Dopp v. Richards

• Decision Date: 31 July 1913
• Docket Number: 2462
• Citation: Dopp v. Richards, 43 Utah 332, 135 P. 98 (Utah 1913)
• Court: Utah Supreme Court
• Parties: DOPP et al., v. RICHARDS

135 P. 98

43 Utah 332

DOPP et al., v. RICHARDS

No. 2462

Supreme Court of Utah

July 31, 1913

APPEAL from District Court, First District; Hon. W. W. Maughan Judge.

Action by William P. Dopp and another against Ralph C. Richards.

Judgment for plaintiffs.Defendant appeals.

REVERSED WITH DIRECTIONS TO DISMISS.

Call &amp Jensen for appellant.

A. A Law for respondent.

RESPONDENTS' POINTS.

To be potential and controlling that a stated sum is liquidated damages, that sum must be fixed as the basis of compensation, and substantially limited to it.(Sutherland on Damages, pages 478-9-80-1;3 Parson Cont. 6th Ed.p. 156;Rinard v. Gardner,31 P. 134;Kelly v. Fejervary,83 N.W. 791;Western Gas, C. Co., v. Dowaigaic Gas & F. Co.;10 Am. & Eng. Ann. Cases 224;Stony Cr. Lumber Co. v. FieldsCo., 1 Am. & Ann. cases 242, and cases there cited;Bagley v. Peddie,16 N.Y. 469;Morrison v. Richardson,80 N.E. 468, 13 Cyc. 91-2-3.)A contract to pay a stipulated sum as damages will be given effect only where the damages provided against are uncertain and are not ascertainable by any satisfactory rule of law.(Krutz v. Robbins,40 P. 415;Kondon v. Kemper,13 L.R.A. 674;Chicago House Wrecking Co. v. U.S.53 L.R.A. 127, 45 C.C.A. 343;McIntosh v. Johnson, 8 Utah, 359;13 Cyc. 95-6-7 and cases cited;Atwood v. Fagan,134 S.W. 765;Safe Co. v. Safe Dep. Co.,93 N.E. 81;Sherman v. Gray,104 P. 1004;Davidson v. Hughes,91 P. 913;Turck v. Mining Co.,8 Colo. 113, 5 P. 838;O'Keefe v. Dyer(Mont.),52 P. 196;Mining Co. v. Mining Co.,28 Colo. 251, 64 P. 218;Ewing v. Litchfield,91 Va. 575, 22 S.E. 362;Stratton v. Fike,51 So. 874.)The tendency of the late cases is to regard the statements of the contracting parties as to liquidated damages as a penalty, and if it be doubtful whether a contract provides for a penalty or liquidated damages, and the actual loss can be measured by established rules of law, the doubt should be resolved in favor of actual compensation and such attempted provision held to be a penalty.(Cushing v. Drew,97 Mass. 445;Pom. Eq. Jur. Sec. 440;13 Cyc. 95, and cases.)

FRICK, J. McCARTY, C. J. STRAUP, J., concurring in part and dissenting in part.

OPINION

FRICK, J.

This action was commenced by plaintiffs, as vendors, to recover damages against the defendant, as assignee of the vendee, for a breach of contract for the sale of real estate.The material parts of the contract are that on the 14th day of April, 1908, the plaintiffs herein entered into a contract with one C. R. Jepperson, whereby the plaintiffs sold to said Jepperson a certain parcel of land in Cache County, Utah, for the agreed price of $ 2660, payable as follows: $ 285 upon the execution of the contract, which amount was duly paid; $ 375 on or before October 1, 1911; and the remaining $ 2000, which was evidenced by a note and mortgage, a first lien on the land sold, was also to be paid on the 1st day of October, 1911.The deferred payments bore interest at the rate of nine per cent. per annum, payable on the 1st day of October of each year.The vendee took possession of the land under the contract, and agreed to pay the taxes.A deed was executed and placed in escrow with a bank named in the contract at Logan, Utah, which was to be delivered to the vendee upon his compliance with the conditions of the contract--otherwise to be returned to the vendees.The contract contained the following stipulations:

"In the event of a failure to comply with the terms hereof by the said party of the second part, the said parties of the first part shall be released from all obligations in law or equity to convey said property as hereinbefore provided, and the said party of the second part shall forfeit all right thereto, and shall also forfeit to the parties of the first part as liquidated damages all payments that may have been made on this agreement.""Time is the essence of this contract, and if default be made by the party of the second part in any of the conditions named herein, then the parties of the first part may at their option declare this agreement null and void, and the said Cache Valley Banking Company is hereby authorized to surrender the above-mentioned deed to the order of the said parties of the first part."

