Smith v. Newell

• Decision Date: 18 March 1896
• Citation: 37 Fla. 147,20 So. 249
• Parties: SMITH v. NEWELL et al.
• Court: Florida Supreme Court

20 So. 249

37 Fla. 147

SMITH v. NEWELL et al.

Florida Supreme Court

March 18, 1896

Appeal from circuit court, Orange county; John D. Broome, Judge.

Action by George R. Newell and others, trustees, against Charles H Smith. From a judgment for plaintiffs, defendant appeals. Reversed.

Syllabus by the Court

SYLLABUS

1. Whether the sum mentioned in a contract to be paid upon a breach thereof is to be considered as liquidated damages, or as a penalty merely, is always a question of law for construction by the court. For the solution of such question no fixed or general rule can be laid down for the government of all cases, but each case must be governed, in large measure, by its own facts and circumstances. Some general rules have become well established, however, for the guidance of the courts in solving the question whenever presented that will govern the construction to be placed upon all contracts whose distinguishing terms and provisions bring them within the limits of such fixed rules. Among the general rules of construction so fixed and established, there is none more unanimously settled and agreed upon by the courts than the following: 'A sum fixed as security for the performance of a contract containing a number of stipulations of widely different importance, breaches of some of which are capable of accurate valuation, for any of which the stipulated sum is an excessive compensation, is a penalty.'

2. If the sum mentioned in a contract to be paid for a breach thereof is construed to be liquidated, stated, or stipulated damages, then it can be directly sued for and recovered as such in an action of debt or assumpsit; and in such case no proof is necessary on the plaintiff's part of the sustainment of any actual loss or damage by reason of the breach, but he sues for and recovers such stipulated sum as upon a special promise to pay that fixed sum. All that is necessary to entitle the plaintiff to recover the stipulated sum, in such a case, is to show the breach of the contract upon which the payment thereof depends.

3. If however, the sum mentioned in a contract to be paid upon a breach thereof is construed to be merely a penalty, and not liquidated or stipulated damages, then the plaintiff must sue for the damage actually resulting from the breach, and not for the specific sum named as the penalty; and he must allege and prove, not only the breach of the contract, but such other essential matters of fact as are necessary to show that he has sustained actual damage by such breach. In such a case he cannot recover any greater sum as damages than his proofs show him to have actually sustained in consequence of the breach. He is entitled in such a case, however, to recover all such damages as he proves himself to have actually sustained by the breach, whether they exceed the amount of the penalty mentioned in the contract or not. The amount of the penalty does not, in such cases, limit the amount of the recovery.

4. The measure of the vendor's damage in case of the purchaser's failure to pay the agreed purchase price of land is the difference between the agreed purchase price and the actual value of the land at the time of the breach of the contract of purchase.

COUNSEL

J. M. Cheney, for appellant.

Beggs &amp Palmer, for appellees.

OPINION

TAYLOR J.

George R. Newell et al., as trustees of the Presbyterian Church of Orlando, Fla., in June, 1890, sued Charles H. Smith in the circuit court of Orange county in an action of debt upon the following contract, for the purchase by the defendant of a lot of land: 'This agreement, made this sixth day of April, A. D. 1889, between J. W. Anderson, S.E. Ives, Geo. R. Newell, C. H. Munger, and C. G. Lee, as trustees of the Presbyterian Church of Orlando, Florida, parties of the first part, and Charles H. Smith, of Orlando, Florida, party of the second part, witnesseth: That the parties of the first part, as trustees, as aforesaid, for and in consideration of the sum of three thousand dollars to be paid by the party of the second part, as hereinafter specified, agree to convey to the party of the second part, within one year from the date hereof, all that lot of land situate in the city of Orlando, in the county of Orange and state of Florida, known and described as lot No. three of block No. thirty-six of R. R. Reid's addition to Orlando, according to a plat of said addition on record in the office of the clerk of the circuit court of said county and state, and to execute and deliver to the said party of the second part a good and sufficient warranty deed to said land, free of all incumbrances, saving and excepting a mortgage to C. W. Harkness, trustee, given to secure the payment of the sum of twelve hundred and fifty dollars, and thereto they bind themselves, their successors in office and assigns, firmly by these presents. And the said party of the second part, for and in consideration of the premises, and the sum of one dollar to him in hand paid, the receipt whereof is hereby acknowledged, hereby agrees that, within one year from the date hereof, he will pay for said described land the said sum of three thousand dollars, to wit, the party of the second part will pay the sum of seventeen hundred and fifty in cash, and will assume the payment of the aforesaid mortgage of twelve hundred and fifty dollars to C. W. Harkness, trustee. The party of the second part further covenants and agrees to pay to the parties of the first part interest on said sum of seventeen hundred and fifty dollars from date, until fully paid, at the rate of eight per cent. per annum, and to pay all interest accruing on said sum of twelve hundred and fifty dollars due C. W. Harkness, trustee, from date, until fully paid. The said party of the second part further covenants with the parties of the first part that should he, the said Charles H. Smith, fail to pay said sums of money, either principal or interest, when the same may become due, that he will pay to the said parties of the first part the sum of five hundred dollars in cash, and will forfeit all claims to the lands hereby agreed to be conveyed, and thereto the said Charles H. Smith binds himself, his heirs, executors, and administrators, firmly by these presents.' The declaration, by apt words, makes this agreement a part thereof, and claims only the $500, named therein, to be paid upon a breach by the purchaser, as liquidated, stated, or stipulated damages.

The declaration was demurred to upon the ground, among others, that it failed to show how or wherein the plaintiffs have been damaged. This demurrer was overruled, and the defendant interposed three pleas, as follows: '(1) That it is true that the plaintiff signed the bond as set forth in the plaintiffs' declaration, but the defendant denies that the plaintiffs have ever tendered a good and sufficient deed to the land in said bond described to this defendant. (2) For a further plea, the defendant says that the plaintiffs have suffered no damage from the alleged fact that the contract of purchase and sale has not been carried out between this defendant and the plaintiffs. (3) And, for a further plea, the defendant says that the said plaintiffs, as trustees, have no authority to convey the land in said agreement described by a good and sufficient warranty deed, nor did they have such authority at the time of bringing this suit, or at any time prior thereto.' The plaintiffs demurred to all of these pleas. The court sustained the demurrer to the last two pleas, and it was withdrawn as to the first. The ground of demurrer to the second plea was: 'That the sum promised to be paid was certain and a positive promise, and that no damage was necessary to be proven.' The plaintiffs replied to the defendant's first plea, alleging that the defendant had waived the tender of the deed from the plaintiffs. Trial was had before a jury, and a verdict was rendered for the plaintiffs in the sum of $554.50; but the court, on motion for new trial, ordered the entry of a remittitur for the $54.50 assessed as interest upon the main sum of $500, and judgment was entered against the defendant for the last-named sum, and from this judgment (prior to the adoption of the Revised Statutes) the defendant took this statutory appeal.

At the trial, the plaintiffs introduced the written agreement, and proved that...