Case ID: ad_121/html/0786-01.html
Source: Caselaw Access Project
Author: {"author": "Clarke, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank L. Perley, Respondent, v. Lee Shubert, Appellant.
    First Department,
    November 15, 1907.
    Contract—agreement to set aside theatrical' routes—-time not essence — , liquidated damage.'
    Although a contract requires -the defendant, a theatrical manager, to set aside for the plaintiff prior to May first certain routes covering all- theatres tinder his control for at least twenty consecutive weeks, to begin not later Iban September and October, the plaintiff to notify the 'defendant in writing of his acceptancepr refusal of. the routes prior to June first, and to notify the defendant by September first of the number of attractions he shall produce, so that the time set aside for him may be otherwise disposed of if not desired, time is not of the essence, of the contract. Hence a failure to submit to the plaintiff the route's on May first is not a breach of the agreement, when as a matter.of fact th.e routes were actually set aside at that date, and nó demand, for the routes had been made by the plaintiff.
    Moreover, as no place for delivering the routes was mentioned in the contract, the place,of delivery was at the office óf the defendant, even if time be considered as-of the essence of the contract; and the routes being ready at the defendant’s office prior to May first, there was no breach of the contract . by- him.
    Whether the damage clause of á contract should be construed as fixing liquidated damages or a penalty depends upon the actual intention of the parties so far as it can reasonably and fairly be ascertained from the language and surrounding circumstances.
    ■ Appeal by the defendant,. Lee ■ Shubert, from a judgment of the Supreme Court in favor of the plaintiff, .entered in the office of the clerk of the county of New York on the 26th day of February, 1907, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 26tli day of February, 1907, denying the defendant’s motion for a new trial made upon the mimites.
    
      Benjamin N. Cardozo [William Klein with him on the brief], for the appellant.
    - Josiah Canter [Franklin Bien with him on the brief], for the respondent.
   Clarke, J.:

This is an action to recover $25,000 as liquidated damages for breach of contract. On July 28,1905, the plaintiff and the defendant, theatrical managers, entered into an agreement in writing which by its terms was to commence on September 1, 1905, and continue for five years, with provisions for renewal for an additional five years. The contract is voluminous, covering some sixteen pages.of the printed record, and containing seventeen separately numbered paragraphs. Its many stipulations or covenants are of varying degrees of importance. It provides that the defendant should submit to and set aside for the plaintiff prior to the first of May in each year during said term, for the production of whatever attractions the plaintiff might desire, six good routes covering all theatres the bookings of which were under the control of the defendant or of his brother, Jacob J. Shubert, or of any corporation or partnership in which they or either of them were'interested'; that the defendant should deliver to the plaintiff within one week after receiving written notice of the name of each play, and of the plaintiff’s intent to present the same, contracts in due form granting and securing to the plaintiff .such time or engagements for the presentation of his attractions in the Lyric Theatre and the Casino in the city of New York, and in all the theatres referred to in the contract, each route to be at least for twenty consecutive weeks, three of them to begin not later than September fifteenth in each year, and three about October fifteenth in each year, and to be upon sharing terms in accordance with an annexed schedule; that if after October fifteenth the plaintiff desired and requested a route beginning later than that date the defendant should book it wherever time in the theatres desired by the plaintiff was not actually contracted for; that after the submission of the routes on or prior to May first the plaintiff should notify the defendant in writing on or prior to July first either of his acceptance or of his declination of all of- any part of each or all of said routes, and should give notice in writing prior to September first what time he would not require ; that should the plaintiff not have, six attractions he would notify the defendant on or before September first in each year of the number of attractions which he desired to produce, so that, the time set aside for him might be disposed of by the defendant; that the terms on which the attractions should play at the different theatres should be in accordance with a schedule annexed thereto ; that the plaintiff should have the right to purchase an interest in all future musical and dramatic plays tobe produced by the defendant during the term of the agreement up to a oñedialf interest upon giving prescribed notice: and upon, prescribed terms of payment; that should the defendant be called upon by any'one to make a production of any .musical production, opera or play without risk to the defendant, he should refef such person to the plaintiff and enter into ah agreement with the plaintiff for a division of the profits ; that the plaintiff should have time for.his productions in each season or in each year at the Casino and Lyric. Theatres in the city'of New York and such other theatres as the defendant might control in the city of New York, in addition to those on the road more specifically described; that the -defendant should be constituted the booking agent of the plaintiff. for the purpose of booking his attractions, and that the plaintiff should not book or attempt to book any attraction except through the defendant ; that should the defendant dispose of the theatres owned or controlled by him he would do so only subject to the terms of the agreement; that no production should be made by the plaintiff in addition to the six routes set apart for him except at theatres owned" or controlled by the defendant; that the form of the contract to be used in booking should be the form thereto annexed ; that if, through introduction, or by the influence of the plaintiff, any theatre should become affiliated with the Shubert enterprises^ or should the booking of any theatre be procured through the efforts or introduction made by the plaintiff, the plaintiff should have one-half of all income accruing from affiliation of said theatre and the booking of time therein for so long a time as the arrangement made with the said theatre should continue; that the plaintiff should have the right, if he so desired, to purchase from the defendant any proportion, not to exceed one-half, of the defendant’s interest in any future musical or dramatic play, during the term of the agreement, upon payment of a proportionate part of the actual cost.

