#### J. L. CALDWELL and D. M. McKELVEY, Trading as SUPERIOR CLEANERS, v. E. H. McCORKLE, Trading as McCORKLE’S CLEANERS & DYERS.

(Filed 2 May, 1945.)

1. Contracts § 24—

In an action by plaintiffs against defendant to recover on contract for services performed, where defendant pleads that plaintiffs, subcontractors for defendant under contract to process clothing, bedding, etc., for Army bases, though paid in full, failed to perform the services as agreed, to the damage of defendant, who was compelled himself to retransport the clothing, etc., and do the work over again to comply with his customer’s contract, there being evidence offered in support of the contentions of both plaintiffs and defendant, it was error for the court to charge the jury that, should they answer the issue in favor of plaintiffs to any amount, it would constitute a finding that the contract was as plaintiffs contend and defendant would not be entitled to recover anything except what a breach of the contract had cost him, as such charge expressly excludes expenses incurred in correcting the defective work of plaintiff and money received for services plaintiffs failed to render.

2. Contracts § 25b—

If the controverted issue of breach of contract is resolved against plaintiffs, in an action for service rendered thereunder against defendant, who has pleaded breach and counterclaim for damages, then defendant is entitled to recover the losses which naturally and proximately result from the nonperformance and which were reasonably in the minds of the parties at the time of its making.

Appeal by defendant from Olive, Special Judge, at October Extra Term, 1944, of MbokleNbuRO. New trial.

Civil action to recover for services rendered.

Both, plaintiffs and defendant are engaged in the business of cleaning and pressing wearing apparel. Defendant obtained a contract from the United States Government to process military uniforms, blankets, mattresses, and other articles for certain Army camps, including Camp Forrest in Tennessee, Camp Sutton in North Carolina, and Camp Stewart in Georgia. He furnished the transportation. When he received articles to be processed he signed a “tally-out” sheet for it and when the processed articles were returned, he received a “tally-in” sheet as a receipt. Defendant sublet a part of the work to plaintiffs and he was to pay therefor at a stipulated rate upon receipt of the Government “tally-in” sheet. There is a controversy as to the provisions of the contract in respect to the exact nature of work to be done by plaintiffs.

Plaintiffs allege that they performed certain services under the agreement for which the defendant has not paid. They allege a balance of $1,261.30 and seek judgment therefor.

*172Tbe defendant, answering, admits tbe contract, denies tbe allegation of indebtedness, and pleads (1) tbe failure of plaintiffs to process apparel delivered to them as required by tbe agreed specifications, (2) that tbe merchandise thus improperly processed was rejected by army officials, rendering it necessary for him to reprocess tbe rejected articles at a total expense of $3,570, and (3) that although tbe plaintiffs failed to properly process such merchandise, be has, under bis agreement with them, paid them tbe agreed price therefor. He alleges further that in addition to tbe expense for recleaning be was required to do extra transporting to and from tbe camps at a total cost of $862.50. Thus be claims a net balance due him of $3,171.20. He prays an accounting.

Tbe parties elected to treat defendant’s affirmative plea as a counterclaim and issues were submitted to and answered by tbe jury as follows:

“1. What amount, if any, is tbe defendant indebted to tbe plaintiffs?

“Answer: $330.00.

“2. What amount, if any’ are tbe plaintiffs indebted to tbe defendant ?

“Answer: 0.”

There was judgment on tbe verdict and defendant appealed.

TJhlman S. Alexander for defendant, appellant.

No counsel contra.

Barnhill, J.

It is agreed that plaintiffs were to process and clean wearing apparel and other merchandise delivered to them by tbe defendant and were to be paid at a stipulated rate. Plaintiffs allege and offer evidence tending to show that defendant has not paid them in full for tbe services rendered under tbe agreement. They seek recovery for tbe balance due. Defendant alleges and offers evidence tending to show that plaintiffs failed to properly process tbe articles received by them; that tbe Army “turned down” or rejected tbe work thus improperly done; that as a result be was required to make additional trips to tbe Army camps and to reprocess and clean such articles at great cost to him; and that be has paid plaintiffs for all work done and services rendered, including tbe charges for tbe articles improperly and insufficiently processed and cleaned. He seeks to recover expenses incurred by reason of tbe alleged breach of contract.

