Dyer v. Cowden

• Decision Date: 03 March 1913
• Citation: 168 Mo. App. 649,154 S.W. 156
• Parties: DYER v. COWDEN.
• Court: Missouri Court of Appeals

154 S.W. 156

168 Mo. App. 649

DYER v. COWDEN.

Springfield Court of Appeals. Missouri.

March 3, 1913.

1. TRIAL (§ 169) — DIRECTION OF VERDICT — EVIDENCE.

A verdict should be directed for plaintiff only when defendant's evidence, viewed in the most favorable light and without regard to plaintiff's evidence, is insufficient to sustain a verdict for defendant.

2. SALES (§ 53) — BREACH OF CONTRACT — ACTION BY SELLER — QUESTION FOR JURY.

Where, in a seller's action for breach of a contract to buy a stock of goods, the defendant testified that plaintiff and his clerk made positive and false statements as to the amount to which the stock would invoice, and that he was induced thereby to make the contract, the questions of fraud and whether defendant was deceived were for the jury, though plaintiff's evidence contradicted defendant's testimony.

3. SALES (§ 43) — VALIDITY — FRAUD — MISREPRESENTATIONS.

Positive statements, of a seller and his clerk, that a stock of goods will not invoice more than $7,000, when in fact they invoice $9,000, which are relied on by the buyer and induce him, without investigating the quantity of the goods, to buy on the basis of the invoice price, constitute a misrepresentation of a material fact and not the mere expression of an opinion or "puffing."

4. SALES (§ 50) — CONTRACT FRAUDULENTLY PROCURED — WAIVER OF FRAUD.

Where a person was induced to sign a contract to buy a stock of goods on the basis of the invoice price by the seller's false representations that the stock would not invoice over $7,000, and thereafter, when he started to take the invoice, was led by the seller to believe that it would amount to about $9,000, he did not ratify the contract and waive the fraud by continuing with and completing the invoice, or by making suggestions to relieve the situation, which were not agreed to by the seller.

5. SALES (§ 379) — ACTION FOR BREACH — PLEADING — WAIVER OF FRAUD.

Where, in a seller's action for breach of a contract to buy a stock of goods, the defendant pleaded fraud in the procurement of the contract, a mere general denial in plaintiff's reply was insufficient to raise the issue of waiver of the fraud and ratification of the contract.

6. DAMAGES (§ 83) — LIQUIDATED DAMAGES — QUESTION OF LAW.

Whether a stipulation in a contract is for a penalty or for liquidated damages is a question of law, and not for the jury.

7. DAMAGES (§ 79) — BREACH OF CONTRACT — LIQUIDATED DAMAGES — PENALTY.

A stipulation, in a contract to buy a stock of goods on the basis of the invoice price, that, in case of a failure to perform, the sum of $300 should be forfeited as liquidated damages was a stipulation for liquidated damages, and not for a penalty, where the stock amounting to approximately $9,000 would be locked up about five days during the inventory at a season when the trade was the best, and it would be difficult to compute the loss of profits and of trade resulting therefrom.

Appeal from Circuit Court, Greene County; Alfred Page, Judge.

Action by L. Dyer against W. L. Cowden. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

The plaintiff brought this action for damages, alleging defendant's failure to comply with the terms of his written contract to purchase a stock of goods, and prayed for judgment in the sum of $300, the amount specified in the contract as liquidated damages for failure to perform. The defendant in his answer admitted the execution of the contract and his failure to comply, but denied that plaintiff was damaged in any way. He also set up as a defense that he was induced to sign said contract on the strength of certain representations made to him by the plaintiff in regard to the amount the stock of goods would invoice; that he told plaintiff he would not execute the contract if the goods exceeded approximately $7,000; that plaintiff assured defendant that he knew approximately the value of the stock, and falsely represented that it would not be more than $200 in excess of $7,000; that, at the time plaintiff made such representation, he knew that the stock would amount to about $9,000; that, relying on such representation, defendant was induced to enter into the contract; that the goods on invoice actually amounted to $8,975; and that the peculiar terms of the contract made it hazardous for defendant to trade for a stock greater in value than $7,000 in round numbers. The plaintiff's reply was a general denial.

