Title: Mevorah v. Goodman
Citation: 57 N.W.2d 600
Docket Number: 7359
State: north-dakota
Issuer: north-dakota Supreme Court
Date: March 5, 1953

57 N.W.2d 600 (1953) MEVORAH et al. v. GOODMAN et al. No. 7359. Supreme Court of North Dakota. March 5, 1953. *603 Lanier, Lanier &amp; Knox and Aaron Aronson, Fargo, for defendants and appellants. Burnett, Bergesen, Haakenstad &amp; Conmy, Fargo, for plaintiffs and respondents. MORRIS, Chief Justice. This is an action for damages for breach of contract. The defendants appeal from a judgment rendered upon a verdict of the jury in favor of the plaintiffs in the sum of $9,250. On June 23, 1950, the plaintiffs, as purchasers, and the defendants, as sellers, entered into a contract for the purchase and sale to the plaintiffs, conditionally, of the *604 business known and operated as Irving's Tractor Lug Company, with branches in Fargo, North Dakota; Portal, North Dakota; and Wichita, Kansas. This business consisted of buying and selling new, reconditioned, and used parts of tractors and agricultural implements. The consideration was $100,000, of which $5,000 was payable in cash and the balance to be represented by the joint and several promissory note of the plaintiffs, Martin Sills and Cesar Mevorah. Title to the stock of goods was retained by the defendants until all of the purchase price was paid. The contract also provided that in the event of default or breach by the purchasers, the sellers might take immediate possession of the property so sold and retain the same, together with all payments previously made, as liquidated damages. The sellers also agreed not to engage, directly or indirectly, in the retail or wholesale business of selling new tractor and farm implement parts in the normal trade territory of the three cities named in the contract, or engage in the foreign export of those items. The contract also provided: and stated that the violation of paragraph H, which included the agreement not to compete and not to use the name of Irving's Tractor Lug Company, "shall subject the sellers to pay the buyers the sum of $10,000.00 as and for liquidated damages." Other provisions of the contract will be referred to as they become pertinent to the discussion of points in controversy. The complaint sets forth five causes of action. In the first cause of action it is stated: In the second cause of action it is stated: As the third cause of action it is stated: As a basis for a fourth cause of action the plaintiffs state: "That on account of and as a result of the failure of the defendants to furnish a true and complete list of the creditors and the amounts owing and because of the developments thereafter and as an outgrowth thereof the *606 plaintiffs have been damaged in the sum of $15,000." In plaintiff's fifth cause of action it is alleged: The defendants answered by way of general denial, and further alleged in an amended answer: The transcript is voluminous and the record contains some 120 exhibits consisting *607 of about 2,000 checks, drafts, orders, invoices, and items of correspondence. There are 43 specifications of error, some of which involve the sufficiency of the evidence. No question of the sufficiency of the evidence to sustain the verdict is before us. The defendants made no motion for a directed verdict and did not move for a new trial. Under our practice it is well settled that in a civil case the question of the sufficiency of the evidence to support the verdict cannot be raised in the supreme court unless it has been first presented to the trial court by a motion for a directed verdict or a motion for a new trial. Westerso v. City of Williston, 77 N.D. 251, 42 N.W.2d 429; State v. Van Horne, 71 N.D. 455, 2 N.W.2d 1; Lueck v. State, 70 N.D. 604, 296 N.W. 917; Baird v. Stephens, 58 N.D. 812, 228 N.W. 212; Olson v. Great Northern R. Co., 56 N.D. 690, 219 N.W. 209; Jacobson v. Klamann, 54 N.D. 867, 211 N.W. 595; Veum v. Stefferud, 50 N.D. 371, 196 N.W. 104; Rokusek v. National Union Fire Ins. Co., 50 N.D. 123, 195 N.W. 300; Bailey v. Davis, 49 N.D. 838, 193 N.W. 658; Horton v. Wright, Barrett &amp; Stilwell Co., 43 N.D. 114, 174 N.W. 67; Erickson v. Wiper, 33 N.D. 193, 157 N.W. 592; Buchanan v. Occident Elevator Co., 33 N.D. 346, 157 N.W. 122; Freerks v. Nurnberg, 33 N.D. 587, 157 N.W. 119; Morris v. Minneapolis, St. P. &amp; S. S. M. R. Co., 32 N.D. 366, 155 N.W. 861. It is undisputed that the plaintiffs assumed control of the business of Irving's Tractor Lug Company on July 1, 1950, and operated it until February 5, 1951, when the business was repossessed by the defendants. Defendants' specifications of error, in so far as they raise questions reviewable in this court, fall into two categorieschallenges to the trial court's rulings on admission or exclusion of evidence and challenges to instructions given by the court or requested by defendants and refused by the trial judge. The defendants specify as error the admission over their objection of plaintiffs' exhibits 2 to 19 inclusive, being a series of drafts issued in the name of Irving's Tractor Lug Company and drawn on the Fargo National Bank of Fargo, North Dakota, during the period in which the plaintiffs were operating the business. These drafts were issued at the direction of the defendants in payment of the purchase of scrap metal by the defendants and not as a part of the business which was operated by the plaintiffs. These exhibits were clearly admissible on the question of whether the defendants violated their agreement not to conduct business in the name of Irving's Tractor Lug Company, as claimed by the plaintiffs under their first cause of action. The defendants argue that these exhibits, as well as others introduced later, do not show a material or substantial breach of the contract. This, however, is a matter of the weight of the evidence and does not go to the admissibility of the exhibits which were clearly relevant under the pleadings. The bank account against which these items were drawn and charged was the account of Irving's Tractor Lug Company, then operated by the plaintiffs. A similar bank account was kept in the Bank of Montreal, Estevan, Saskatchewan. The contract provided that until the purchase note was paid the sellers or