On this conflicting evidence tbe court twice instructed tbe jury to tbe effect that if they answered tbe first issue in favor of plaintiffs, in any amount, they should not consider or answer the second issue, on tbe theory that an affirmative answer to tbe first issue would constitute a finding that tbe contract was as contended by plaintiffs and plaintiffs bad fully complied therewith.

*173Some time after tbey bad begun tbeir deliberations tbe court recalled tbe jury and stated to tbem tbat it erred in instructing tbem not to consider tbe second issue in tbe event tbey answered tbe first issue in any amount, and charged tbem as follows:

> “No matter wbat you answer tbe first issue, you will consider tbe second issue, and, as I say, you will apply tbe same law to tbe second issue tbat I gave you, to begin witb.”

Wbat, tben, bad tbe court instructed tbe jury as to tbe law applicable to tbis issue? Tbe record discloses tbe following:

> “Now, gentlemen of tbe jury, tbe Court instructs you, on tbis second issue, if you answer tbe first issue in any amount, you will bave found tbat tbe .contract was as tbe plaintiffs contend, by tbe greater weight of tbe evidence, and you would bave allowed tbem a reasonable amount for tbis processing of tbe clothing; and, if you come to tbis second issue, gentlemen of tbe jury, tbe Court instructs you, as a matter of law, tbat tbe defendant would not be entitled to recover anything except wbat a breach of tbe contract has cost him; and, if you come to tbe second issue, tbe defendant would not be paying tbe plaintiffs any amount for any processing of tbe clothing and be would not be entitled to recover tbe full amount of wbat it cost him to clean and press tbe clothing, because be has testified tbat be has been paid by tbe Government for tbe processing and cleaning, but only such damages as flow immediately from tbe breach of tbe contract.”

Defendant’s exception thereto must be sustained.

Tbe court in tbe quoted charge inadvertently-failed to go further and explain wbat elements of damage would enter into and be embraced by “wbat a breach of tbe contract would cost him.” It expressly excluded expenses incurred in reprocessing articles not cleaned or processed in accord witb agreed specifications. It failed to correct tbis inadvertence elsewhere in its charge.

Furthermore, non constat defendant may not bave settled in full for all services rendered.by plaintiffs, it still may be true, as be testified, tbat be has paid tbem for work tbey failed to do in accord witb tbe terms of tbe contract. It does not follow as a matter of law tbat an affirmative answer to tbe first issue would constitute a finding by tbe jury tbat tbe contract was as plaintiffs contend. Nor does such a finding compel tbe conclusion tbat plaintiffs are not required to account for money received for services tbey failed to render. If tbe controverted issue as to tbe alleged breach of contract is resolved against tbem, tben defendant is entitled to recover tbe losses which naturally and proximately resulted from tbe nonperformance and which were reasonably in tbe minds of tbe parties at tbe time of its making. Monger v. Lutterloh, 195 N. C., 274 (279), 142 S. E., 12, and cases cited.

*174The record fails to justify the conclusion the parties did not contemplate that a breach of the contract by plaintiffs would cause defendant to incur additional expense in reprocessing the merchandise to meet the ■ requirements of the Army and additional trips in transporting the same to and from the Army camps.

This is not affected by the fact defendant has been paid by the Government for the processing and cleaning. On his testimony the breach of contract by plaintiffs compelled him to reprocess, at considerable expense, merchandise they agreed to clean and for the processing of which he has paid them at the agreed rate. If this be true and the jury so finds, the plaintiffs, in the settlement between the parties, must compensate defendant, under the prevailing rule or measure of damages for breach of contract, for the loss he has sustained by reason of their failure to comply with the terms of their agreement.

The disposition we have made of this appeal renders it unnecessary for us to discuss other exceptive assignments of error appearing in the record.

For the reasons stated there must be a

New trial.