Shreve v. Brereton

• Decision Date: 08 January 1866
• Citation: 51 Pa. 175
• Parties: Shreve <I>et al. versus</I> Brereton <I>et al.</I>
• Court: Pennsylvania Supreme Court

51 Pa. 175

Shreve et al. versus Brereton et al.

Supreme Court of Pennsylvania.

January 8, 1866.

ERROR to the District Court of Allegheny county.

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Hamilton & Acheson, for plaintiff in error.—The acquiescence of defendants may have amounted to a waiver of their right to rescind the contract, but not of notice of plaintiffs' subsequent readiness to receive the oil.

The neglect of plaintiffs to buy oil in the market for three or four months after defendants ceased to deliver in July, and not answering defendants' letter, justified defendants in treating the contract as abandoned: 2 Pars. on Contracts 191.

The averment in the declaration that the plaintiffs were ready and willing to receive the goods must be proved: Robinson v. Tyson, 10 Wright 286. The more so in this case, because the readiness of plaintiffs to receive was traversed by a special plea. If the notice of November 11th showed a readiness to receive the oil then, it did not tend to show readiness in previous months. As to the computation of damages. There was no evidence of the price of oil in September, nor of its rise until October 9th. This was too late for plaintiffs to buy for September. The damages could not exceed the difference between the contract and market price on September 30th, to which day defendants had to make the monthly delivery. The price on that day should have regulated the verdict: Leigh v. Patterson, 8 Taunt. 540; Sedgwick on Measure of Damages 262-3; and therefore for September plaintiffs received no damage.

Is the sum mentioned in contract, penalty or liquidated damages? The words are explicit and precise, both affirmatively and negatively. This question is always to be determined with reference to the language and subject-matter of the agreement: Curry v. Larer, 7 Barr 470; Tarnton v. Ferguson, 7 C. B. 716; Chamberlain v. Barley, 11 N. H. 234-240.

"Stipulated damages" are the parties' own words, and the court cannot make a new contract for a man: Lowe v. Peers, 4 Burr. 2225; Galsworthy v. Strutt, 1 Wels., H. & G.; 1 Exch. 665. When there are several stipulations of various degrees of importance, as to some of which the damages may be considered liquidated, as to others not, the sum mentioned is a penalty. When the damages are altogether uncertain, and a sum expressly made payable in respect to it, as stipulated damages, they will be so construed: Green v. Price, 13 M. & W. 700; Kemble v. Farren, 6 Bing. 141; Boys v. Ancell, 5 Id. (N. C.) 330.

The covenant here refers only to delivery of oil and payment of the difference between contract and market prices; and the clause in relation to damages refers to all the conditions. The damages to either party could not be foretold; hence a liquidated sum was fixed. Atkins v. Kennier, 4 Wels., H. & G. 776, Beall v. Hays, 5 Sandf. 640, and Bagley v. Peddie, Id. 192, were on different circumstances from this case. The clause was inserted for some purpose, and the court is bound to give effect to it. If not to fix the amount of damages, it may operate as a limitation beyond which the parties cannot go: Wilbeam v. Ashton, 1 Campbell 78; Galsworthy v. Strutt, sup., p. 662.

James A. & W. H. Lowrie, for defendants in error.—If the provision is only a penalty, then the authorities are clear and uniform, that the plaintiff has his choice either to sue in debt on the penalty and recover any damages he may have suffered, not exceeding the penalty, or to declare in covenant, and recover all his damages, even though they may exceed the penalty. The following authorities are enough to prove this: Graham v. Bickham, 4 Dall. 149; Harrison v. Wright, 13 East 343; Lowe v. Pears, 4 Burr. 2228; Ayres v. Pease, 12 Wend. 393; Maylam v. Norris, 1 Com. B. 244 (50 E. C. L.); Haggart v. Morgan, 1 Seld. 422; Winter v. Trimmer, 1 Blackstone R. 395; Cottrel v. Hooke, 1 Doug. 93; Martin v. Taylor, 1 Wash. C. C. R. 1; Hurst v. Hurst, 4 Exch. R. 579; Icely v. Grew, 6 Nev. & M. 467 (36 E. C. L. 439); Mayne on Damages 64; Sedgwick on Damages, 3d ed. 424, 443-447 (424-426).

If the strict construction would work absurdity or oppression, the use of term liquidated damages will not prevent the court from inquiring into actual damage: Sedgwick on Damages 420; Mayne on Damages 66. Parties cannot liquidate damages so as to avoid the usury laws: Chiddick v. Marsh, 1 New Jer. 463. If doubtful, the sum will be construed penalty: 24 Verm. 97; 16 Ill. 475; Sedgwick 441.

Where independently of the stipulation, damages would be uncertain and very difficult of ascertainment, the damages will be considered liquidated if so called.

