Knutton v. Cofield, 194

• Decision Date: 27 March 1968
• Docket Number: No. 194,194
• Citation: 273 N.C. 355,160 S.E.2d 29
• Court: North Carolina Supreme Court
• Parties: C. A. KNUTTON, t/a Reid Music Company, Plaintiffs, v. James E. COFIELD, t/a Cofield Restaurant, Defendants.

Page 29

160 S.E.2d 29

273 N.C. 355

C. A. KNUTTON, t/a Reid Music Company, Plaintiffs, v. James E. COFIELD, t/a Cofield Restaurant, Defendants.

No. 194.

Supreme Court of North Carolina.

March 27, 1968.

Joseph J. Flythe, Rich Square, and Carter W. Jones, Ahoskie, for defendant appellant.

Cherry & Cherry, by Thomas L. Cherry, Ahoskie, and Gillam & Gillam, by M. B. Gillam, Jr., Windsor, for plaintiff appellee.

HUSKINS, Justice.

Defendant preserves three exceptions and assigns same as error. All others are deemed abandoned since they are not brought forward and discussed in the brief. Rule 28, Rules of Practice in the Supreme Court, 254 N.C. 783 at 810; State v. Strickland, 254 N.C. 658, 119 S.E.2d 781.

Defendant assigns as error the judgment overruling his demurrer. We are unable to find in the record proper any exception to support this assignment. An assignment of error is worthless unless it is based upon an exception duly taken in apt time during the trial and preserved as required by Rule 19(3) and Rule 21, Rules of Practice in the Supreme Court, supra; State v. Strickland, supra; Tynes v. Davis, 244 N.C. 528, 94 S.E.2d 496; Barnette v. Woody, 242 N.C. 424, 88 S.E.2d 223. Even so, we have examined the complaint and in our opinion it states a good cause of action.

When trial by jury is waived and issues of fact are tried by the court, it is required to give its decision in writing with its findings of fact and conclusions of law stated separately. G.S. § 1--185; In Re Wallace, 267 N.C. 204, 147 S.E.2d 922; Taney v. Brown, 262 N.C. 438, 137 S.E.2d 827. Its findings of fact have the force and effect of a verdict by a jury and are conclusive on appeal if there is evidence to support them, even though the evidence might sustain a finding to the contrary. Sherrill v. Boyce, 265 N.C. 560, 144 S.E.2d 596; Priddy v. Kernersville Lumber Co., 258 N.C. 653, 129 S.E.2d 256; Textile Insurance Co. v. Lambeth, 250 N.C. 1, 108 S.E.2d 36; State Trust Co. v. M & J Finance Corp., 238 N.C. 478, 78 S.E.2d 327. The trial judge becomes both judge and juror, and it is his duty to consider and weigh all the competent evidence before him. Hodges v. Hodges, 257 N.C. 774, 127 S.E.2d 567. He passes upon the credibility of the witnesses and the weight to be given their testimony and the reasonable inferences to be drawn therefrom. If different inferences may be drawn from the evidence, he determines which inferences shall be drawn and which shall be rejected. Hodges v. Hodges, supra.

There is plenary evidence in the record to support the findings of fact; hence, this Court is bound by them. Defendant in his own testimony admitted signing the contract and breaching it. He must therefore stand or fall upon his contentions that (1) the contract is void as against public policy because it is in restraint of trade and prohibited by G.S. §§ 75--1, 75--2 and 75--5; or (2) that the 'liquidated damages' clause of the contract is in fact a penalty and not enforceable.

G.S. § 75--1 declares '(e)very contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce' to be illegal. Any such act, contract, combination or conspiracy which violates the principles of common law is declared to be illegal by G.S. § 75--2. Numerous particular acts are prohibited by G.S. § 75--5, subsection (b)(2) thereof making it unlawful for any person to have any contract '(t)o sell any goods in this State upon condition that the purchaser thereof shall not deal in the goods of a competitor or rival in the business of the person making such sales.' Hence, it becomes necessary to examine these statutes and determine their applicability, if any, to the contract between plaintiff and defendant in this case.

The statutes on monopolies and trusts, codified as Chapter 75 of [273 N.C. 360] the General Statutes of North Carolina, are addressed to the sale and movement in commerce of goods, wares, merchandise and other things of value. Cases arising under them ordinarily involve a vendor and a purchaser. Thus the prohibited acts are usually connected with a purchase and sale, whereas the contract between plaintiff and defendant involves their joint undertaking to provide a coin-operated phonograph for the use of the patrons at defendant's restaurant, plaintiff to furnish and service the machine and defendant to furnish the space for its occupancy and pay for the electricity used to operate it. Profits were to be equally divided. In our opinion, this contractual arrangement does not involve a sale of goods, wares, or merchandise within the contemplation and scope of Chapter 75 of the General Statutes. Defendant was not engaged in the business of selling music machines and did not contract to refrain from selling machines of plaintiff's competitors. Hence, Standard Fashion Co. v. Grant, 165 N.C. 453, 81 S.E. 606; Florsheim Shoe Co. v. Leader Department Store, 212 N.C. 75, 193 S.E. 9, and Arey v. Lemons, 232 N.C. 531, 61 S.E.2d 596, relied on by defendant, are readily distinguishable.

