Sunderland Bros. Co. v. Chi., B. & Q. R. Co.
| Decision Date | 27 September 1920 |
| Docket Number | No. 20853.,20853. |
| Citation | 179 N.W. 546,104 Neb. 319 |
| Court | Nebraska Supreme Court |
| Parties | SUNDERLAND BROS. CO. v. CHICAGO, B. & Q. R. CO. |
OPINION TEXT STARTS HERE
Syllabus by the Court.
Sections 6159, 6160, 6162, Rev. St. 1913, which impose on railroad companies, for delay in shipment and delivery of goods carried, a liability in favor of the shipper for a specified sum in addition to all actual damages suffered by reason of such delay, are unconstitutional under section 5, art. 8, of the Constitution, which provides that all fines and penalties, arising under the general laws, shall go exclusively to the school fund.
The case of Clearwater Bank v. Kurkonski, 45 Neb. 1, 63 N. W. 133, discussed and criticized.
Additional Syllabus by Editorial Staff.
In determining whether a provision to pay a stipulated sum in case of default is a penalty or liquidated damages, the court will consider the subject-matter, the language employed, and the intention of the parties; and, if the construction is doubtful, the agreement will be construed as a penalty, and if resulting damage is certain, or can be ascertained by evidence, it is a “penalty,” but where the damages are not susceptible of measurement by pecuniary standard, a stipulated sum will be regarded as “liquidated damages.”
The purpose of liquidated damages is to furnish compensation for an injury sustained, and if the amount provided does not bear a reasonable relation to the damage which might be contemplated by the parties, or if it was intended to more than cover that damage, and is not compensatory merely, it will be construed as a penalty.
Appeal from District Court, Douglas County; Leslie, Judge.
On motion for rehearing. Motion overruled.
For former opinion, see 177 N. W. 156.
Letton, J., dissenting.Byron Clark, Jesse L. Root, and J. W. Weingarten, all of Omaha, for appellant.
Baldrige & Saxton, of Omaha, for appellee.
This matter now comes up on rehearing. Former opinion, Sunderland Bros. Co. v. Chicago, B. & Q. R. Co., 104 Neb. 319, 177 N. W. 156.
The action was brought by the plaintiff, who had shipped building material in carload lots over defendant's railroad, and is based upon sections 6159, 6160, 6162, Rev. St. 1913, known as the “Reciprocal Demurrage Act,” allowing recovery to the shipper of $1 per day, together with all actual damages sustained for each day's delay in shipment and delivery of goods, by the carrier.
[1] The sole question presented is whether or not the provision of the statute, allowing $1 per day per car, together with all actual damages sustained, provides for liquidated damages to the shipper, or allows a recovery in the nature of a penalty. If the allowance to the shipper is in the nature of a penalty, then the provision is in violation of section 5, art. 8, Const., providing:
[3] The rule of distinction between penalties and damages is stated in Haffke v. Coffin, 89 Neb. 134, 138, 130 N. W. 1045, 1046 (quoting from Brennan v. Clark, 29 Neb. 385, 45 N. W. 472), as follows:
That rule has been repeatedly followed by this court and is the rule generally recognized in other states. 17 C. J. 937, § 235; Id. 945, § 238.
[4] The purpose of liquidated damages is to furnish compensation for an injury sustained, and if the amount provided does not bear a reasonable relation to the damage which might be contemplated by the parties, or if it is apparent that it was intended to more than cover that damage, and is not compensatory merely, then it must be construed as a penalty. Such is the holding in Lee v. Carroll Normal School Co., 1 Neb. (Unof.) 681, 96 N. W. 65;Brennan v. Clark, 29 Neb. 385, 45 N. W. 472;Squires v. Elwood, 33 Neb. 126, 49 N. W. 939. In the two cases last above mentioned the court held that there the damages were easily ascertainable, and the amount provided must have been intended as a penalty, as there was no need for liquidating the amount by agreement. In the cases of Atchison & N. R. Co. v. Baty, 6 Neb. 37, 29 Am. Rep. 356, and Grand Island & W. C. R. Co. v. Swinbank, 51 Neb. 521, 71 N. W. 48, a statute, which compels a railroad company to pay the owner of live stock, killed upon the track, double value of the property, has been held to provide a penalty and to be unconstitutional and void, since it is apparent that more than mere compensation is provided by the statute.
