Pine Bluff Hotel Company v. Monk & Ritchie

• Decision Date: 07 February 1916
• Docket Number: 153.
• Citation: 183 S.W. 761,122 Ark. 308
• Parties: PINE BLUFF HOTEL COMPANY v. MONK & RITCHIE
• Court: Arkansas Supreme Court

183 S.W. 761

122 Ark. 308

PINE BLUFF HOTEL COMPANY v. MONK & RITCHIE

No. 153.

Supreme Court of Arkansas

February 7, 1916

Appeal from Jefferson Circuit Court; Antonio B. Grace, Judge reversed.

Reversed and remanded.

Bridges & Wooldridge, for appellant.

1. The intention of the parties govern and is usually conclusive as to whether a sum stipulated to be paid in case of breach of a contract is liquidated damages or a penalty; the question is one for construction. 8 Ruling Case Law, 560; 56 Ark. 405 413; 87 Id. 545, 553; 104 Id. 9-15; 73 Id. 432; 69 Id. 114; 104 Id. 9; 118 Ark. 492; 48 Pa. St. 450. It was error to refuse instruction No. 1 and in giving No. 8. 205 U.S. 105.

2. The hotel company was not liable to the contractors for building the wall the second time, but the contractors were liable to the hotel company in such sum as the proof showed to be the cost of constructing the wall the third time. See as to authority and powers of architects and superintendents, 100 Ark. 166; 87 Id. 56; 20 Minn. 494; 21 Manitoba L Rep. 641; 98 S.W. 387; 149 F. 189-191, 104 S.W. 1061-6; 53 P. 637. A contractor is liable notwithstanding an honest mistake. 88 Ark. 213. Appellant was entitled to recover (1) liquidated damages and not the penalty, (2) for rebuilding the west wall and (3) $ 1,800 it paid its superintendent for services during the delay. Cases supra.

M. Danaher and Palmer Danaher, for appellee.

1. Provisions in a contract like this as to the time of completion may be waived. 6 Cyc. 65; 16 Abb. Pr. N. S. (N. Y.) 337; 20 Ohio 361; 2 Woodw. (Pa.) 332; 54 N.W. 743; 99 Ala. 620; 13 So. 118; 75 Atl, 25; 138 S.W. 1188-90. A large amount of the extra work was done by order of the owners, and the contractors did the work and furnished the materials under the honest belief that no damages would be claimed for delay. Cases supra.

2. The builder were bound to follow the plans and specifications. The west wall was built according to same and the builders were entitled to pay. 88 Ark. 213; 6 Cyc. 63; 81 P. 742; 131 Id. 642; 39 A. 795. If a building or wall falls from following defective plans, etc., before or after completion the builder is not liable. 142 P. 675; 41 N.W. 338; 39 A. 143. The defect was in the plans of the architect. There is no error in the instructions. Only actual damages were properly allowed. Cases supra.

OPINION

MCCULLOCH, C. J.

The plaintiffs, Monk & Ritchie, entered into a contract with the defendant and counter-claimant, Pine Bluff Hotel Company, to construct a six-story hotel building for the latter in the City of Pine Bluff for the contract price of $ 170,000. The contract contains a stipulation that the building should be completed by October 1, 1912, and that in the event of delay in completion beyond that date the contractors should pay the sum of $ 100 per day "for each and every day the completion of the building is delayed beyond the time specified above, as liquidated damages by reason of such delay." That clause of the contract contains the further stipulation as follows: "This is understood to be, and is a provision for damages liquidated that will be sustained by the owner in the event of delay of completion of said work after October 1, 1912, and the same is not a provision for a penalty." There was a delay of nearly a year in the completion of the building, and the defendant filed a counter-claim asking for judgment for damages in the sum of $ 100 for each day of the delay.

According to the undisputed evidence, the plaintiffs performed extra work on the building, for which the price aggregated the sum of $ 8,863.07, making a total earned price, for work and material of $ 178,863.07. Defendant has paid thereon the sum of $ 165,919.80, leaving a balance due of $ 12,943.27. In addition to that, the plaintiffs claim the sum of $ 3,500, the price for rebuilding a retaining or area wall which fell down before the completion of the building and which plaintiffs rebuilt under the direction of the architect. The wall fell the second time, and the defendant in the counter-claim asserts the right to recover the price of rebuilding it on the ground that the fault was with the plaintiffs and that they should rebuild the wall again or pay the cost of rebuilding it. The disputed items are those concerning the rebuilding of the wall and the items of damages for delay in completing the building.

