Rabinowitz v. North Texas Realty Co.

• Decision Date: 12 February 1925
• Docket Number: (No. 6792.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 270 S.W. 579
• Parties: RABINOWITZ v. NORTH TEXAS REALTY CO.
• Court: Texas Court of Appeals

270 S.W. 579

RABINOWITZ v. NORTH TEXAS REALTY CO.

(No. 6792.)^*

Court of Civil Appeals of Texas. Austin.

February 12, 1925.

Rehearing Denied March 25, 1925.

Appeal from Denton County Court; E. I. Key, Judge.

Action by the North Texas Realty Company against D. Rabinowitz. Judgment for plaintiff, and defendant appeals. Affirmed.

Emil Corenbleth, of Dallas, and Owsley & Owsley, of Denton, for appellant.

Sullivan, Speer & Minor, of Denton, for appellee.

BAUGH, J.

The North Texas Realty Company, a partnership composed of J. H. Barton and W. R. Sullivan, of Denton, Tex., sued D. Rabinowitz to recover $375, claimed as commissions due for services rendered as brokers in a transaction involving the exchange of real estate between said Rabinowitz and Joe Darnall. Darnall owned about 226 acres of land in Denton county, and Rabinowitz an improved lot in Ranger, Tex. The Realty Company brought them together; they agreed upon the terms of exchange of their properties, and entered into a written contract embodying those terms. Contemporaneously with the execution of said contract, D. Rabinowitz executed and delivered to plaintiff the following:

"State of Texas, County of Denton:

"This is to certify that the undersigned D. Rabinowitz, of Dallas, Dallas county, Texas, is to pay the North Texas Realty Company the sum of three hundred seventy-five ($375.00) dollars as commission for services rendered in the exchange of certain property at Ranger described in a certain contract between one Joe Darnall and the said Rabinowitz as 125-127 South Austin street, said commission due and payable at Denton, Texas, when deal is finally consummated.

"Witness my hand this the 12th day of April, A. D. 1921.

                                  "[Signed] D. Rabinowitz."
                

Rabinowitz defended in said suit on the grounds, amongst others, that his contract with Darnall was unenforceable; that Darnall had failed to make good title to his lands; that said commission was not due and payable until the deal was finally consummated; and that, since it was never consummated, he did not owe plaintiff anything.

The case was tried to the court without a jury and judgment rendered against Rabinowitz for $375. From this judgment, he has appealed.

Opinion.

The first contention made by appellant is that his contract with Darnall was unenforceable. This contract provided for the conveyance by each to the other of their respective tracts of land, and that appellant in addition to conveying his lot in the town of Ranger, Tex., was to pay Darnall $1,500 in cash and assume an indebtedness of $9,266.50 against Darnall's 226 acres of land in Denton county. It also provided that each was to furnish the other an abstract, certified to date, showing good title; that each was to have 30 days in which to have his abstract examined and, in case any objections were raised by either, same should "be met and cured by them as speedily as possible." Section VI of said contract further provided as follows:

"As evidence of good faith, each party hereto contracts and agrees to become bound to the other party in the sum of twenty-five hundred ($2,500) dollars hereby agreed upon in advance as liquidated damages in case either party shall breach the terms of this contract. That is, if first party shall fail and refuse to carry out this contract hereby made, he shall become liable to the party of the second part for the sum of twenty-five hundred ($2,500) dollars as liquidated damages for his failure to so comply with his said contract, provided, of course, that second party has in all respects complied with the terms of this agreement, and second party shall become liable to first party in a like sum should he make default in carrying out the provisions of this agreement, provided, of course, that first party had complied with the terms hereof, but in case both parties shall carry out the terms hereof, then this provision shall become null and void; otherwise, to remain in full force and effect."

It is this section which appellant insists makes the contract unenforceable, citing Smith v. Felder (Tex. Civ. App.) 208 S. W. 409; Moss v. Wren, 102 Tex. 569, 113 S. W. 739, 120 S. W. 847; Clark v. Asbury (Tex. Civ. App.) 134 S. W. 288; and Redwine v. Hudman, 104 Tex. 23, 133 S. W. 426. Contracts of this character, containing options, forfeiture provisions, or providing for liquidated damages, in various terms, have been before the courts repeatedly. The contract itself must be looked to in each instance. Judge Williams of the Supreme Court, in Redwine v. Hudman, 104 Tex. 21, 133 S. W. 426, states with approval the controlling principle in such cases as follows:

"The principle which controls is well settled. It is thus stated: `The question always is, What is the contract? Is it that one certain act shall be done, with a sum annexed, whether by way of penalty or damages, to secure the performance of this very act? Or is it that one of two things shall be done at the election of the party who has to perform the contract, namely, the performance of the act or the payment of the sum of money? If the former, the fact of the penal or other like sum being annexed will not prevent the court enforcing the performance of the very act, and thus carrying into execution the intention of the parties. If the latter, the contract is satisfied by the payment of a sum of money, and there is no ground for proceeding against the party having the election, to compel the performance of the other alternative.' Fry on Specific Performance, § 115. See, also, 36 Cyc. 571, 572.

"Whether a contract belongs to one class or the other depends on the intention deduced from a proper construction of the instrument in which the parties have expressed their agreement."

We have not set out in full the contract between Rabinowitz and Darnall. It clearly appears, however, that it was the manifest intention of the parties to exchange their properties. The matter of possession, taxes, rents, and interest are all specifically determined in the contract. Nor do we think the liquidated damage clause above set out in any wise detracts from the principal obligation — that is, the conveyance by the respective parties of their lands — or that it permits either party to convey his land, or at his option to pay the $2,500. The case of La Prelle v. Brown (Tex. Civ. App.) 220 S. W. 151, presented this question in a contract very similar to that under consideration here. In that case the line of cases cited by appellant was reviewed and such contract held to be enforceable. The language there used is well applicable to the instant case. This court, there speaking through Judge Jenkins, used the following language:

"The test as to whether the contract could have been specifically enforced is: Was it a contract to do a specific thing (buy the land), with a penalty annexed by way of damages to aid in securing...