Mayor v. &aelig

• Decision Date: 28 September 1908
• Docket Number: (No. 900.)
• Citation: 4 Ga.App. 722,62 S.E. 475
• Parties: MAYOR, ETC., OF CITY OF BRUNSWICK。 v. ÆTNA INDEMNITY CO.
• Court: Georgia Court of Appeals

62 S.E. 475

4 Ga.App. 722

MAYOR, ETC., OF CITY OF BRUNSWICK。

v.ÆTNA INDEMNITY CO.

(No. 900.)

Court of Appeals of Georgia.

Sept. 28, 1908.

1. Damages—Liquidated Damages and Penalties—Construction or Stipulations.

Prima facie the amount of money named in a bond conditioned for the faithful performance of the obligations of a contract is a penalty, and not liquidated damages; and a recovery in an action upon the bond will be limited to the amount of the actual damage sustained and proved.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 15, Damages, § 155.]

2. Same.

Where to secure the performance of the terms of a contract there is a stipulation for the payment of a fixed, unvarying sum upon the breach of any of several promises of varying degrees of importance, especially where the damages for the breach of some of them would be easily ascertainable, the sum named will be construed to be a penalty.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 15, Damages, § 105.]

3. Same.

The designation of a conventional amount to be paid upon the breach of a contract will not be held to liquidate the damages, where it is apparent that it was not the intention of the parties that the obligor could escape further liability by paying that sum.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 15, Damages, § 156.]

(Syllabus by the Court.)

Error from City Court of Brunswick; A. D. Gale, Judge.

Action by the mayor and city council of Brunswick against the Ætna Indemnity Company on an indemnity bond. Judgment for defendant, and plaintiff brings error. Affirmed.

The Southern Electric Railway, Light & Water Company, with a view of constructing and operating a number of public utilities, including gas works, an electric light plant, and an electric street railway, at Brunswick, Ga., began negotiations through one Neff, its agent, with the mayor and council of that city for certain rights, permits, and franchises, including the use of the public streets, the fee to which was vested in the city. The city council, pursuant to the negotiations, passed an ordinance in which the desired franchises were granted, the conditions under which they were to be enjoyed were stipulated, and a number of covenants were imposed upon the grantees. Among other things, the grantees of the franchises were not to cut or molest any shade trees without special consent; were not to lay tracks, except in certain portions of the street; were not to charge any passenger more than five cents for any continuous passage in any cars they might operate; were to grant transfers; were to permit policemen to ride free; were to obey all ordinances regulating the speed of cars; were to pay a proportionate part of street paving in certain cases; were to pay as a franchise fee a certain annual percentage of the gross earnings; were not to charge beyond a certain price for illuminating gas and electricity; were to supply a certain amount of water free to the city for the purpose of flushing sewers; were to buy an existing gas and water plant, if required by the city to do so; were to hold the city harmless from all damages by reason of injuries to person or property caused by the laying of tracks, the making of excavations, etc.; were to pay any judgment which might be rendered against the city on any of these accounts; and were to pay any damage that might be done to public sewers, water mains, etc. There is no distinct covenant that the grantee shall exercise the franchises granted; but it is provided in section 8 that "the rights powers, franchises and privileges herein granted shall cease, determine and be forever void if the said Neff, his associates, successors and assigns, fail to begin in good faith the construction of said street railway system within four months from the date of the passage of this ordinance, and unless said Neff, his associates and assigns, shall, twelve monthsfrom such date, have constructed and in operation at least four miles of such electric street railway system within the limits of said city, and the remainder, if any, within thirty-six months after such date." Ample provision was made for the forfeiture of the different franchises by nonuser or by failing to maintain the utilities contemplated. The ordinance was conditioned that the rights and privileges granted should not pass to the grantees until they signified their acceptance in writing of the terms of the ordinance, in which event the ordinance should have not only the force of law, but also the effect of a contract. It was further provided that within four months thereafter the grantees should file with the mayor and council "a bond in the penal sum of $10,000, assuring due and faithful performance of each and every covenant assumed to be performed by the grantee herein."

The Southern Electric Railway, Light & Water Company filed its acceptance and gave the bond in the sum required, with the Ætna Indemnity Company as surety. The condition of the bond is: "That whereas, the mayor and council of the city of Brunswick, Georgia, on August 10, 1905, passed and adopted an ordinance entitled 'An ordinance to grant unto J. H. Neff, his associates, successors and assigns, a right and franchise for the operation of a street railway system, electric light, gas and water plants in the city of Brunswick, Georgia, and for other purposes;' and whereas said J. H. Neff has assigned and transferred to the Southern Electric, Gas & Water Company, a corporation under the laws of the state of Maine, all his rights and privileges and franchises under said ordinance, a copy of which ordinance is attached hereto as a part hereof: Now, therefore, if said the Southern Electric, Gas & Water Company, a corporation under the laws of the state of Maine, its successors and assigns, shall duly and faithfully perform each and every covenant assumed to be performed by the grantee in the aforesaid ordinance (except, however, that the aforesaid the Southern Electric, Gas & Water Company, its successors and assigns, shall be excused and relieved from the performance of any covenant or duty assumed under the terms of said franchises by the grantee, his associates, successors and assigns, where performance is prevented by pending litigation or any order, decree or judgment of a court of competent jurisdiction), then this obligation to be void; otherwise, to remain in full force and effect."

The mayor and counsel brought the present action against the principal and surety in the bond, reciting the adoption of the ordinance, its acceptance by the Southern Electric, Gas & Water Company, and the giving of the bond in the terms mentioned above; also alleging...