218-220 Mkt. St. Corp. v. Krichradisco, Inc.

• Decision Date: 05 February 1940
• Docket Number: No. 24.,24.
• Citation: 11 A.2d 109,124 N.J.L. 302
• Parties: 218-220 MARKET STREET CORPORATION v. KRICHRADISCO, Inc.
• Court: New Jersey Supreme Court

11 A.2d 109

124 N.J.L. 302

218-220 MARKET STREET CORPORATION

v. KRICHRADISCO, Inc.

No. 24.

Court of Errors and Appeals of New Jersey.

Feb. 5, 1940.

[Copyrighted material omitted.]

Appeal from Circuit Court, Essex County.

Action by 218-220 Market Street Corporation against Krich-Radisco, Incorporated, for breach of contract for installation of air-conditioning system, wherein defendant filed a counterclaim. From a judgment for defendant, plaintiff appeals.

Affirmed.

Spaulding Frazer, of Newark (Jack Rinzler, of Passaic, and Harry Schaffer, of Newark, of counsel), for plaintiff-appellant.

Milton M. Unger, of Newark (Sydney L. Seiler, of Newark, on the brief), for defendant-respondent.

PORTER, Justice.

This appeal is from a judgment recovered in the Essex County Circuit Court by the respondent on its counter-claim.

The action was for a breach of contract for the installation of an air conditioning system in the appellant's bar and restaurant. The claim was that the equipment installed was not as specified; that it was not satisfactory in doing the work intended and that it had not been installed within the time limited in the contract. The respondent denied any breach and counter claimed for the sum of $11,400, which was the unpaid balance of the contract price.

The verdict of the jury was in favor of the respondent on the counter claim for $7,537, which the trial court reduced to $7,285 because of an obvious error in the calculation of interest.

The issues were sharply disputed, thoroughly and ably presented, especially as to the equipment which was installed and whether it was as provided for in the contract.

The case presented was largely one involving factual disputes.

It will be noted that the verdict was over $4,000 less than the unpaid balance of the contract price. This means that the finding of the jury was that there had been a breach of the contract and that appellant's damage was the difference between the unpaid balance of the contract price and the amount of the verdict.

An examination of the voluminous record satisfies us that the trial court committed no error which injuriously affected the substantial rights of the appellant, therefore there should be an affirmance. Cf. Kargman v. Carlo, 85 N.J.L. 632, 90 A. 292; Ridgeley v. Walker, 86 N.J.L. 590, 92 A. 394; Connolly v. Public Service Railway Co., 94 N.J.L. 157, 109 A. 507.

The first, and perhaps the main point, urged by appellant as reversible error is that the trial court was in error in directing a verdict against it on the fourth count of the complaint. This count sets up the provision of the contract, and charges its breach, it provided that the cooling system be installed and in operation by May 30, 1938, and failing in those respects the respondent shall pay $100 for every day thereafter until the installation and operation be completed as liquated damages. We think that a legal question for the court rather than a factual one for the jury was presented on this motion as to the legality of this provision of the contract. We conclude that the court was right in granting the motion for two reasons: First—because the testimony, in our view, abundantly established the fact that the equipment was installed and in operation on the date mentioned. Secondly—whether that was the fact or not, we conclude that the sum of $100 per day is so out of proportion to any loss which the proofs indicate might result from such breach that it is in fact a penalty and not liquidated damages. We reach that conclusion from a consideration of the amount of the contract price; the nature of the work and its intended purpose; that the period during which this amount is payable is a continuing one and is not limited to the summer season and all the other circumstances of the case. It seems clear that this amount was not based upon damages which would likely flow from a breach but is rather an arbitrary figure unrelated to such damages or losses and was therefore a penalty. Moreover, no testimony was offered to show any loss of business or other specific damage suffered by appellant in the circumstances. This matter of proof of damages will be adverted to again later. The policy of the law is to allow real damages only. If the contract provides damages which will exceed real damages as same may be ascertainable by proof, or damages which are unconscionable or excessive under the circumstances the same are considered as penalties and are unlawful.

This Court in stating these rules has said that where from the whole contract doubt exists whether the sum mentioned is intended as a penalty or as liquidated damages, "it will be construed as a penalty, because the law favors mere indemnity". Monmouth Park Ass'n v. Wallis Iron Works, 55 N.J.L. 132 at page 141, 143, 26 A. 140, at page 143, 19 L.R.A. 456, 39 Am.St.Rep. 626. See also Summit v. Morris County Traction Co., 85 N.J.L. 193, 88 A. 1048, L.R.A.1915E, 385.

The next point urged as ground for reversal is that the court refused to charge the jury appellant's 16th, 18th, 19th, 20th and 21st requests. We conclude that there is no merit to this point for the reason that all of these requests were in fact charged in substance by the court. Requests 16 and 21 in effect are that there can be no recovery of the contract price if the jury find a failure to perform "in any substantial respect" or "a substantial part of the work." These requests were charged by the court, we think, clearly and fully in these words?quot;Taking into consideration all of the alleged defects and short-comings of the equipment by way of material supplied, the manner of installation and performance, have the defendants, the sellers, substantially performed their contract? If they have not, then the plaintiff is entitled to payment on the contract." We find that the same subject matter was also spoken of by the court to the same effect in other parts of the charge. The rule is well established that the court need not charge in the precise language of the requests. If, as here, the requests are covered by the court's own language that is sufficient. Requests 18 and 19 in effect are that defendants are not entitled to recover on the counter claim if there was a wilful deviation from the terms of the contract or lack of good faith and that consideration be given in finding those facts by the evidence of the carelessness and negligence of the respondents in the prosecution of the work. Again we think the court adequately covered these matters in its charge and so did not need to repeat...