110 S.W.2d 1016 (Tex.Civ.App. 1937), 1705, Ferguson v. Ferguson
| Citation | 110 S.W.2d 1016 |
| Opinion Judge | LESLIE, Chief Justice. |
| Party Name | FERGUSON v. FERGUSON. |
| Attorney | Davis & Davis, of Haskell, F. M. Robertson, of Ratan, and E. V. Hardwick, of Stamford, for appellant. Culbertson & Morgan, of Fort Worth, for appellee. |
| Judge Panel | GRISSOM, J., disqualified and not sitting. |
| Case Date | November 24, 1937 |
| Court | Texas Court of Appeals, Texas Court of Appeals |
Page 1016
Appeal from District Court, Taylor County; M. S. Long, Judge.
Suit by Joe Lee Ferguson against A. M. Ferguson. Judgment for defendant and plaintiff appeals.
Reversed and remanded.
Page 1017
Joe Lee Ferguson instituted this suit against A. M. Ferguson to recover $25,000, alleged to be liquidated damages due him as result of the latter's refusal to abide by the terms of an arbitration award to which they were parties. The trial court sustained a
Page 1018
general demurrer to plaintiff's petition, and he appeals.
Appellant asserts the legal sufficiency of the petition and the appellee attacks it by four counter propositions.
Appellee's first two propositions are to the effect that the allegations of the appellant's petition disclose that he elected a remedy by which he acquired the property awarded him by the board of arbitration and is not now entitled to recover said sum as liquidated damages.
These propositions are overruled. There is no question of election of remedies in the case. The contentions evidence a misconception of the petition and the provision of the contract, for a breach of which, the suit is prosecuted. Neither these nor the contract as a whole evidence any intention upon the part of either litigant to forego or waive in any event his equal interest in the estate valued between $200,000 and $300,000 for $25,000, promised merely as a guaranty of the performance of the award.
The appellee seems to proceed upon the theory that the suit is to enforce "the contract to submit the matters in controversy to arbitration." That contract was not breached. The appellee fails to appreciate that it is the contract "to abide the award," for a breach of which this suit is brought for liquidated damages. Although in the same written instrument as the agreement to arbitrate, and dependent upon that as a contract for the necessary consideration to support it, it is by its nature distinct from and merely collateral to the contract to arbitrate. It could not operate until the arbitrators effected an award under the terms of the agreement to submit the controversies to them.
In about three separate parts of the petition, and after reference to the submission of claims and controversies, the pleading states concerning the work of the board: "* * * all matters and causes undertaken to be done under said agreement were duly completed and executed." This has reference to the labors of the arbitrators, and it is not to be understood from these allegations, or the pleading as a whole, that the appellee, A. M. Ferguson, accepted the award, and that Joe Lee Ferguson went into full possession and enjoyment of the properties awarded to him, if indeed such consideration would be material in this lawsuit. The pleading specifically alleges that A. M. Ferguson failed and refused to abide by the terms of the award, thereby maturing said amount as liquidated damages to appellant.
Regardless of the outcome or whatever may have been the results of any suit or suits which these parties have prosecuted or defended in the courts (referred to in the petition), the plain provisions of the contract according to the allegations obligated A. M. Ferguson to abide by the result of the arbitration award, and it is alleged that he has failed and still refuses to do so, in that he has and does appeal to the courts to destroy the work of the arbitrators, although he waived the right of appeal from their decision under the authority of article 233, Revised Civil Statutes 1925, choosing to "rely solely upon the success of arbitration."
The real grounds upon which the sufficiency of the plaintiff's petition is challenged and its insufficiency sought to be shown, involved, as we think, the following considerations: (1) Does the agreement stipulate for the payment of liquidated damages or penalty? (2) Is that part of the agreement which purports to make provision for liquidated damages or a penalty for the failure of either party to abide the results of the arbitration (considered as distinct from and merely collateral to the agreement to submit controversies to arbitration) a valid or void stipulation or agreement? (3) Do the facts alleged show a breach of the agreement by the defendant?
We shall consider these questions in their order. If said provision (twenty-fifth paragraph) of the contract provides for a penalty, no recovery can be had for the breach, except for actual damages. The determination of the true character of such provisions in a contract is not free from difficulty. Concerning the construction of same it is said in 17 C.J. p. 934, § 233, as follows: " 'Whether,' it has been said, 'a sum named in a contract to be paid by a party in default on its breach is to be considered liquidated damages or merely a penalty, is one of the most difficult and perplexing inquiries encountered in the construction of written agreements.' It seems to be generally conceded indeed that each case must be permitted to stand pretty much on its own peculiarities and particular facts. [ Collier v. Betterton, 87 Tex. 440, 29 S.W. 467; Copeland v. Holloman (Tex.Civ.App.) 51 S.W. 257.]
Page 1019
And that no general rules applicable to all contracts are deducible. The question is one to be determined by the contract fairly construed. Where the parties have agreed on the amount of damages, ascertained by fair calculation and adjustment, and have expressed this agreement in clear and explicit terms, the amount so fixed will be treated as the true damages (stated or liquidated) and not as a penalty."
In the instant case the petition alleges that the appellant and appellee (1) mutually agreed in writing to submit their controversies to arbitration, (2) the award, (3) the failure of appellee to abide thereby, and (4) the amount of damages expressly stipulated for in writing as liquidated damages. There is nothing ambiguous about the contract or provision in suit. It expressly stipulates for liquidated damages, and the petition so declares without alleging any fact or circumstance manifesting an intention to the contrary. Such allegations prima facie state and import a cause of action for liquidated damages. Durst v. Swift, 11 Tex. 273; Eakin v. Scott, 70 Tex. 442, 7 S.W. 777; Pippin Bros. et al. v. Thompson (Tex.Civ.App.) 292 S.W. 618; Yetter v. Hudson, 57 Tex. 604; Norman v. Vickery, 60 Tex.Civ.App. 449, 128 S.W. 452; Talkin v. Anderson (Tex.Sup.) 19 S.W. 852; Bowden v. Southern Rock Island Plow Co. (Tex.Civ.App.) 206 S.W. 124, 125; Collins-Decker Co. v. Crumpler, 114 Tex. 528, 272 S.W. 772; Kollaer v. Puckett et al. (Tex.Civ.App.) 232 S.W. 914; Witherspoon v. Duncan, 62 Tex.Civ.App. 361, 131 S.W. 660; Brown Iron Co. v. Norwood (Tex.Civ.App.) 69 S.W. 253; Irvin v. Lambert et al. (Tex.Civ.App.) 70 S.W.2d 495; Engelhardt v. Batla (Tex.Civ.App.) 31 S.W. 324; 13 Tex.Jur. p. 323, § 177; p. 123, § 46, 47; p. 135, § 54; 17 C.J. § 308, p. 1005.
There could be no warrant for holding that the petition states a cause of action for penalty as a matter of law. We cannot presume that the difference between the actual damages and the amount stipulated was so great as to show, as a matter of law that the latter is a penalty rather than a provision for liquidated damages. Brown Iron Co. v. Norwood (Tex.Civ.App.) 69 S.W. 253.
A careful analysis of the petition and the contract involved leave no doubt that the provision in question presents a prima facie case of contract for liquidated damages. As to whether a sum agreed to be paid as damages for the breach of a contract shall be considered liquidated damages, or only a penalty, is held to depend upon the intention of the parties gathered from a full view of the provisions of the contract, the terms in which they have expressed their intention and the circumstances surrounding the subject-matter of the agreement, as well as the subject-matter itself. In the light of these considerations we...
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