Mandle v. Owens

Decision Date30 June 1975
Docket NumberNo. 1--375A63,1--375A63
Citation330 N.E.2d 362,164 Ind.App. 607
PartiesWilliam Dee MANDLE and Eileen L. Mandle, Appellants (Plaintiffs Below), v. H. Joseph OWENS and Kathryn J. Owens, Appellees (Defendants Below).
CourtIndiana Appellate Court

Rosenfeld, Wolfe, Frey & Lowery, Norman L. Lowery, Terre Haute, for appellants.

Myrl O. Wilkinson, Dix, Patrick, Ratcliffe & Adamson, Terre Haute, for appellees.


Plaintiffs-appellants (Mandles), by newspaper advertisement, offered their residence in Terre Haute, Indiana, for sale. Defendants-appellees (Owenses) after examining the house, entered into an agreement with Mandles to purchase the house for $30,000. Owenses at the time of the agreement made an earnest money deposit in the amount of $300.00 on the house in the form of a check.

On July 22, 1972, the parties signed a proposition which was typed, and had been dictated over the telephone by the Mandles' attorney. On July 24, 1972, Mandles, at their attorney's request, went to his office to sign an agreement which had been prepared by the attorney for the Owenses. This instrument was executed that date and was a final written agreement, pertaining to the purchase.

The contract entered into by and between the parties reads, in part, as follows:

'. . . We hereby deposit with you earnest money in the sum of Three Hundred ($300.00) Dollars, to be applied as part of the purchase price for said real estate at the time of delivery of deed.

This proposition shall be treated as made to the owner of said property, and shall remain open for acceptance for the period of ten (10) days from this date and if accepted, the above amount is to apply as part of purchase price, and if refused same is to be refunded. If offer is accepted and we fail to complete the purchase of the real estate herein mentioned as provided herein, the amount of Three Hundred ($300.00) dollars will be forfeited to you.'

The parties stipulated that Mandles complied with all the terms and conditions for the sale of the property as set forth in the agreement.

On August 8, Owens called Mandles and informed them that he and his wife had decided not to proceed with the purchase of the Mandle house--that they had found something they liked better.

Mandles had cashed the earnest money check in the amount of $300.00 on August 1, 1972.

In the meantime, Mandles had paid $1,000 earnest money on another home and had made application for a loan thereon.

Mandles, having moved from Terre Haute to their new home in Maryland, advertised the Terre Haute property for sale after they were informed by Owenses that they would not take the property. They were unsuccessful and having a deadline to meet on the Maryland property, on August 28, listed the Terre Haute property with a Terre Haute realtor.

The property was sold for $29,500. A brokerage fee of $2,065 was paid the realtor. The Terre Haute property was refinanced and other expenses in the amount of $436.00 were incurred. Mandles also claim additional expenses for:

                Motel             $140.00
                Telephone           15.00
                Interest on loan   150.17

The trial court entered its special findings of fact and conclusions of law thereon.

The findings set forth the provisions of the contract and they will not be re-copied here. Conclusions of law are as follows, to-wit:

'1. That the clause referred to in Finding Number 1 above is a liquidated damages clause which was intended by the parties as compensation for a breach of the contract by the buyers and was a good faith attempt on the part of the parties to estimate the damages which would probably flow from a breach thereof and is fair and reasonable and was intended by the parties to be the sole remedy in the event of the buyers' breach under the contract.

2. That the plaintiffs are estopped from claiming additional damages by reason of defendants' failure to perform the contract by accepting and retaining the earnest money deposit and proceeding to enter into a contract of sale for said permises with a third party.

3. That the plaintiffs sustained no recoverable damages by reason of the defendants' failure to complete the said sale.

4. That the law is with the defendants.'

Judgment was entered for the defendants Owenses.

Specification 2 of the motion to correct errors is that the decision of the court is contrary to the evidence. This being a negative judgment no question is presented by this specification of error. Ver Hulst v. Hoffman (1972), Ind.App., 286 N.E.2d 214, 216.

Specification 1 is that the judgment is contrary to law. On appeal Mandles assert arguments attacking each conclusion of law as hereinabove set out, which arguments are contained in their motion to correct errors.

We shall group sub-sections (1), (2), and (3) and treat them as one, pursuant to Ind. Rules of Procedure, Appellate Rule 8.3(A)(7).

