Edward E. Gustin & Co. v. Nebraska Bldg. & Inv. Co.
| Decision Date | 21 April 1923 |
| Docket Number | No. 22268.,22268. |
| Citation | 110 Neb. 241,193 N.W. 269 |
| Parties | EDWARD E. GUSTIN & CO. v. NEBRASKA BLDG. & INV. CO. ET AL. (BAYLOR, INTERVENER). |
| Court | Nebraska Supreme Court |
OPINION TEXT STARTS HERE
Syllabus by the Court.
Whether the sum mentioned as damages in a building contract and indemnity bond is a penalty or liquidated damages may be a question of construction. In determining this question, the subject-matter of the contract, the consideration, the intention of the parties, all the evidence, facts and surrounding circumstances, and the language and context of the contract, must be carefully considered. And where the damages are uncertain, and not readily capable of exact ascertainment by any known rule, and the parties surveyed the whole situation at the time of contract, and agreed upon the amount of damages, in case of a breach in the contract to construct a building by a certain time, such sum, in case of a breach, is the true measure of recovery and is liquidated damages and not a penalty.
Evidence examined, and held that this action was not prematurely brought.
Appeal from District Court, Lancaster County; Shepherd, Judge.
Action by Edward E. Gustin & Co., against the Nebraska Building & Investment Company and others, in which F. B. Baylor, trustee in bankruptcy, intervened. From a judgment for plaintiff, defendants appeal. Affirmed.Johnson, Moorhead & Rine, of Omaha, for appellants.
Stewart, Perry & Stewart, of Lincoln, for appellee.
F. B. Baylor, of Lincoln, pro se.
Heard before MORRISSEY, C. J., GOOD and ALDRICH, JJ., and BEGLEY and BUTTON, District Judges.
On the 20th day of February, 1919, Edward E. Gustin & Co., appellee, entered into a 99-year lease with the Nebraska Building & Investment Company, one of the appellants, to a parcel of ground, belonging to appellee, and situated between the Lincoln Hotel and the Lincoln Drug Company on P street, Lincoln, Nebraska, one of the business sections of the city. There were buildings situated on these premises at the time, of the value of $15,000; but they were in a bad state of repair, and to render them fit for rental purposes required an outlay of considerable money. By the terms of the lease these buildings were to be razed to the ground and removed. And, also, by the terms of the lease, appellant was to erect a new fire-proof edifice, at least four stories high, and to complete the same by January 1, 1921. The covenant to erect this new building was the inducement that caused appellee to enter into the lease. Appellant agreed to pay $250 a month during the life of the lease as rental, and to pay taxes, keep up repairs, ordinary and extraordinary, and to pay all assessments, and keep up insurance, etc. The lease further provided that, if appellant failed to erect the building as agreed, appellee's actual damages should be $15,000. To procure the faithful performance of this lease an indemnity bond in the sum of $15,000 was given, with the Nebraska Building & Investment Company as principal and certain other of the appellants as sureties.
Appellant began the actual erection of a building, excavating, building footings and concrete walls and other foundation work, and then defaulted and ceased work entirely. After January 1, 1921, the Nebraska Building & Investment Company went into the hands of a receiver. One William E. Barkley was appointed receiver, and later the leasehold interest in the premises was sold to one Eugene C. Eppley, who is now in possession. In all other respects there has been no default in the terms of the lease, and the taxes and rentals are paid.
After January 1, 1921, this action was instituted on the bond, to recover the $15,000 damages. A trial by the court without a jury resulted in a judgment for appellee for the full amount. To reverse this judgment appellants have prosecuted an appeal to this court.
Appellants argue that the excavation and foundation work that has been done on the property has added value to the property far in excess of $15,000 and hence appellee is the gainer and the damages provided for in the bond should be treated as a penalty and recovery denied. This argument overlooks the rights of appellee under the contract. The inducement that caused appellee to enter into the contract was the building of the new structure. Possibly appellee did not have the money to put up the building itself. If not, of what value will this hole in the ground and foundation work be to appellee? If the old buildings had been repaired, appellee might have realized a better rental; and without the building being erected appellee is not sure of his rent.
A modern building should last practically forever. If so, this would be a very valuable property at the end of the lease with such a building standing upon it. Then, too, is such a contract to be treated so lightly? Is it something to be brushed aside as a sort of a dream? If appellee could have erected the building itself, its rentals no doubt, would have been very large from such a structure. But it contracted to forego these large rentals and accept $250 a month and apply the balance for 99 years to pay for the new edifice. If we figure from this standpoint, appellee will pay a pretty big price for its building in 99 years. Everything considered, it seems to us that in this larger view, looking to the future, almost a century, rather than to the present, appellee is the loser rather than the gainer. And his rent has been rendered...
To continue reading
Request your trial