Bowden v. Southern Rock Island Plow Co.

• Decision Date: 08 June 1918
• Docket Number: (No. 7932.)
• Parties: BOWDEN v. SOUTHERN ROCK ISLAND PLOW CO.
• Court: Texas Court of Appeals

206 S.W. 124

BOWDEN v. SOUTHERN ROCK ISLAND PLOW CO.

(No. 7932.)

Court of Civil Appeals of Texas. Dallas.

June 8, 1918.

Rehearing Denied November 2, 1918.

Appeal from Dallas County Court, at Law; T. A. Work, Judge.

Action by the Southern Rock Island Plow Company against Andrew Bowden. Judgment for plaintiff, and defendant appeals. Reformed, and affirmed as reformed.

R. P. Dorough, of Texarkana, for appellant. Thompson, Knight, Baker & Harris, of Dallas, for appellee.

RASBURY, J.

Appellee sued appellant in the court below for certain items of damage alleged to be the consequence of appellant's refusal to accept a shipment of wagons sold by the former and purchased by the latter, and tendered through carrier for delivery at Texarkana in compliance with the terms of a written contract between the parties. There was trial by jury, to whom were referred, in the form of the usual interrogatories, certain controverted issues of fact for special verdict. Upon the verdict returned by the jury there was judgment for appellee on all matters in controversy; and no issue is made in this court in that respect. A part of the judgment, however, consists of an item of $318.90, which is attacked, and which was referred to and determined by the court, due to the fact that the right to recover that item depended upon the provisions of the contract and certain uncontroverted facts. It is therefore necessary to recite the provision of the contract and the facts relating to that item.

The contract is an elaborate one, and has numerous provisions relating to as many matters. The only provision affecting the matter in controversy, however, is one which in substance provides that appellant, the buyer, shall not countermand the "order," refuse to receive the articles of merchandise, or have shipment held beyond current season, save upon payment to appellee, the seller, of all freight, storage, injury to the property, or other actual outlay and expenses, together with 20 per cent. of the purchase price thereof, or invoice, "as agreed liquidated damages." When the wagons arrived at Texarkana, where they were by the contract to be delivered, appellant refused to accept them from the carrier. They were taken in charge by appellee and resold for $54.20 less than the amount appellant agreed to pay therefor, after deducting all expenses incurred in the resale. The approximate average profit realized by appellee upon sale of wagons of the character purchased by appellant and the profit realized on the sale to appellant is 20 per cent. of the sale or invoice price, which in the instant case was $318.90. The action of the court in awarding appellee judgment for said item is founded upon the provision of the contract and the facts just recited.

Appellant complains of the action of the court in the respect stated, and contends, in effect, that the contract provision quoted discloses a penalty, and not liquidated damages, entitling appellee to recover only his actual damages, which, without controversy, the record discloses is $54.20, from which it results that the judgment is excessive to the extent of said item of $318.90. This contention presents an old and oft-recurring issue, one in fact which arises with nearly every attempt to enforce similar agreements. The right to contract for the payment of compensation for loss or injury which may accrue as result of a breach of the contract is inherent, of course, and as a consequence the issue always is whether the sum named is a penalty or liquidated damages, which the parties as a rule declare it to be. An eminent authority declares that the English and American cases concede the following rules:

"Where the sum fixed as liquidated damages is manifestly above the injury sustained, it will be held to be a penalty, and only actual damages can be recovered. Where the contract is for a matter of uncertain value, and a sum is fixed to be paid on the breach of it, the sum, if not clearly unreasonable, is recoverable as liquidated damages. Where the payment of the money appears to have been intended only to secure the performance of the contract, it will be construed as a penalty. Where the contract contains a number of conditions, and the penalty is applied to only one of them, it is not recoverable as liquidated damages." 4 Elliott, Contracts, § 3767.

The cases from our own courts reflect at least the following well-defined rule: Since the intention of the parties is a cardinal factor in determining the meaning and purpose of the parties, it shall prevail, if it can be ascertained from the language. This rule has been applied in cases where the parties expressly declare the sum named is intended as a forfeiture or penalty, and no other intention can be gathered from the contract. Durst v. Swift, 11 Tex. 273; Eakin v. Scott, 70 Tex. 442, 7 S. W. 777; Norman v. Vickery, 60 Tex. Civ. App. 449, 128 S. W. 452; Witherspoon v. Duncan, 62 Tex. Civ. App. 361, 131 S. W. 660. See, also, 13 Cyc. 90; 8 R. C. L. 560. The latter authority, at page 567, cites authorities indicating that the intention of the parties is not all-controlling, when the sum stipulated is shown to be out of proportion to the probable loss. As much is...