Benewah Creek Improvement, Land & Logging Co. v. Milwaukee Lumber Co.

• Decision Date: 30 December 1925
• Citation: 242 P. 793,41 Idaho 783
• Court: Idaho Supreme Court
• Parties: BENEWAH CREEK IMPROVEMENTS, LAND & LOGGING COMPANY, a Corporation, Appellant, v. MILWAUKEE LUMBER COMPANY, a Corporation, and FRED HERRICK, Respondents

242 P. 793

41 Idaho 783

BENEWAH CREEK IMPROVEMENTS, LAND & LOGGING COMPANY, a Corporation, Appellant, v. MILWAUKEE LUMBER COMPANY, a Corporation, and FRED HERRICK, Respondents

Supreme Court of Idaho

December 30, 1925

SPECIFIC PERFORMANCE-PENALTY OR FORFEITURE FOR BREACH OF CONTRACT - LIQUIDATED DAMAGES - WHEN PERFORMANCE ENFORCED WITHOUT PENALTY-MANDATORY INJUNCTION.

1. Where a contract contains provisions for the performance or nonperformance of acts which are not measurable by an exact pecuniary standard, and also one or more other acts in respect of which damages are easily ascertainable by a jury and a certain sum is stipulated to be paid upon a violation of any or all of such provisions, such sum will be taken to be a penalty.

2. Where a party has contracted to do a certain act or to refrain from doing a certain act and has made himself liable to a penalty for the purpose of insuring performance or nonperformance, a court of equity will, if the contract is otherwise one which calls for its interposition, compel such party to specifically perform, or restrain him from committing the act, as the case may be, notwithstanding the penalty prescribed.

3. Equitable relief with regard to the specific performance of a contract is not a matter of strict right but rests in the sound discretion of the court, to be judicially exercised in view of all the circumstances surrounding the matter in controversy, the language employed in the contract, the intention of the parties, and whether or not the damages sustained are ascertainable in whole or in part, and whether relief may be afforded by a mandatory injunction.

4. Where in an action for specific performance the relief sought is far in excess of the consideration moving under the contract to the party against whom relief is sought, and to enforce the contract literally as regards penalty for nonperformance would require such party to pay the equivalent of a sum far in excess of the damages suffered, a court of equity will require a specific performance of the contract and refuse to construe it as one providing for liquidated damages.

APPEAL from the District Court of the Eighth Judicial District, for Benewah County. Hon. Edgar C. Steele, Judge.

Action for the specific performance of a contract. Judgment for defendants. Reversed.

Reversed and remanded, with directions. Costs awarded to appellant.

Ezra R Whitla and Wm. D. Keeton, for Appellants.

Courts will enforce the contract as written. (Heslin v. Eastern B. & L. Assn., 28 Misc. 376, 59 N.Y.S. 572; Gazos Creek M. & Lbr. Co. v. Coburn, 8 Cal.App. 150, 96 P 359; Jewell Tea Co. v. Watkins, 26 Colo. App. 494, 145 P. 719; Kupfersmith v. Delaware Ins. Co., 84 N.J.L. 271, 86 A. 399, 45 L. R. A., N. S., 847; Scheuerman v. Mathisor, 74 Ore. 40, 144 P. 1177; 9 Cyc. 587; Johnson v. Geddes, 49 Utah 137, 161 P. 910; Kanaskat Lumber & S. Co. v. Cascade Timber Co., 80 Wash. 561, 142 P. 15; Zohrlaut v. Mengelberg, 144 Wis. 564, 124 N.W. 247; Hughes Produce Co. v. Pulley, 47 Utah 544, 155 P. 337, L. R. A. 1916D, 728; Building & L. Assn. v. Walker, 59 Neb. 456, 81 N.W. 308; Brian v. Oregon Short L. Ry. Co., 40 Mont. 109, 20 Ann. Cas. 311, 105 P. 489 25 L. R. A., N. S., 459; Thayer v. Augustine, 55 Mich. 187, 54 Am. Rep. 361, 20 N.W. 898; Machold v. Farnan, 14 Idaho 258, 94 P. 170; Bennett v. Hyde, 92 Cal. 131, 28 P. 104; Smith v. Krall, 9 Idaho 535, 75 P. 263.)

There was ample consideration in this case. (Hind v. Holship, 2 Watts (Pa.), 104, 26 Am. Dec. 107; Visalia Gas & E. Co. v. Sims, 104 Cal. 326, 43 Am. St. 105, 37 P. 1042; Presbyterian Board of Missions v. Smith, 209 Pa. 361, 58 A. 689; Rollins v. Hare, 15 Ind.App. 677, 44 N.E. 374; Thompson Co. v. Pennebaker, 173 F. 849.)

Inadequacy of consideration alone is no defense. (Ullsperger v. Meyer, 217 Ill. 262, 75 N.E. 482, 2 L. R. A., N. S., 221; Erwin v. Parham, 12 How. (U.S.) 197, 13 L.Ed. 952; Bradley v. Heyward, 164 F. 107; Morrow v. Mathews, 10 Idaho 423, 79 P. 196; Telegraph Phone Corp. v. Canadian Phone Co., 103 Me. 444, 69 A. 767.)