The cases which come under this last class are those where the damages are stipulated for violation of contracts, by a tenant ploughing up pasture ground, 3 Barn. & Ald. 692; by refusing to marry, Lowe v. Pears, 4 Burr. 2228; by carrying on a particular business within bounds agreed upon, on the sale of the good-will to another, 4 Exch. R. 776, Id. 657, 13 M. & W. 695, 16 Id. 346, 14 Id. 187, 8 Mass. 223, 4 Wend. 468, 1 Zabriskie 463, 17 Wend. 447, 22 Id. 201, 3 Car. & P. 240 (14 E. C. L. 286); by refusing to assign a lease and deliver possession of land on a given day, 13 Wend. 587, Sedgwick on Damages, 3d ed., 423-436.

Here there is no uncertainty: damages are ascertainable by the ordinary standard. The rule means where there is no ordinary standard which can be applied by ordinary judicial skill, or skill of the business to which the case belongs.

A contract to pay a certain sum or return a lease in a given time, is a penal obligation: Burrage v. Crump, 3 Jones Law R. (N. C.) 330.

In the following cases stipulated damages have been set aside in favour of the rule of legal compensation: Kemble v. Farren, 6 Bing. 141; Davis v. Penton, 6 Barn. & C. 200; Homer v. Flintoff, 9 M. & W. 678; Beckham v. Drake, 8 Id. 846; Galsworthy v. Strutt, 1 Exch. 568; Williams v. Dakin, 22 Wend. 201; 13 Barb. 106; 12 Id. 366; 24 Vt. 97; Heard v. Bowers, 23 Pick. 455; Shute v. Taylor, 5 Met. 61: Hoag v. McGinnis, 22 Wend. 163; Carpenter v. Lockhart, 1 Smith (Ind.) 326; Bayse v. Ambrose, 7 Jones (Mo.) 39; Watts v. Shepherd, 2 Alab. 425; Owens v. Hodges, 1 McMillan (S. C.) 106; Bagley v. Peddie, 5 Sandf. 192; 11 Texas 273; 14 Barb. (Ark.) 315; 37 Eng. L. & Eq. 122; 2 Abbott Pr. R. 449; Sedgwick on Damages, 3d ed. 440 (421); Beall v. Hays, 5 Sandf. 640; 3 Ohio St. R. 241; Sedgwick 429 (410); Edwards v. Williams, 5 Taunt. 247; Boys v. Ancell, 5 Bing. N. C. 390.

Suing for liquidated damages is a rescission in other respects; suing on the covenant affirms it. Otherwise a party might commit a small breach, pay the penalty and insist upon the other party performing or paying some penalty, and thus the means of securing performance would dissolve the contract: 1 W. Black. 387-395; 13 East 343; 4 Burr. 2228; 4 Exch. 579; 1 Com. B. 240, 251; Mayne on Damages 64.

The opinion of the court was delivered, January 8th 1866, by READ, J.

This is an action of covenant, to recover damages for the breach of a contract by the defendants, to deliver twelve thousand barrels of petroleum or rock oil of certain specific gravity, in monthly instalments of one thousand barrels each, to the plaintiffs, at the landing of the Aladdin Oil Works, in bulk or in barrels. The price was six and a half cents per gallon delivered as aforesaid, and to be measured in the tanks at said works; and settlements were to be made at the end of every month for one thousand barrels, provided that quantity had been delivered during the month, when $500 was to be paid in cash by plaintiffs and the residue in their note at four months. The defendants had the privilege of delivering in advance during the spring and summer months, not exceeding two thousand barrels, and during the fall and winter months, not exceeding three thousand barrels, but only one thousand barrels to be settled for at the end of any one month.

If the defendants did not keep up the supply the plaintiffs were at liberty to buy any deficiency of oil at market prices, and to charge the difference in price, freight, &c., to defendants, who agreed to pay the same. On the 13th August 1862, the oil for the month of July and two boats was settled and paid for by the plaintiffs.

On the 19th of August, six days afterwards, the defendants wrote to plaintiffs complaining of the lowness of the water, and fearing they could not get down enough to make out the one thousand barrels for the month. "What we want is this, should we not be able to get oil down this month, we want to give you two thousand barrels in September, and settle for both August and September, on the 1st of October. If this arrangement is satisfactory please let us know immediately. The proceeds of your note have been duly received."

The price of oil ranged during the summer from three to four cents, and even as low as two and a half cents per gallon, but in September it began to rise and rose greatly in October and November. No oil was delivered after the settlement for the month of July above stated, and on the 11th November the plaintiffs had a notice served on the defendants, informing them, that unless they kept up the plaintiffs' supply, the plaintiffs would purchase in the market, and charge them with the difference of price. To this there was no answer, and they afterwards purchased oil to supply all the arrears of the defendants.

Judge Williams, in a very able charge, submitted the case under proper instructions to the jury. He first submitted the question whether the plaintiffs had committed such breaches of the contract, as would justify the defendants in...