Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co.

William B. Brown, J.,

concurring. I agree with the majority that the judgment of the court of appeals awarding plaintiff-appellee $25,792 in damages must be affirmed. However, because I see no conflict between New York and Ohio law in this case, I find it unnecessary to adopt a conflict of laws rule. 1

*441 Both Ohio and New York have adopted the general rule that a plaintiff is entitled to recover damages for a defendant’s breach of contract in the amount of the farther compensation plaintiff would have received under the contract, less the value to plaintiff being relieved of the obligation of completing performance. Allen, Heaton & McDonald, Inc. v. Castle Farm Amusement Co. (1949), 151 Ohio St. 522 [ 39 O.O. 330 ]; R & I Electronics, Inc. v. Neuman (1978), 66 A.D. 2d 836 , 411 N.Y. Supp. 2d 401. Additionally, both states require plaintiff to allege and prove what he would have received under the contract and what the continuing performance would have cost. Id. Neither state’s law specifically deals with the issue of allocation of overhead expenses. 2 Thus, since the law of both jurisdictions is identical on the question, there is no conflict of laws. 3 Where no conflict exists courts should naturally apply forum law and the fact that the parties have chosen the law of a particular state to govern their contract is irrelevant. 4

Therefore, the sole issue before this court is whether the court of appeals properly awarded damages to appellee. Appellant contends that appellee presented no proof as to costs saved in regard to making master tapes, devising programming. schedules, consulting, advising and servicing its customers. Appellant argues that these were services for which Midwestern had contracted and that these costs, including Schulke’s business trips to Europe, must be allocated among appellee’s customers as costs saved. Lastly, appellant believes that these constitute essential costs of the contract and have nothing to do with overhead.

This argument is unpersuasive. Webster’s New Collegiate Dictionary (1975 Ed.) defines “overhead” as “business expenses * * * not chargeable to a particular part of the work or product.” That is precisely what the costs involved in this case are. The contract provided that appellee would furnish appellant with music cue sheets and schedules for recommended tape rotations in addition to the tapes themselves. There is no mention of advice, consultation or additional servicing. As for Schulke’s trips to Europe, appellee was already under contract to the BBC for the production of music selections. *442 Even after the breach, appellee entered into a new contract with the BBC. Midwestern’s breach presented no opportunity to affect the BBC contracts or reduce Schulke’s travel expenses. In fact, as the majority opinion has clearly noted, appellee had to continue to produce master tapes for its remaining sixty-nine customers. This cost and similar costs for the production of the master tapes are clearly not chargeable to a particular part of the product and are thus overhead expenses. Schubert v. Midwest Broadcasting Co. (1957), 1 Wis. 2d 497 , 85 N.W. 2d 449 , is precisely on point in this regard and is properly approved and followed.

Furthermore, I agree with the majority that appellee appropriately satisfied its burden of proof in regard to savings actually experienced. Allen, Heaton & McDonald, Inc., supra. That standard does not require an absolute mathematical precision in the proof of damages or expenses saved. Indeed, such a requirement would be manifestly unjust, for it would allow the wrongdoer to profit from his breach and would supply an incentive for the breaching party to obfuscate the facts regarding the issue.

For the foregoing reasons I concur in the judgment that the decision of the court of appeals be affirmed.

It is unfortunate that the majority adopts the rule of Restatement of Law 2d (1971) 561, Conflict of Laws, Section 187, without any discussion of the rationale or policy behind such adoption. The majority opinion also ignores some very fundamental and potentially troublesome issues in the application of the test. For example, neither the Restatement nor this majority opinion discusses when the chosen state must have a substantial relationship to the parties or the transaction. This issue is particularly important in situations such as the present case where one party has moved and neither party retains any contact with the chosen state. This question and many others left unaddressed by the majority need to be considered before the Restatement test can truly become viable.

Furthermore, this court is well advised not to adopt the Restatement rule hastily inasmuch as it has received significant criticism. See Note, Effectiveness of Choice-of-Law Clauses in Contract Conflicts of Law: Party Autonomy or Objective Determination? (1982), 82 Colum. L. Rev. 1659 .

The lack of case law on this question is implicitly recognized by the majority. While stating that New York law governs the case, the majority relies on a Wisconsin case to resolve the question.

Appellant asserts that Ohio law places a stricter burden of proof upon a plaintiff in order to recover compensatory damages than does New York law. I do not read the pertinent cases to establish such a difference.

In this situation the expectations of the parties are not defeated because their contract is governed by the very rules which they desired. Moreover, there is no need for the courts of the forum state to undergo the perils of applying the law of another state beyond the" initial inquiry as to whether the rules are identical. In the present case, this application is even less significant because the law of neither state addresses the determinative issue. Interestingly enough, there is authority in New York for just such an application. Levey v. Saphier (1975), 83 Misc. 2d 146, 149 , 370 N.Y.Supp. 2d 808, 813 (where the court concluded that New York law applies even though it admitted that the application of Delaware law would have made no difference).