The plaintiff in this case relies upon the holding in Graham v. Kibble, 9 Neb. 182, 2 N. W. 455, and the cases which have followed that case, citing it as authority: Phœnix Ins. Co. v. Bohman, 28 Neb. 251, 44 N. W. 111;Phœnix Ins. Co. v. McEvony, 52 Neb. 566, 72 N. W. 956; and Hier v. Hutchings, 58 Neb. 334, 78 N. W. 638. The rule, as stated in the case of Graham v. Kibble, supra, and as followed in the cases just above cited, is entirely consistent with the rule stated in the beginning of this opinion. In all of these cases statutes were involved which provided that a party could recover from a public officer a certain stipulated amount in damages, in case of the wrongful act or oppression of the officer, in charging excessive fees, or in arresting a party who had been released on habeas corpus, etc.
In the case of Graham v. Kibble, supra, the amount of damages allowed by statute was $30, in case a public officer should charge excessive fees. It was argued that the statute provided a penalty. The court's decision, however, was based upon the proposition that the amount provided was in the nature of liquidated damages, though a part of the opinion by way of dictum discussed the amount allowed as a penalty, and intimated that in the case of public officers a penalty could be provided. In the case of Grand Island & W. C. R. Co. v. Swinbank, supra, in which the court held that a statute, allowing double damages against a railroad company for the killing of live stock, was unconstitutional, Judge Irvine said (51 Neb. 526, 71 N. W. 50):
By reason of the court's dictum in the case of Graham v. Kibble, that the amount allowed was a penalty, such provisions have later been referred to as penalties in the cases following that case. In the case of Phœnix Ins. Co. v. Bohman, supra, the court stated that the statute, allowing a party to recover $50 against an officer taking excessive fees, was highly penal in its nature. In that case and in the cases of Phœnix Ins. Co. v. McEvony, supra, and of Hier v. Hutchings, supra, the constitutionality of the statute was not reasoned or discussed, but the statute was sustained simply on the authority of Graham v. Kibble. It further appears that those statutes should have been expressly sustained as providing liquidated damages, as was done in the former case.
[2] The cases so far discussed, then, are in complete harmony, so far as the question has been expressly considered, upon the rule of determining between liquidated damages and a penalty. The plaintiff urges that the case of Clearwater Bank v. Kurkonski, 45 Neb. 1, 63 N. W. 133, is a case in favor of the constitutionality of the statute in question. The statute in that case provided for the recovery of $50 liquidated damages and also for actual damages sustained. It is apparent that the amount allowed, $50, if given in addition to actual damages, was a provision for more than actual compensation to the person injured, and it would seem that, when that statute comes before the court again, that case must be overruled, if the decisions in all the cases above referred to are to be adhered to. In the Kurkonski Case, the question of allowing extra damages, in addition to the $50, is not discussed as tending to show that any more than compensation was intended to be provided by the statute. The opinion in that case discloses that the question of whether or not the $50 was a penalty was not very closely considered, and it is stated in the opinion that the amount was evidently intended as liquidated damages, and the case of Graham v. Kibble, supra, cited as authority.
That the Legislature could provide liquidated damages, if it was apparent that the amount provided was intended to be compensatory only, has been held in the case of Cram v. Chicago, B. & Q. R. Co., 84 Neb. 607, 122 N. W. 31, 26 L. R. A. (N. S.) 1022, and 85 Neb. 586, 123 N. W. 1045, 26 L. R. A. (N. S.) 1028, 19 Ann. Cas. 170. In that case, however, the statute was upheld on the ground that the amount allowed was to cover damages only, and the court stated that, if more than that amount had been allowed, the provision must have...
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