I ran across some old records on a lawsuit involving the Atchison Topeka & Santa Fe' Railway Co., Henry S. Montgomery & Frank S. Thomas. In the records it discusses the Waltham pocket watches that Thomas & Montgomery ordered & had marked the Santa Fe' Route.

I don't own one of these watches but I thought it was interesting reading.

Tom

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ATCHISON, T. & S. F. RY. CO. v. THOMAS. (Supreme Court of Kansas. Dec. 1, 1904.)

CONTRACT—ACTION FOB BREACH—DAMAGES— ANTICIPATED PROFITS.

1. Damages recoverable upon breach of a contract are those damages only which are the direct and proximate result of the wrongful act of which complaint is made.

2. Damages, which are speculative, remote, or contingent, cannot form the basis of a recovery for the breach of a contract.

3. Damages for anticipated profits recoverable upon breach of a contract must be established with a reasonable degree of certainty, must be the natural and proximate consequence of the breach, and be free from conjecture and speculation.

4. Where, in consideration of money advanced to inaugurate and establish a time-service system for a railway company, T. was verbally given by the railway company the right to sell, to its employees required to carry watches of a certain fixed standard, 4.800 watches of a certain model bearing a copyrighted trade-mark and meeting the required standard, and where the railway company agreed to protect upon its books and collect for T. from the personal earnings of the employees, while in its employ, their orders on the treasurer of the company payable in monthly installments of $5 each, but no assurance was given to T. that the employees would purchase watches of him. and they were privileged to buy and carry any watch which would meet the required standard of the time service, and the railway company thereafter refused to longer protect upon its books and collect such orders for T.. but not until T. had sold to employees all the watches he had on hand when such arrangement was made, and T. was under no legal obligation to purchase additional watches, held, in an action by T. against the railway company to recover damages for a breach of contract, where the damages were for loss of profits on watches which T. claimed he might have sold to the employees, that his claim for damages was too speculative, remote, and contingent.

(Syllabus by the Court.)

Error from District Court, Jefferson County; Marshall Gephart, Judge.

Action by Frank S. Thomas, doing business as M. A. Mead & Co.. against the Atchison, Topeka & Santa Fe’ Railway Company. Judgment for plaintiff, and defendant brings error. Reversed.

Robert Dunlap and A. A. Kurd, for plaintiff in error. Ferry & Doran and David Overmyer, for defendant in error.

ATKINSON, J. This was an action by Frank S. Thomas, doing business under the firm name and style of M. A. Mead & Co., of Topeka, Kan., against the Atchison, Topeka & Santa F6 Railway Company, to recover $48,888, damages for the breach of a contract. Verdict and judgment for plaintiff in the sum of $20,000.

In June, 1896, Frank S. Thomas, with one H. S. Montgomery, with whom he had for the purpose formed a copartnership, entered into a contract with the Atchison, Topeka & Santa F6 Railway Company, in the name of H. S. Montgomery, to inaugurate a uniform time service, and establish a system of inspection of clocks used by defendant, and watches used by its employees, over its several lines of railroad. As a part of the contract with defendant, Montgomery, who was a practical watchmaker, was by defendant appointed its general watch and clock inspector, with a salary from defendant of $500 por annum. Thomas, as a part of the contract, agreed to finance the enterprise,, pay Montgomery a salary of $60 per month, and share equally the profits of the business with Montgomery. Defendant refused to appoint Montgomery its general watch and clock inspector until all his debts were paid, that it might not be annoyed by his creditors. Thereupon Thomas paid about $3,000 of Montgomery's debts to constitute him eligible for appointment. Thomas also agreed to superintend, and at his own expense, through Montgomery, rate, regulate, and repair, all clocks in use by defendant along its lines of railroad, and inspect, rate, and regulate the watches of those employees of defendant who were by defendant required to carry watches to conform to the requirements of the time-service system. In consideration therefore, and as a part of said contract, defendant agreed, through its general manager, that Thomas and Montgomery, in the name of the latter, should have the right to supply and sell to the employees of defendant certain watches of a uniform character, and of a standard to meet defendant's requirements. The contract received the aid and encouragement of defendant. A circular was issued by the general manager. It defined the time service and its requirements. It announced that the employees in the operating department of the road would be required to carry watches to meet the required standard. The circular also called the attention of the employees to the fact that, while any watch which would come up to the required standard would be sufficient, watches meeting the required standard could be purchased of Montgomery, as general watch and clock inspector, at reasonable prices and on monthly installments. Thomas and Montgomery caused to be constructed by the American Waltham Watch Company watches of a certain model and of a standard to meet the requirements of defendant, and caused to be placed thereon their trade-mark, the words "Santa Fe' Route," which trademark they had caused to be copyrighted in the name of Montgomery, who assigned to Thomas a one-half interest therein. In the sale of these watches to the employees of defendant, the note of the purchaser was taken, payable to the order of H. S. Montgomery, in monthly installments of $5 each.