The court instructed the jury that the stipulation contained in the contract was for a penalty, and that the defendant should only recover actual damages sustained. The jury by its verdict found for the plaintiffs for the undisputed sum of $ 12,943.27, and for the sum of $ 3,500 the price of rebuilding the wall, together with interest on those two items, and found in favor of the defendant in the sum of $ 16,027.20 for damages on account of the delay in completion of the work, leaving a balance due the plaintiffs of $ 1,978.20. The discussion here will be confined to the two points in the case, with reference to the stipulation for the payment of $ 100 per day for delay and the item for rebuilding the retaining wall.

The evidence shows that the defendant had an investment of from $ 350,000 to $ 375,000 in the building, which was constructed mainly for the purpose of operating a hotel. In addition to the hotel proper, there was a cigar stand which rented for $ 125 per month; banking room, which rented for $ 166.66 per month; a store room, which rented as a drug store for $ 50 per month; a barber shop, which rented for $ 50 per month; another store room, which rented for $ 75 per month; and a bar room, which was rented out part of the time after completion of the building. The hotel part was constructed to lease to some one operating a hotel and some of the other rooms were leased out before the contract of construction was let. Preparations were made to occupy the building before it was completed, and there was a large expenditure in anticipation of the operation of the hotel, the principal item being that of the salary of a superintendent, who was employed to superintend the operation of the hotel as soon as the building could be occupied for that purpose.

The court erred in instructing the jury that the stipulation was for a penalty, for it seems clear, under the law as established not only by the decisions of this court but of many other courts, that the stipulation constituted a valid contract for liquidated damages in the event of delay, and the contract is enforcible as such. The cases on this subject, which seems to settle the question in favor of defendant's contention that it was a stipulation for liquidated damages, may be cited as follows: Lincoln v. Little Rock Granite Co., 56 Ark. 405, 19 S.W. 1056; Nilson v. Jonesboro, 57 Ark. 168, 20 S.W. 1093; Young v. Gaut, 69 Ark. 114, 61 S.W. 372; Blackwood v. Liebke, 87 Ark. 545, 113 S.W. 210; Kimbro v. Wells, 112 Ark. 126, 165 S.W. 645. The courts are more and more disposed to follow the obvious intention of the parties as expressed in the contract, by upholding a stipulation of this sort as being one for liquidated damages unless it is clear that it was intended as a penalty in disguise. Sun Printing & Pub. Co. v. Moore, 183 U.S. 642, 46 L.Ed. 366, 22 S.Ct. 240; United States v. Bethlehem Steel Co., 205 U.S. 105, 51 L.Ed. 731, 27 S.Ct. 450.

Moreover, it is not to be overlooked that the parties themselves in the contract expressly denominated the stipulation as being one for liquidated damages, and have written it into the contract that it shall not be treated as a penalty. Now, the language of such stipulation would be unavailing to control the meaning if it really was intended as a penalty, but when the terms of the contract leave a state of doubt as to what the parties intended, the surest test is to accept their own clear expression as to what was intended. In other words, the fact that the parties themselves have called it liquidated damages is forceful evidence of their real meaning and will control unless it otherwise appears that it was merely meant as a cover for a stipulation for penalty.

In Wait v. Stanton, 104 Ark. 9, 147 S.W. 446, we quoted with approval the following from Mr. Justice Agnew's opinion in Streeper v. Williams, 48 Pa. 450: "Upon the whole, the general observation we can make is that in each case we must look at the language of the contract, intention of the parties as gathered from all its provisions, the subject of the contract and its surroundings, the case and difficulty of measuring the breach in damages, and the sum stipulated, and from the whole gather the view which good conscience and equity ought to take of the case."

When that test is applied, it is easily seen that this contract was one for the payment of liquidated damages.

In Blackwood v. Liebke, supra, we said that "the question is not as to the status...