Madler v. Silverstone

• Decision Date: 04 October 1909
• Citation: 104 P. 165,55 Wash. 159
• Parties: MADLER et ux. v. SILVERSTONE et ux.
• Court: Washington Supreme Court

104 P. 165

55 Wash. 159

MADLER et ux. v. SILVERSTONE et ux.

Supreme Court of Washington

October 4, 1909

Department 1. Appeal from Superior Court, King County; Mitchell Gilliam Judge.

Action by P. H. Madler and wife against Phil A. Silverstone and wife. Judgment for plaintiffs, and defendants appeal. Affirmed.

Judd & Olson, for appellants.

C. L Holcomb, for respondents.

FULLERTON J.

On June 23, 1908, the appellants Silverstone entered into a written agreement with the respondents Madler for a mutual exchange of properties; the agreement being in the following language 'This agreement made and entered into this 23rd day of June, 1908, by and between Phil A. Silverstone and Sadie Silverstone, husband and wife, parties of the first part and P. H. Madler and Nell S. Madler, husband and wife, parties of the second part, witnesseth: That for and in consideration of the sum of one dollar each to be paid by each of said parties hereto to the other party, and the mutual covenants and agreements to be performed herein by the respective parties the parties of the first part herein promise and agree to convey to the parties of the second part, or to their order, by good and sufficient warranty deed, the following described real estate in King county, Washington, to wit: Lots eleven (11) and twelve (12) in block nine (9) in Law's Second addition to the city of Seattle located on the northeast corner of Third Ave. West and Blaine streets, free and clear from all incumbrance, and lots four (4) five (5) six (6) seven (7) eight (8) nine (9) ten (10) eleven (11) twelve (12) and thirteen (13) on block five in Wood's Green Lake Park addition to the city of Seattle, located at the northeast corner of Nineteenth Ave. N.E. and Sixty-Fifth streets, free and clear from all incumbrance except a mortgage of $33.00 against each lot and which is payable on or before November 1st, 1908, and the said parties of the first part agree to furnish parties of the second part a complete abstract of each lot and a written opinion of a reputable attorney of Seattle, who is competent to pass on such titles, showing good title in said parties or the person making such good and valid conveyance. The parties of the second part agree to convey, by good, and sufficient warranty deed to the parties of the first part, lot twenty-four (24) in block thirteen (13) of University Park addition to the city of Seattle, with all improvements thereon, known as No. 4734 University Boulevard, free and clear of all incumbrance excepting a $2,500.00 mortgage incumbrance, with interest thereon at 7% per annum, and said parties of the second part agree to furnish to the parties of the first part an abstract of title and the written opinion of title thereon by Shank & Smith, attorneys of Seattle. And the parties of the first part agree to execute a second mortgage with note to the order of the parties of the second part for the sum of three hundred thirty ($330.00) dollars, payable on or before November 1st, 1908, with interest thereon at 8% per annum and covering lot 24 of block 13 in University Park addition to Seattle, Washington. It is understood and agreed that if either of the parties to this contract shall fail to comply with the conditions hereof or to carry out any agreement herein by such party to be performed, such party shall pay and forfeit to the other party the sum of five hundred ($500.00) dollars as liquidated and agreed damages. It is understood and agreed that each of the parties will pay one half of the cost of drawing up this contract, deed and mortgages and all expenses of this transaction. Each of the parties hereto covenant and agree to fully perform their respective portions of this contract within ten days from the date hereof. In case of defect of title to either property which cannot be made good, the penalty clause herein to be inoperative.' The agreement was not performed, and the respondents brought this action against the appellants to recover the sum named therein as liquidated and agreed damages, averring in their complaint that the failure to so perform was due to the fault of the appellants. The cause was tried by the trial court sitting without a jury, and is brought to this court on the findings of fact made by that court, the evidence on which the findings are based not being in the record. The court found the due execution of the contract, a failure to perform on the part of the appellants, that the failure to so perform was not due to any fault of the respondents, and that by reason of the refusal and failure of appellants to perform the contract the respondents had 'been damaged in the sum of $500, the amount provided in the contract as liquidated damages'; finding, further, that there was no evidence of pecuniary loss to the respondents other than is contained in the written contract. The court thereupon entered a judgment for the respondents for the amount so found to be due as liquidated damages, and this appeal was taken therefrom.

But one question is suggested by the record, namely: Is the provision of the contract whereby the one party agrees to pay and forfeit to the other the sum of $500, if such party fails to comply with the conditions of the contract, a provision for liquidated damages, or is it a penalty? The appellants strenuously contend that it is a penalty, and rely for authority upon the former holdings of this court. The first case called to our attention where an agreement to pay a fixed sum in case of a breach in the performance of the conditions of a contract was considered in Reichenbach v Sage, 13 Wash. 364, 43 P. 354, 52 Am. St. Rep. 51. In that case the appellants' principal contracted with the respondent to construct a certain building to be completed by a given date agreeing to pay $10 per day for each and every day the completion of the building was delayed beyond the date named. The court below held the provision to be one for liquidated damages, and not a penalty, and its...