This contract continued to July 1, 1897. a little more than one year, when it was terminated by defendant without the consent of plaintiff. Its termination was effected by a circular issued by the president of the railway company. The circular was a general one prohibiting the employes of the company from engaging in private business. The effect of the circular was to disqualify Montgomery, as general watch and clock inspector of the railway company, from further engaging in the sale of watches to the employees of defendant, unless expressly authorized by the president to continue their sale. To so disqualify Montgomery had the effect to terminate the contract as to Thomas. In the sale of watches to the employees of defendant, it was claimed by Thomas he could only successfully operate when operating through Montgomery, as he had been doing. Soon after the Issuing of this circular by defendant, Thomas and Montgomery went from Topeka to Chicago to see and confer with President Ripley with reference to the effect of the circular on Montgomery and on the business of selling watches to the employees of defendant. The president was firm in the position that Montgomery could not continue general watch and clock Inspector of defendant and at the same time engage In the sale of watches to employees. He declared Montgomery must quit the sale of watches or discontinue the duties of Inspector. Thomas explained to President Ripley the contract between himself, Montgomery, and defendant, made through the general manager of defendant; explained that he and Montgomery were partners in the enterprise: represented to the president that to apply the provisions of the circular to Montgomery, and thereby cause his discontinuance of the sale of watches to employees, or the discontinuance of the sale of watches to the employees through Montgomery, would be ruinous to the business of selling these watches; that he (Thomas) had financed the enterprise, and had expended large sums of money in inaugurating the time service for defendant; that there were a large number of watches of the special model and design which would be without a market and worthless; that he had on hand many installment notes of the employees taken in the name of Montgomery, given for the purchase of watches; that these notes would be difficult of collection from the employees; that the employees of defendant would pay the notes more readily when made payable and apparently belonging to Montgomery, an officer of the company, than if made or assigned to another; and that it would result in great financial loss and be ruinous to him.

The claim is made by Thomas that defendant, through President Ripley, admitted that it had been greatly benefited by the time service. The claim is also made that the president then stated that in consideration of the money advanced by Thomas in inaugurating the time service, and in compromise of the claim of Thomas for the damage he would sustain from the act of defendant in terminating the contract, defendant would reimburse Thomas for the money he had expended in inaugurating the time service system; would give to Thomas the right to sell to the employee’s of defendant 4,800 watches of the model bearing the "Santa Fe' Route" trade-mark; would give to him the right to take from the employee’s of defendant an order on the treasurer of defendant, authorizing defendant to deduct $5 per month from the earnings of the employee In payment for the watch purchased; that defendant would, in so far as it was able to do so collect these orders for plaintiff; and also that defendant would undertake to collect from its employees, in so far as it was able to do so, the installment notes theretofore given In the name of Montgomery In payment for watches sold to the employee’s. The further claim is made by Thomas that he agreed to this proposition of settlement, and also that he undertook and agreed to sell to the employee’s of defendant 4.800 watches of the model bearing the trademark.

Thomas, through Montgomery, accepted from defendant an amount in satisfaction of his claim for money advanced in installing the time-service system. Defendant collected from its employees, in so far as it was able to do so, the installment notes given to Montgomery in payment for watches. Under the name of "M. A. Mead & Co., of Topeka, Kansas," Thomas entered upon the new arrangement made with defendant, through President Ripley, for the sale of watches. He sold 726 watches to the employee’s of defendant on the order system, and the orders so taken were by defendant protected on the books of the company, and by defendant' collected for plaintiff from the personal earnings of the employees giving such orders. The sale of watches under this arrangement was by plaintiff discontinued on January 1, 1900, due to defendant refusing to longer accept and collect orders given by its employees for the payment of watches. Plaintiff then brought this action in damage, claiming $48,888, a loss of $12 profit on each of the 4,074 watches remaining unsold of the 4,800 watches plaintiff claimed, under the arrangement with defendant, the right to sell. Defendant filed a general denial, but upon the trial of the case interposed numerous defenses to plaintiff's claim. The trial resulted in a verdict and Judgment for plaintiff in the sum of $20,000.

Numerous errors are assigned by the railway company—among others, that the court erred in giving instruction No. 16, which is as follows: "If you find from a preponderance of the evidence that the plaintiff is entitled to recover in this action, then his measure of damages would be the profits on the number of watches which he has shown by a preponderance of the evidence he could have sold, and was prevented from selling to the employees of defendant company by reason of defendant refusing to protect such sales on the pay roll of the company, not exceeding in amount the sum of $48,888."

It is the contention of defendant that plaintiff's claim for damages is too remote and contingent, that it is open to the charge of being prospective, and that it enters the domain of speculation. It is urged that, for the reasons assigned, plaintiff's claim for damages cannot constitute the basis for a valid Judgment; that Instruction No. 16, complained of, relative to the measure of plaintiff's claim for damages, was erroneous.

On January 1, 1900, when plaintiff's right to sell watches to the employees of defendant was terminated, he had sold all the watches of the design or model bearing the trademark which he had on hand at the time the arrangement was made with defendant giving to him the right to sell 4,800 watches to the employees. Plaintiff was under no legal obligations to purchase watches of the model bearing the trade-mark, to make up or complete the 4,800 watches. His claim for damages Is based wholly upon the profits he claims he could have made; not upon watches owned by him, or upon watches which he was under a legal obligation to purchase, but upon watches which he could have purchased, and which he claims he could have sold to the employees of defendant at a profit of $12 on each watch, had his arrangement with defendant not have been terminated. The only testimony upon the question of plaintiff's damages was that of plaintiff himself, who testified that he would have realized a profit of $12, net, upon the sale of each of the remaining 4,074 watches, could lie have sold them to the employees under the arrangement he had with defendant.

It Is the aim and purpose of the law to give to a party injured by the breach of a contract all the damages which he may suffer from such breach; and where the contract is made with a view to future profits, and such profits are within the contemplation of the parties, they may, where they can be established with certainty, form a Just measure of damage. But the right to recover damages for anticipated profits has always been, and will continue to be, a troublesome question. No fixed rule can be laid down which, when applied to the facts of a case involving damages for anticipated profits, will determine whether a recovery may, or may not be had. Each case must be determined on the facts peculiar to itself. The authorities both In the United States and England are agreed as a general rule, subject to certain well-established qualifications, that anticipated profits prevented by the breach of a contract are not recoverable in the way of damages for such breach; but in the application of this principle the same uniformity In the decisions does not exist. In some cases of almost exact analogy in the facts the adjudications of the courts in the different states lire directly opposite.