City of Summit v. Morris County Traction Co.

• Decision Date: 17 November 1913
• Parties: CITY OF SUMMIT v. MORRIS COUNTY TRACTION CO. et al.
• Court: New Jersey Supreme Court

88 A. 1048

85 N.J.L. 193

CITY OF SUMMIT

v. MORRIS COUNTY TRACTION CO. et al.

Court of Errors and Appeals of New Jersey.

Nov. 17, 1913.

Swayze and Minturn, JJ., dissenting.

Error to Supreme Court.

Suit by the City of Summit against the Morris County Traction Company and others. Judgment for plaintiff, and defendant brings error. Affirmed.

Corra N. Williams, of Newark, for plaintiff in error.

Elmer King, of Morristown, for defendant in error.

GUMMERE, C. J. The city of Summit in 1907, on the application of the defendant company, passed an ordinance granting leave to it to construct and operate a trolley line through the city streets, upon certain conditions specified in the ordinance and agreed to by the company. These conditions were many in number and of varying importance. Some of them related to the construction of the road, others to the operation thereof, and still others to the payment to the city of compensation for the privilege of using the city streets. Most of those relating to construction and operation carried with them a specific penalty for violations thereof by the company. The ordinance also contained a provision that the company should, at the time of its acceptance thereof, give a bond to the city, with sufficient surety, in the sum of $5,000, with a condition that the company and its successors should fully and faithfully keep, observe, and perform all the provisions of the ordinance on its part to be kept, observed, and performed. A bond was given in accordance with this provision, and the present suit is brought to recover the damages alleged to have been sustained by the city by the failure of the company to perform diverse duties imposed upon it by different sections of the ordinance. The breaches alleged having been proved at the trial, the court found for the plaintiff, but, no special damage having been proved to have been sustained by the city, only nominal damages were permitted to be recovered by it; the court holding that the payment called for by the bond was by way of penalty and not as liquidated damages. The plaintiff now seeks to review the ruling of the trial court upon this point.

We think the view of the trial court that the bond in suit provided a penalty for a breach of any of the conditions thereof, and not for damages liquidated by agreement of the parties for such breach, is the correct one. The rule to be gathered from our decided cases is this: That when damages are to be ascertained for the breach of a single stipulation contained in an agreement, and they are uncertain in amount and not readily susceptible of proof under the rules of evidence, then if the parties have agreed upon a sum as the measure of compensation for the breach, and that sum is not disproportionate to the presumable loss, it may be recovered as liquidated damages (Monmouth Park Association v. Wallace Iron Works, 55 N. J. Law, 132, 26 Atl. 140, 19 L. U. A. 456, 39 Am. St. Rep. 626; Robinson v. Centenary Fund, 68 N. J. Law, 723, 54 Atl. 416); but where the agreement contains disconnected stipulations of various degrees of importance, the sum named therein to be paid in case of a failure of performance will be considered as a penalty, unless the agreement specifies the particular stipulation or stipulations to which the liquidated damages are to be confined. Whitfield v. Levy, 35 N. J. Law, 149; Hoagland v. Segur, 38 N. J. Law, 230. The determination of the trial court was in consonance with this rule of law. It was also in harmony, we think, with the intention of the parties as exhibited by the provision of the ordinance which required the bond to be given; for apparently in every case in which the municipal authorities considered that the breach of the company of any stipulation...