Brief Fact Summary.
Freund (Plaintiff), an author and college teacher, entered into a contract with Washington Square Press (Defendant) under which Defendant was to publish and sell in book form Plaintiff’s work on modern drama. Plaintiff delivered his manuscript and was paid a $2000 advance, but Defendant never published the book and Plaintiff never received any royalties.
Synopsis of Rule of Law.
Damages are not to be measured by what the defaulting party saved by the breach, but by the natural and probable consequences of the breach to the plaintiff.
The Plaintiff sought specific performance, but it was denied. The trial court denied lost royalties, but found that the cost of hardcover publication was the natural and probable consequence of the breach, and awarded $10,000 to cover this cost. The Appellate Division affirmed, holding finding that the cost of publication was the proper measure of damages. However, the dissent concluded the cost of publication was not the proper measure of damages, and that the Plaintiff could recover nominal damages only.
What was the proper measure of damages for Defendant’s failure to publish?
The order of the Appellate Division should be modified to reduce the damage award to six cents, plus costs and disbursements to the plaintiff. The Plaintiff’s expectation interest under the contract was twofold: 1] the $2,000 advance, which he received; and 2] his expectancy interest in royalties. The Plaintiff theoretically stood to gain profit in the form of royalties from the sale of the published book, but there was no stable foundation for a reasonable estimate of the amount he would have received. The courts below erred by measuring damages by the cost of performance to the defendant, rather than the value to the plaintiff of the promised performance.
The injured party should not recover more from the breach than he would have gained if the contract was fully performed. Awarding the Plaintiff the cost of publication would have given him a far greater advantage than full performance of the contract, under which he would have received royalties, only.