By the 15th subdivision of the agreement the following covenant was made in respect to the remedies available to the plaintiff in the event of the defendant’s default:

Fifteenth. In addition to any remedy which the party of the. second part may have by virtue hereof, the parties hereto expressly agree that should the party of the first part fail to fully perform all the covenants and conditions of this agreement on his part to be performed, that then and in that event the damages which said party of the second part may sustain by reason thereof are hereby assessed at the sum of Twenty-five thousand dollars ($25,000) which said sum the party of the first part agrees to pay, this not being a penalty but being agreed upon as liquidated damages for the breach of the within contract.”

The plaintiff brings this action to recover damages because the defendant, as he alleges, failed to .submit six routes to him on or before May 1, 1906. He does not claim that he ever demanded the routes. On June 2, 1906, he gave the defendant the following notice: “ Take notice that you having failed to carry out many of the conditions of the contract made and entered into by and. between us in writing, dated July 28th, 1905, and especially having failed to submit to me and set aside six first class routes prior to the first day of May, 1906, as provided for by the second clause of said contract, and more than thirty days having elapsed since said time, you are hereby notified that the said contract has been terminated by your failure to carry out the same, and I hereby demand of you the payment of the sum of $25,000 forthwith as liquidated damages as provided for by the fifteenth clause of said contract.” Immediately on the receipt of this notice the defendant wrote the plaintiff as follows:

“ June 2nd, 1906.
“ My Deae Feank.—Yours of June 2nd to hand and contents noted. I am really surprised at the contents thereof. I have written you several letters with reference to your routes and have telephoned you over a dozen times, but seem to get no information whatsoever from your office. I simply desire to reiterate what I have heretofore written you that your routes have been laid aside and have been awaiting your approval for the last four weeks. Come over and see me with reference to the matter. With kindest regards, I ain,
“Tours truly,
“LEE SHUBEBT.”

The plaintiff did hot reply to this letter but commenced this action. On behalf of the defendant it Was proved that the routes had been made up for the plaintiff’s use and were in the-defendant’s office ready to be delivered to him if he called before May 1, 1906, and the routes so prepared were marked for identification, . '

There was testimony to the effect that as early as April 10,1906, the defendant wrote the plaintiff that the routes had already been set apart for him, and asked him to call and go over them. The plaintiff denies that lie received this letter. It was shown by the testimony of the defendant’s attorney, which, however, the plaintiff Contradicted, that in April, 1906, said attorney spoke, to the plaintiff over the telephone about the routes* and asked why he 'did not come over and fix the- routes, at the office, and that the plaintiff. said he would be over very shortly. The jury returned a verdict for the plaintiff for $25,000, and from the judgment entered thereon this appeal is taken.

The briefs of counsel upon both* sides have elaborately discussed the question whether the $25,000 provided to be paid by the 15th clause of the agreement. is to be considered as liquidated damages ór as a penalty, and have cited a multitude of cases. • All of these cases' and many more have been examined by us. From them has been deduced one rule at least in which they all agree and about which there can. be no doubt, and that is that in the construction of such provisions the actual, intention of the parties so far' as it can reasonably and fairly be ascertained from the language of the contract and from the nature of the surrounding circumstances is to be considered. In other words,- that each case is to be considered in the light of its own facts. Examining this case as made we find it unnecessary, to enter into a discussion of this vexed question or to add to a legaLliterature Where reconcilement -of all the cases has been abandoned as impossible, because it seems to us clear that the plaintiff has not made out a. breach of the' contract Updn the defendant’s part. There being no breach it is of no importance whether the sum to be paid upon a breach be liquidated damages or a penalty.