In Bradshaw v. Millikin, 173 N.C. 432, 92 S.E. 161, L.R.A.1917E, 880 defendant sold his barber shop to plaintiff and agreed that he would not engage in the barber shop business in the town of Hamlet for a period of two years; and in case of breach of his agreement, defendant agreed to pay $400.00 as liquidated damages. Upholding the contract the Court said:

'Contracts in restraint of trade, like the one we are now considering, were formerly held to be invalid as against public policy, but the more modern doctrine sustains them when the restraint is only partial and reasonable. The test * * * is to consider whether it is such only as will afford a fair protection to the interests of the party in favor of whom it is given, and not so large or extensive as to interfere with the interests of the public.'

In Mar-Hof Co. v. Rosenbacker, 176 N.C. 330, 97 S.E. 169, it was held that a contract, made in good faith for a valuable consideration, whereby the manufacturer of middy suits gave the plaintiff an exclusive agency to sell the suits in a named territory, was valid and enforceable and not within the inhibition of the antitrust statutes or of the common law. Accord, Waldron Buick Co. v. General Motors Corp., 254 N.C. 117, 118 S.E.2d 559.

Finally, defendant contends that plaintiff seeks to recover a penalty erroneously denominated in the contract as liquidated damages. 'Liquidated damages may be collected; a penalty will not be enforced.' City of Kinston v. Suddreth, 266 N.C. 618, 620, 146 S.E.2d 660, 662.

'The phrase 'liquidated damages' means a sum stipulated and agreed upon by the parties, at the time of entering into a contract, as being payable as compensation for injuries in the event of a breach. * * * (A) stipulated sum which is determined to be liquidated damages rather than a penalty is enforceable.' 22 Am.Jur.2d, Damages § 212.

'Liquidated damages are a sum which a party to a contract agrees to pay or a deposit which he agrees to forfeit, if he breaks some promise, and which, having been arrived at by a good-faith effort to estimate in advance the actual damage which would probably ensue from the breach, are legally recoverable or retainable * * * if the breach occurs. A Penalty is a sum which a party similarly agrees to pay or forfeit * * * but which is fixed, not as a pre-estimate of probable actual damages, but as a Punishment, the threat of which is designed to prevent the breach, or as Security * * * to insure that the person injured shall collect his actual damages.' McCormick, Damages § 146 (1935). Quoted with approval in City of Kinston v. Suddreth, supra.

Whether a stipulated sum will be treated as a penalty or as liquidated damages may ordinarily be determined by applying one or more aspects of the following rule: '(A) stipulated sum is for liquidated damages only (1) where the damages which the parties might reasonably anticipate are difficult to ascertain because of their indefiniteness or uncertainty and (2) where the amount stipulated is either a reasonable estimate of the damages which would probably be caused by a breach Or is reasonably proportionate to the damages which have actually been caused by the breach.' 22 Am.Jur.2d, Damages § 214. This rule was generally followed in Bradshaw v. Millikin, supra, 173 N.C. 432, 92 S.E. 161, where the Court stated:

'In deciding whether the sum fixed by the contract as the measure of a recovery, if there is a breach, should be regarded as a penalty or as liquidated damages, the court will look at the nature of the contract, and its words, and try to ascertain the intentions of the parties; and also will consider that the parties, being informed as to the facts and circumstances, are better able than any one else to determine what would be a fair and reasonable compensation for a breach; but the courts have been greatly influenced by the fact that in almost all the cases the damages are uncertain and very difficult to estimate.'

While early opinions tended to regard stipulations in contracts purporting to fix sums to be paid in the event of breach as penalties rather than as liquidated damages, and courts were slow to enforce stipulated sums, 'it is doubtful that there is any longer sufficient authority to support a rule that the courts tend to regard such provisions as penalties. In fact, some courts have given expression to the opposite rule and have said that the modern tendency is to look upon stipulated sums with candor, if not with favor.' 22 Am.Jur.2d Damages § 214; Kothe v. R. C. Taylor Trust, 280 U.S. 224, 50 S.Ct. 142, 74 L.Ed. 382; Wise v. United States, 249 U.S. 361, 39 S.Ct. 303, 63 L.Ed. 647. 'Ordinarily, even a court of equity will not relieve against a stipulation for liquidated damages.' 22 Am.Jur.2d, Damages, supra; Sun Printing and Publishing Association v. Moore, 183 U.S. 642, 22 S.Ct. 240, 46 L.Ed. 366.

Applying the foregoing principles of law to the...