Foote & Davies Co v. Malont

• Decision Date: 22 July 1902
• Court: Georgia Supreme Court
• Parties: FOOTE & DAVIES CO. v. MALONT.

42 S.E. 413

115 Ga. 985

FOOTE & DAVIES CO.

v.MALONT.

Supreme Court of Georgia.

July 22, 1902.

CONTRACT FOR PENALTY—VALIDITY—PAROL EVIDENCE—OPINION EVIDENCE—DIRECTION OF VERDICT.

1. A written contract between two persons, stipulating that, if either fails to carry out his part of the same, "the party failing is to immediately pay to the other party the sum of five hundred dollars, besides all damages sustained by reason of such failure, " is, so far as relates to the payment of the $500, a contract for a penalty; there being in such contract no other words indicating any different intention of the parties in respect to such matter.

2. When there is no ambiguity as to the legal import of the language used in a written contract, parol evidence is inadmissible to show that the parties thereto intended it to have a different meaning.

3. It is not competent for a witness to testify to his opinion that the breach of a given contract by one of the parties thereto caused damages to the other in a lump sum stated.

4. When the plaintiff in an action makes out a prima facie case for the recovery of the amount sued for, and the defendant merely shows, by evidence offered in support of a plea of recoupment, a breach of a stipulation in the contract by the plaintiff, without showing any actual damages in consequence thereof, there is no error in directing a verdict in favor of the former for such amount. Under such circumstances, the defendant is not entitled to have the case submitted to a jury, in order that the amount of the proved claim of the plaintiff may be reduced by such nominal damages as they might find in favor of the defendant.

(Syllabus by the Court.)

Error from superior court, Fulton county; J. H. Lumpkin, Judge.

Action by T. J. Malony against the Foote & Davies Company. The court below directed a verdict for plaintiff, and defendant brings error. Affirmed.

Ulysses Lewis and C. W. Smith, for plaintiff in error.

Tompkins & Alston and Lumpkin & Colquitt, for defendant in error.

FISH, J. Malony, who carried on business under the name of Malony Directory Company, brought an action against Foote & Davies Company, a corporation, for the recovery of an amount of money which he alleged was due him for certain expenses which he, in accordance with a contract between them, had incurred and paid in behalf of the defendant, and for which, under the contract, the defendant was to reimburse him. The defendant admitted the execution of the contract, and that it had become indebted to the plaintiff in the amount for which he sued, but pleaded that the plaintiff had violated a certain stipulation in the contract, and was therefore indebted to it in the sum of $500, as liquidated damages, under the following provision of that instrument: "Foote & Davies and Malony Directory Co. mutually agree, if either fails to carry out their part of this contract, that the party failing is to pay to the other party the sum of five hundred dollars, besides all damages sustained by reason of such failure." The main question which we are called upon to decide is whether the sum which the parties here agreed should, in the event of a breach of the contract, be paid by the party violating it to the other party, was, as claimed by the defendant, liquidated damages, or, as claimed by the plaintiff, a penalty? The court below held it to be a penalty, and, as the defendant proved no actual damages, directed a verdict in favor of the plaintiff for the amount sued for.

1. We are clearly of opinion that the above-quoted clause of the contract does not provide for the payment of liquidated damages, but for the payment of a penalty. "The intention of the parties is mainly to be considered in determining whether an agreement is a penalty or liquidated damages." Sutton v. Howard, 33 Ga. 536. "The only inquiry as to intention is whether or not the parties intended the sum to be accepted as compensation." 1 Sedg. Meas. Dam. § 408. The parties to the contract under consideration agreed that the party failing to carry it out should immediately pay to the other party the sum of $500, besides all damages sustained by reason of such failure. They did not undertake to estimate and liquidate the damages which would result from a violation of the contract, for the amount which they agreed should be paid by the party failing to comply with the contract to the other party was to be in addition to all damages sustained by reason of such failure. The sum of $500 stipulated to be paid for a breach of the contract could not be liquidated damages, because it was to be paid over and above all damages sustained. The agreement in effect, was that the party failing to carry out the contract was to pay to the other party $500 and all damages sustained. This being true, and there being nothing elsewhere in the contract to indicate a different intention, the sum named here was and could only be a penalty. It is a well-settled principle that, where a contract provides for the payment of a...