in it having regard to the character of the business and the events which followed the improper breaking up of the partnership.
I am not disposed to make any deduction on account of the plaintiff's receipts from assets taken over by him—the effect of that has been already allowed for in the reduced profits—or because of his failure to take steps to earn money in some other capacity than as a real estate agent.
Fully realizing that my estimate of the damages is quite as likely to be inaccurate as that of the Court of Review or of the Court of King's Bench, but discharging the functions of a juryman as best I can, I would, therefore, estimate the plaintiff's damages at $18,800 plus $2,500, or, say, $21,300 in all.
It follows that the judgment of the Court of Review for $22,000 should be restored. The appellant should have his costs here and in the Court of Appeal.
Brodeur J. (dissenting)—Il s'agit dans cette cause de dommages-intérêts réclamés par le demandeur intimé, Howard, contre le défendeur appelant, Findlay, parce que ce dernier aurait illégalement mis fin à la société qui existait entr'eux.
Le 22 août 1910, par acte notarié, les parties se mettaient en société pour tenir une agence d'immeubles à Montréal. La durée de la société était fixée à cinq ans. Les trois premières années ont été des plus prospères et la société a réalisé des profits au montant d'environ $450,000.
Le 11 septembre 1913, l'appelant Findlay mettait fin à la société sans donner de raisons valables. Howard protesta naturellement contre cette dissolution prématurée. Des négociations eurent lieu pour amener une dissolution à l'amiable. On s'entendit sur le partage de l'actif; mais on ne put réussir à déterminer la quotité des dommages que Howard réclamait pour cette dissolution illégale. De là la présente action.
La Cour Supérieure a accordé $80,000 à Howard. La Cour de Revision a réduit les dommages à la somme de $22,000. Howard a alors porté sa cause en Cour d'Appel qui lui a accordé $40,000. Les deux parties appellent de ce dernier jugement. Findlay accepterait cependant le jugement de la Cour de Revision et ne voudrait être condamné qu'à $22,000; Howard voudrait avoir les $80,000 qui lui ont été accordées par la Cour Supérieure. Nous avons alors un appel de la part de Findlay et un contre-appel de la part de Howard.
La Cour Supérieure n'a pas voulu prendre en considération les faits qui ont eu lieu postérieurement à l'institution de l'action mais elle a déclaré.
que le juge doit, quand il rend sa sentence, se rapporter à l'état de choses existant au moment de la demande.
La. Cour de Revision a, au contraire, décidé de prendre en considération l