The provision of the contract to turn over the property to the appellant is for liquidated damages. (1 Pomeroy, Eq. Jur., secs. 442, 450; Fasler v. Beard, 30 Minn. 32, 38 N.W. 755; Tobler v. Austin, 22 Tex. Civ. App. 99, 53 S.W. 706; Schroeder v. California Yukon Trading Co., 95 F. 296; Brennan v. Clark, 29 Neb. 385, 45 N.W. 472; DeGraff v. Wickham, 89 Iowa 720, 52 N.W. 503, 57 N.W. 420.)

Equity will not relieve against liquidated damages. (Nilson v. Towns of Jonesboro, 57 Ark. 168, 20 S.W. 1093; Peekskill S.C. & M. R. Co. v. Village of Peekskill, 21 A.D. 94, 47 N.Y.S. 305; Everett Land Co. v. Maney, 16 Wash. 552, 48 P. 243; Pogue v. Kaweah Power & W. Co., 138 Cal. 664, 72 P. 144; 1 Pomeroy, Eq. Jur., 440; Morre v. Durnam, 63 N.J. Eq. 96, 51 A. 449; Grigg v. Landris, 21 N.J. Eq. 494.)

Equity will decree specific performance in such a case. (Pogue v. Kaweah, P. & W. Co., supra; People v. Love, 19 Cal. 677.)

Equity having obtained full jurisdiction will grant any relief proper. (21 C. J. 579, par. 858; Dover Lumber Co. v. Case, 31 Idaho 276, 170 P. 108; Lawrence v. Halversen, 41 Wash. 534, 83 P. 889; Mathieson Alkali Works v. Virginia Banner Coal Co., 140 Va. 89, 124 S.E. 470; Murray v. Speed (Okl.), 153 P. 187; Templeton v. Bockler, 73 Ore. 494, 144 P. 405; Ely v. Johnson, 114 Va. 31, 75 S.E. 748.)

Ed. S. Elder and Frank L. Moore, for Respondents.

Where the evidence is conflicting and there is substantial evidence to support a finding, it will not be disturbed on appeal. ( Bedal v. Smith, 36 Idaho 797, 214 P. 213, and cases cited.)

Where a contract for the performance of an act makes time of the essence of the contract, failure of the obligor to perform within the time specified does not of itself operate as a forfeiture. There must be affirmative action on the part of the obligee. (Durant v. Comegys, 3 Idaho 204, 28 P. 425; Haas v. Coburn, 22 Idaho 27, 124 P. 476; Pease v. Teller Corp., Ltd., 22 Idaho 807, 128 P. 981.)

Where the entire facts are presented to the court in an action to enforce the specific performance of a contract, the rights of parties to the contract should not be adjudged upon technical or narrow questions, or consideration so as to do injustice to the parties to the contract, but the court should give full consideration to all the facts and circumstances, and the intention and action of the parties, and give such judgment as will be just and equitable to the parties thereto. (Haas v. Coburn, supra; Pease v. Teller Corp., Ltd., supra.)

BUDGE, J. William A. Lee, C. J., and Wm. E. Lee, J., concur, TAYLOR, J., Concurring Specially.

OPINION

BUDGE, J.

Appellant and respondent company on June 28, 1916, entered into a written contract wherein the respondent contracted to build, maintain and operate a flume along Benewah Creek, to be used for the transportation of sawlogs owned by homesteaders in Benewah Valley. We shall not repeat the contract in haec verba in this opinion but will refer to such parts thereof as we deem material.

It was provided in the contract that the respondent company was to build, construct and operate a flume from the St. Joe River, near the mouth of Benewah Creek, to the Hamely Ranch, at which place a dam was to be constructed to furnish a water supply and also to create a reservoir into which the logs hauled from timber lands might be unloaded. The terminus of the flume was to be in the St. Joe River, in order that the logs might be floated down into Coeur d'Alene Lake and caught in what is known as a sorting gap, there to be so handled that they could be sold to mill owners operating in that section of the state. It was stipulated in the contract that the flume was to be built in sections having lakes for storage purposes along the flume at distances not exceeding two miles. The flume was to be completed and in operation on or before the first day of May, 1917, and when completed the sides of the flume should have been at least five and one-half feet high. It was also provided that logs should be received from owners and transported without discrimination for $ 1 per thousand feet. The contract contained the further provision that it should be liberally construed in favor of the appellant.

Appellant was the owner of a right to the use of water in Benewah Creek, and some work had been done by it on the stream for the purpose of putting it in such condition that the logs of homesteaders might be floated down the same during the high-water season, a limited use of the creek having already been made for that purpose. The water right and the use thereof was by written lease transferred to respondent company by appellant upon condition that the flume be constructed and operated according to the terms of the contract and upon payment of $ 250 as an annual rental therefor.

In appellant's complaint, among other things, it is alleged that respondent company failed to carry out the terms of the contract, setting out wherein and in what manner the contract was breached. It further alleged the giving and serving of notice, as in the contract provided for, that the respondent complete the contract according to its terms, and further contained notice of a declaration of forfeiture by reason of the alleged failure on the part of respondent to fulfill the provisions of the contract, appellant's right to forfeit the same due to noncompliance, a declaration of forfeiture and a demand for possession. Appellant further prayed that an injunction issue, restraining and enjoining respondents from molesting, interfering or attempting to interfere with appellant in the enjoyment of the flume and appurtenances and that the respondent company be required by proper decree, to make, execute and deliver to ...