Case Title: City of Kinston v. Suddreth

Citation: 146 S.E.2d 660, 266 N.C. 618

Docket Number: 

State: north-carolina

Court: North Carolina Supreme Court

Date: 1966-03-02T00:00:00Z

Document:
146 S.E.2d 660 (1966) 266 N.C. 618 CITY OF KINSTON, a municipal corporation v. H. C. SUDDRETH. No. 356. Supreme Court of North Carolina. March 2, 1966. *662 George B. Greene, Kinston, for plaintiff appellant. C. E. Gerrans, Kinston, for defendant appellee. SHARP, Justice. Defendant demurred on the ground that, in their contract, the parties had expressly fixed and limited the maximum amount of damages which the City could recover from him in the event he failed to comply with his bid; that he had the alternative to perform or to forfeit; and that the City, therefore, can recover no more than the agreed amount which the parties had denominated "liquidated damages." Plaintiff's position is that the contract provision was not for liquidated damages, but for a penalty which the court will not enforce, thus permitting plaintiff to recover its actual damages. At the outset, it is noted: The plea that a sum stipulated to be liquidated damages is in reality a penalty is ordinarily a defensive onea shield to protect a defendant from an absurd or oppressive claim which is entirely disproportionate to the actual damage he has caused. We apprehend that it is rare indeed that a party as hereattempts to use the plea offensively to collect damages in excess of the stipulated figure. Liquidated damages may be collected; a penalty will not be enforced. 22 Am.Jur.2d, Damages § 212 (1965). It is not necessary for us to decide whether the sum, which the parties here have so designated, is actually liquidated damages. Conceding it to be a penalty, as plaintiff contends, the result in this case will be the same. If a provision denominated liquidated damages be deemed one for a penalty, "the measure of damages is compensation for the actual loss, not exceeding the penalty named." Wheedon v. American *663 Bonding & Trust Co., 128 N.C. 69, 71, 38 S.E. 255. (Italics ours.) It seems quite apparent that defendant intended to limit the amount of damages which could be recovered against him in the event he did not purchase the property. Whatever the City may have intended, that was the effect of the contract which it accepted. We hold that the contract limited defendant's maximum liability to $4,000.00. Defendant voluntarily forfeited the additional $210.00 which he later deposited. Although the contract here contained no such specific stipulation, the validity of provisions limiting the maximum amount to be recovered in the event of a party's breach of contract, leaving actual damages in a lessor amount to be established is unquestioned. The judgment of the court below sustaining the demurrer and dismissing the action is Affirmed. MOORE, J., not sitting. PLESS, J., and RODMAN, E. J., took no part in the consideration or decision of this case.