J.I. Case Threshing Co. v. Souders

• Decision Date: 26 October 1911
• Docket Number: No. 7,312.,7,312.
• Citation: 48 Ind.App. 503,96 N.E. 177
• Parties: J. I. CASE THRESHING CO. v. SOUDERS.
• Court: Indiana Appellate Court

48 Ind.App. 503

96 N.E. 177

J. I. CASE THRESHING CO.

v.SOUDERS.

No. 7,312.

Appellate Court of Indiana, Division No. 2.

Oct. 26, 1911.

Appeal from Superior Court, Tippecanoe County; Henry H. Vinton, Judge.

Action by the J. I. Case Threshing Company against Frank T. Souders. From a judgment for defendant, plaintiff appeals. Affirmed.

Stuart, Hammond & Simms, for appellant. Edgar G. Collins, for appellee.

ADAMS, J.

The appellee, who was the defendant below, purchased a threshing outfit from the appellant, the terms being evidenced by a written contract. The only part of the order or contract involved in this appeal is the following stipulation: “In consideration of the expense incurred by the company in soliciting, investigating, and taking this order, the purchaser promises and agrees to pay all freight charges on said machinery from the factory, and fifteen per cent. of the price above stipulated in cash, in case he should cancel this order or decline to accept said machinery.” The purchase price for the machinery was $2,475. The appellant shipped and offered to deliver the machinery to the appellee, who declined to receive or accept the same, and this action was brought to recover the sum of $371.25, being 15 per cent. of the purchase price, and the further sum of $21.60, the amount of freight paid upon the shipment. All proof of freight charges paid by appellant was withdrawn from the jury at the close of the evidence. The court then gave to the jury peremptory instruction, directing a verdict for the defendant, and entered judgment on the verdict that appellant take nothing by its action, and that appellee recover his costs. Appellant filed its motion for a new trial, the overruling of which motion constitutes the only error assigned and relied upon for reversal; and the only question presented to this court and argued by counsel is whether or not the agreement above set out constitutes a claim for liquidated damages, or whether it provides for the payment of 15 per cent. of the purchase price as a penalty.

The appellant contends that if the stipulated damages are to be held for liquidated damages, and not as a penalty, then the court invaded the province of the jury in giving the peremptory instruction. The appellee admits that this is strictly true, but says that the construction to be given the stipulation for damages is one of law for the determination of the court, and, as the court properly interpreted the law, no error resulted from giving the peremptory instruction. Whether the amount stipulated in a contract to be paid by a party upon failure of performance is to be treated as liquidated damages or as a penalty has been a fruitful source of litigation and the subject of much judicial interpretation. Certain general rules are recognized as controlling, but when applied to particular cases, the question becomes one of great difficulty, and the authorities are not in full accord. The general rule governing the subject is laid down in 1 Sedgwick, Damages, § 405, as follows: “Whenever the damages were evidently the subject of calculation and adjustment between the parties, and a certain sum was agreed upon and intended as compensation, and is in fact reasonable in amount, it will be allowed by the court as liquidated damages. This rule will be found to be applicable to all contracts, and really involves the consideration of the subject in the three following aspects-that of the intent of the parties; that of the reasonableness of the contract; and that of the weight allowed by the court to the language employed.” The same authority in the following section, on the matter of the intent of the parties, says: “Courts will not go outside of the contract to ascertain the intention of the parties entering into it. To do this would be to violate the elementary maxim that parol evidence cannot be introduced to vary or control a written instrument, and accordingly it is well settled that the character of the agreement is a matter of law to be decided by the court upon a consideration of the whole instrument.” In 1 Sutherland, Damages (3d Ed.), at page 721, it is said: “The trend of judicial thought and action on the subject is well and frankly expressed by Justice Marshall of the Wisconsin court. The law is too well settled to permit any reasonable controversy in regard to it at this time that where parties stipulate in their contract for damages in the event of a breach of it, using appropriate language to indicate that the damages are agreed upon in advance, and such damages are unreasonable, considered as liquidated damages, the stipulated amount will be considered to be a mere forfeiture or...