After all the defendant's evidence had been introduced, and after plaintiff's evidence in rebuttal and defendant's rejoinder thereto, the court gave an instruction directing the jury to return a verdict for the plaintiff assessing the damages at $300. Judgment was rendered accordingly; and after unsuccessful motions for a new trial, and in arrest of judgment, defendant perfected an appeal to this court.

The evidence shows that the defendant, a resident and merchant of Springfield, Mo., having been engaged in the merchandise business for about 12 years, owned an equity in some real estate in Springfield; that through a real estate broker, one Nash, he met the plaintiff, a resident and merchant of Ash Grove, Mo.; and that defendant and Nash went to Ash Grove for the purpose of examining plaintiff's stock of goods. The defendant was in plaintiff's store from in the morning until after supper, and, according to his testimony, the plaintiff explained the cost mark on specific articles, but did not give it to him in writing; his testimony being that his investigation went more to the quality than the quantity of the stock of goods. After supper a trade was generally agreed upon, but no written contract was entered into until November 22, 1911, a few days later. The following provisions of the contract are all that are necessary to be set forth in order to determine the case: "Upon the completion of said invoice of said goods, wares, and merchandise, whatever said goods, wares, and merchandise, and fixtures and furniture, with the said 2 per cent. added as aforesaid for carriage, shall total over and above the sum of $4,500 shall be paid to the second party as follows: The first party agrees to and hereby obligates himself to turn over to the second party the daily sales of said stock each day, reserving therefrom only the reasonable running expenses of said business, and the first party agrees to permit the second party or some one by him, the second party, employed, to remain in said store for the purpose of inspecting the amount of such daily sales, and for that purpose shall have the right to examine the books of the said first party to ascertain the amount of such daily sales, and to receive such daily sales, less said running expenses, for which the said first party agrees to pay to such second party or his agent the sum of $1.50 per day. And it is further agreed and understood by and between the parties hereto that the whole of the difference between the total of the invoice price of said goods, wares, and merchandise and furniture and fixtures of said second party, with the said 2 per cent. added for carriage, and the sum of $4,500, the equity of the said first party in said Springfield property conveyed by him to said second party, shall be paid in full to the second party by January 1, 1912. It is further agreed and understood by and between the parties hereto that said stock of goods and fixtures conveyed to the first party by the second party, as aforesaid, shall not be removed from their present location until paid for in full, as afore described. It is further agreed and understood by and between the parties hereto that in event either party shall fail to do and perform the agreements and covenants herein contained shall forfeit and pay to the other party the sum of $300 liquidated damages sustained by such party. It is further agreed and understood by and between the parties hereto that in event the first party shall fail or refuse to make full payment of the amount due on said invoice between said invoice of said goods of second party and the $4,500 paid by first party by January 1, 1912, then in that event the said stock of merchandise and fixtures thereto belonging conveyed hereby by second party to first party, and all that may be added thereto by the first party, shall revert to the second party, and he shall be entitled lawfully to the possession thereof on demand. It is further agreed and understood by and between the parties hereto that said invoice shall be commenced and continued until completed, as soon as convenient, and to begin November 27, 1911."

The plaintiff introduced the contract in evidence and proved the breach, offering no proof of his actual damages, but relying upon the clause in the contract providing for liquidated damages. His evidence consisted of his own testimony, and that of his attorney, Mr. Ragsdale, and of his clerk, Mr. Collins. However, defendant admitted the execution of the contract and the breach, so that the plaintiff on his theory had made out a prima facie case. In order to determine whether the trial court committed error in directing a verdict for the plaintiff, a careful review of the defendant's evidence is necessary.

The defendant testified that on the first day he was in the store, and before any contract was entered into, he had a conversation with plaintiff relative to the value of the stock of goods, as to what it would invoice, and that at first plaintiff said he did not know exactly what it would be, but that in the afternoon of that day he told defendant the stock would go around $7,000 — might miss that a little either way — that plaintiff said he had the principal part of the invoice, and that he kept a merchandise account, and that the stock would go approximately $7,000, and that that sum would not miss it either way more than $200, which statement, defendant says, was made by the plaintiff on two occasions that day; that, when he asked plaintiff how...