The question of whether a contractual provision stipulating damages in the event of a breach is considered a valid liquidated damages clause or a penalty which is unenforceable, is purely a question of law for the court. Lettellier v. Abilene Flour Mills Co. (1935), 101 Ind.App. 20, 198 N.E. 111; Aldon Builders, Inc. v. Kurland (1972), Ind.App., 284 N.E.2d 826, 833.

This court, in Tudor v. Beath (1921), 76 Ind.App. 526, at p. 528, 131 N.E. 848, at p. 848, said, in quoting from Walker, Admr. v. Bement (1911), 50 Ind.App. 645, 94 N.E. 339:

"It is not always easy to distinguish between a penalty and liquidated damages, but it has been generally held by the courts that when the damages likely to be occasioned by the breach are uncertain, and the sum fixed to be recovered on such breach is not grossly excessive or unjust, it will be treated as liquidated damages, but if the damages likely to be occasioned by the breach are susceptible of certain proof, and the amount stipulated to be paid on such breach is in excess of that amount, it will be treated as a penalty." (Our emphasis.)

This court went further to hold as follows:

'This rule, however, is not applicable to a contract for the sale or exchange of real estate where the damages likely to arise on account of a breach are uncertain. In such contracts it is proper for the parties in advance of a breach to estimate the damages consequent upon a breach and agree upon their measure. Such an agreement, when entered into in good faith, will be enforced.

The words 'damages,' 'penalty,' 'forfeiture,' and 'liquidated damages,' when used in such contracts, are not conclusive, but they will be duly considered in connection with all the other provisions of the contract in determining whether the stipulation as to damages in case of a breach shall be considered as a penalty or as liquidated damages. If upon the whole agreement the court can see that the sum stipulated to be paid was intended as a penalty, the designation of it by the parties as 'liquidated damages' will not prevent this construction; if, on the other hand, the intent is plain that the sum shall be 'liquidated damages,' it will not be treated as a penalty because the parties have called it by that name. It is well settled, however, that if the event is at all doubtful, the tendency of the courts is in favor of the interpretation which makes the sum a penalty.

The presumption is that a lump sum named by the parties to a contract is a penalty rather than liquidated damages. It is also held that, where there are covenants of varied kinds and...

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18 cases
  • In re Doty
    • United States
    • U.S. Bankruptcy Court — Northern District of Indiana
    • February 9, 1991
    ...or drafted by an attorney it will be construed strictly against the party who prepared or drafted it. Mandle v. Owens, 164 Ind.App. 607, 330 N.E.2d 362 (1st Dist.Ind.App.1975) trans. den. 265 Ind. 252, 353 N.E.2d 465; Lacy v. White, 153 Ind.App. 504, 288 N.E.2d 178 (1st In determining the i......
  • In re Greives
    • United States
    • U.S. Bankruptcy Court — Northern District of Indiana
    • March 17, 1987
    ...or drafted by an attorney it will be construed strictly against the party who prepared or drafted it. Mandle v. Owens, 164 Ind.App. 607, 330 N.E.2d 362 (1st. Dist.Ind.App.1975) trans. den. 265 Ind. 252, 353 N.E.2d 465 (1976); Lacey v. White, 153 Ind.App. 504, 288 N.E.2d 178 (1st. In additio......
  • A.V. Consultants, Inc. v. Barnes
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • December 9, 1992
    ...for the court. Hahn, 581 N.E.2d at 463; Nylen v. Park Doral Apartments, 535 N.E.2d 178, 184 (Ind.Ct.App.1989); Mandle v. Owens, 164 Ind.App. 607, 330 N.E.2d 362, 364 (1975), transfer denied, 265 Ind. 252, 353 N.E.2d 465 (1976). In this case, the district court held that the liquidated damag......
  • Stanray Corp. v. Horizon Const., Inc.
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    • Indiana Appellate Court
    • February 23, 1976
    ...below finds that the claimant failed to successfully carry his burden, the lien claimant appeals a negative judgment. Mandle v. Owens (1975), Ind.App., 330 N.E.2d 362. We can reverse a negative judgment only if we find it to be contrary to law. Pierce v. Yochum (1975), Ind.App., 330 N.E.2d ......
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