The 15th clause quoted (supra) preserved all the ordinary remedies, both legal and equitable, which -the plaintiff might have under the contract or any of the provisions thereof, and in addition provided a distinct remedy for 'a failure by the defendant to perform all the covenants and' conditions of this agreement by him to be performed and fixed the damages therefor at $25,000. It is not claimed that at the time this suit was brought the defendant had failed to perform all the covenants and conditions of the agreement. The utmost that is claimed is that he had failed to perform one of the covenants or conditions. It is claimed that that failure broke the entire contract, that $25,000 immediately became due without any proof of damage. This covenant was that the defendant should submit to and set aside for the plaintiff prior to the first day of May six good routes.

In construing this instrument it becomes important to determine whether that date was of the essence of the contract. The plaintiff’s claim goes to the extent of asserting that if these six routes had been submitted and set aside one day late, on the second day of May, still the contract would have been breached and the $25,000 recoverable. Is such a claim reasonable? Was it within the contemplation of the parties and the fair intendment of the contract ? This contract was between theatrical managers. It had to do with theatrical business. By the terms of the contract each of these routes was to be for at least twenty consecutive weeks, three to begin not later than September fifteenth and three about October fifteenth. After the submission of the routes on or prior to May first, the contract provided that the plaintiff should notify the defendant in writing on or prior to July first either his acceptance or declination of all of any part of each or all of said routes, and notify the defendant prior to the "first of September what time he would not require. If the plaintiff did not have six attractions he should notify the defendant on or before September first of the number of attractions he desired to produce so that the time set apart for him might be disposed of by the defendant.

It is evident, it seems to ns, that under such conditions submission of the routes on the first of May was not of the essence of the contract and that a failure so to submit did not per. se breach the contract.

The plaintiff had two months thereafter in which to consider and pass upon the routes,; he had two more months in which tó notify the defendant of what time he would not require, and the season was not to begin for three of the.routes until the fifteenth of September and for the rest until the fifteenth of October. There,is not one word in this voluminous agreement, which supports the proposition that time, namely, May first, was of the essence of the contract. The offices of the two parties were in the same city, within three blocks of each other. lío demand was-ever made by the plaintiff' upon the defendant. The defendant never repudiated the contract, but had set aside the routes and had the prepared charts thereof ready in his office for submission to the plaintiff. . Upon' the very day on which the plaintiff notified him that he had breached the contract, the defendant wrote denying such breach either in fact or intention and told plaintiff that the routes were and had been ready for his inspection, and asked him to- call and look them over. At this time, a whole month of the time provided for the plaintiff to éxamine and notify of his acceptance or rejection still remained. Under such, circumstances, to permit a recovery of the large sum of $25,000 as upon a technical breach, is to do violence to all sense of fair play, is not required by the law, and will not be sanctioned by the court.

We leave out of consideration the testimony on the defendant’s part that prior to May first the plaintiff had been, notified by letter and telephone that the routes were ready and awaiting his. inspection. We hold that under this contract and upon this proof, time was not of the essence of this contract and the defendant had not breached it, and that as he had not failed to perform all the covenants and conditions of the agreement by him to be performed, the plaintiff was not entitled to recover. We think further that under this contract the place of delivery of these routes, no place for delivery being therein mentioned, was at the office of the defendant, and that, even if time could be considered as the essence of the contract, the routes having been set aside and ready for submission at said office prior to the first of May, there Was no. breach.

This record impresses us as indicating a far greater desire upon the part of the plaintiff to entrap the defendant into the forfeiture of $25,000 than to carry out a fair contract. He évidently prefers a breach to a performance. The defendant did not repudiate the contract. He complied with its terms. The plaintiff failed to establish a cause of action and the judgment and order must be reversed and a new trial "ordered, with costs to the appellant to abide the event'.

Patterson, P. J., Ingraham, Scott and Lambert, JJ., concurred.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.