After entering into the foregoing contract the vendee, Jepperson, assigned all of his interest therein to the defendant Richards, and, when the 1st day of October, 1911, arrived, the latter failed to make the payments provided for in the contract, excepting the one of $ 285, which was paid as aforesaid.Immediately upon the default of payment by the defendant, the plaintiffs terminated the contract, and on the 5th day of October, 1911, commenced this action for damages for its breach.

The defendant makes no claim whatever to the land.In the complaint the plaintiffs allege that by reason of the breach aforesaid they were damaged in the sum of $ 1500, upon which the defendant was entitled to a credit for the sum of $ 758 for payments made pursuant to the terms of the contract.Plaintiffs in their complaint also sought to be relieved from the stipulation in the contract with respect to liquidated damages, which stipulation we have quoted above.Plaintiffs sought to be relieved from the said stipulation upon the alleged ground that "the provision contained in the contract with reference to a forfeiture of all sums paid on said contract as liquidated damages was intended by the said parties to be a penalty in the event of a breach of the same."The defendant answered complaint; but it is not necessary to set forth the averments contained therein, except to state that, in view that the plaintiffs had admitted that defendant had paid the sum of $ 758, and had elected to terminate the contract and to repossess themselves of the land in question, and because of the payments that had been made by the defendant upon the contract as aforesaid, he denied any further liability.

At the trial it was stipulated that the plaintiffs had "declared said contract null and void" as provided therein.It was further stipulated that, in case the court deemed it material, which materiality was denied by defendant, the "rental value of the premises described in the complaint was and is $ 250 per annum."It was also stipulated, subject to its materiality, which was denied by the plaintiffs, that in the month of January, 1912, the plaintiffs sold the land in question for the sum of $ 2754.75.The plaintiffWilliam P. Dopp, in support of the allegation in the complaint that the stipulation in the contract with regard to liquidated damages was not binding upon him, over defendant's objections, also testified as follows:

"I left the making of the contract with Mr. Thompson, and we(Dopp and Jepperson) did not have any conversation in regard to the damages; all we said was that we would get Mr. Thompson to make out the contract, and we both read it over, and agreed that it was all right, and signed it."

This is all of the evidence in the record upon that subject.The question that arises in the legal mind is, How could ordinary minds more completely have met and agreed upon a proposition than did the minds of the parties to the contract in question, as appears from the foregoing statement?There was some further evidence produced by the plaintiffs; but what was produced was entirely immaterial to any issue in the case.

Upon substantially the foregoing admissions, stipulations, and evidence, the plaintiffs rested, and the defendant moved for a nonsuit, which was denied.

The defendant testified, and produced receipts in support of his testimony, that he had paid $ 811.66 upon the contract, and further testified that, in addition thereto, he had paid all of the taxes on the land after taking possession thereof under the contract.The court excluded defendant's testimony with respect to the payment of the $ 811.66 and the receipts, because of defendant's admissions in his answer; but his testimony with regard to the payment of taxes remained in the record, and is not denied.

The court made findings of fact in which, among other facts, it found that the defendant had paid $ 758 on said contract; that the rental value of said land was $ 250 for each year for the four years commencing with 1908 and ending with 1911; that the damages sustained by the plaintiffs was $ 1000, upon which defendant was entitled to credit for said $ 758 paid on said contract, leaving a balance due plaintiffs as damages the sum of $ 242.Conclusions of law and judgment were made and entered in accordance with said findings of fact, from which judgment the defendant prosecutes this appeal.

The appellant contends that the court erred in not enforcing the terms of the contract as agreed to by the parties thereto, and that it further erred in holding that the respondent was entitled to recover anything under the provisions of the contract in question.Respondent seeks to sustain the judgment and rulings of the court upon the ground that the forfeiture clause in said contract, which we have set forth in full, should be treated as a penalty and not as a binding stipulation for liquidated damages.

As to whether or not a particular sum named in an executory contract as liquidated damages for a breach thereof will be held to be a penalty merely or will be enforced as the damages agreed upon is a question upon which the courts are somewhat at variance.It is, however, clear from the authorities that no hard and fast rule can be laid down which shall control in all cases, at least not in those jurisdictions which have no statute governing the question.In California the subject is controlled by statute.Kerr's Cal. Codes, sections 1670,1671.As a general rule, it is held that each case...