their agents should have the right to countersign all checks issued by the buyers in the conduct of the business of Irving's Tractor Lug Company and that "The sellers may not refuse to countersign any check arbitrarily or capriciously so long as the check is issued for a proper business purpose." The contract contains a provision that the sellers agree to furnish the buyers a written list of names and addresses of creditors with the amount of indebtedness due each. A list furnished pursuant to this provision was introduced in evidence. The defendants claim it was error for the court to admit in evidence exhibit 36, which was a bundle of about 160 checks for small amounts under $35 issued against Irving's Tractor Lug Company account in the Bank of Montreal and payable to parties not listed as creditors. The defendant, Irving Goodman, testified that they had been issued mostly for refunds to customers for indebtedness that was outstanding prior to *608 July 1, 1950. This exhibit was properly admitted as being material under plaintiffs' fourth cause of action, wherein it is contended that the defendants failed to furnish a true and complete list of creditors as required by the contract. Similar objections were made to the introduction of checks and drafts issued to unlisted creditors and to credit memorandums that had been issued in lieu of cash refunds to customers. These memorandums entitled the customers to apply the amounts specified therein on future purchases. We find no error in the admission of any exhibits of this nature. If, as the defendants claim, the bank accounts of Irving's Tractor Lug Company were reimbursed by the defendants for all such items charged against them, that fact does not render the admission of these exhibits erroneous. Reimbursement would be for the jury to consider in connection with the assessment of damages. Exhibits 48 to 62 inclusive are checks written for the purpose of paying the credit memorandums. These checks were also admissible for reasons already stated as being material to the issue as to whether the list of creditors furnished to the plaintiffs by the defendants complied with the provisions of the contract. In a group of specifications the defendants assert that the trial court erred in sustaining objections to questions asked on cross-examination of plaintiffs' witnesses during the presentation of the plaintiffs' main case. We will discuss illustrative instances from this group of specifications. The propriety of the examination of witnesses and the order in which evidence is presented are matters largely within the sound discretion of the trial court and his rulings will not be disturbed in the absence of a showing of abuse of discretion. State v. Kerns, 50 N.D. 927, 198 N.W. 698; State v. Tolley, 23 N.D. 284, 136 N.W. 784; State v. Hazer, 57 N.D. 900, 225 N.W. 319; People v. Logie, 321 Mich. 303, 32 N.W.2d 458. These are criminal cases, but the same rule is also applied in civil actions. Ruddick v. Buchanan, 37 N.D. 132, 163 N.W. 720; Schwoebel v. Fugina, 14 N.D. 375, 104 N.W. 848; 58 Am.Jur., Witnesses, Section 631. The rule is applicable to the cross-examination of a witness for purposes of impeachment. State v. Kerns, supra. The witness Alpers testified that he formerly worked for the defendants when they were operating Irving's Tractor Lug Company and continued to work for that concern after the plaintiffs took it over and until October 1950. This witness identified a number of drafts which he drew in the name of Irving's Tractor Lug Company on the Fargo National Bank. The drafts were for the purchase of scrap iron made by the Goodmans after the plaintiffs had taken over the company, the point of this testimony being an attempt to show that the defendants used the name of the company in violation of the contract. In an attempt to impeach this witness, defendants' counsel asked these questions to which objections were sustained: The questions do not fall within the range of proper impeachment. They intimate that the witness had had some trouble with the plaintiffs for whom he was testifying. This indicates no prejudice against the defendants and the nature of the questions is not such as to indicate their answers would in any way affect the witness' credibility. The defendants complain that they were unduly and erroneously restricted by the trial court in the cross-examination of the plaintiff, Martin Sills. The instance having the greatest semblance of merit grows out of this situation: The contract provided that all money received in the course of the buyers' business should be deposited in the Fargo National Bank "or other bank mutually agreeable to the parties." It appears from the testimony of the plaintiff Sills, and from other evidence, that an account was carried in the Dakota National Bank in the name of the Irving's Tractor Lug Company by agreement of the parties. *609 The defendants' answer alleges that prior to the claim of breaches by the defendants the plaintiffs breached the contract in a number of respects, including this: "they went so far as to secretly and without notice to defendants open a special and separate account in the Dakota National Bank of Fargo, North Dakota, under the account name of Irving Tractor Lug Company, special account." In the cross-examination of Sills as a part of the plaintiffs' main case, these questions were asked and objections thereto sustained: Orderly trial procedure requires that a party who has not opened his own case will not be permitted to introduce affirmative defenses to the jury by cross-examination of witnesses of the adverse party. Hogen v. Klabo, 13 N.D. 319, 100 N.W. 847. These questions would have been proper if asked of the witness if he had been called for cross-examination under the statute as a part of the defendants' case. They appear in this record, however, as a part of the cross-examination conducted during the plaintiffs' presentation of their case. The questions pertain to a breach of the contract by the plaintiffs, a matter which was pleaded as a defense. It was not an abuse of discretion of the trial judge to sustain objections thereto as improper cross-examination. In fact, he is to be commended for applying a rule of orderly procedure in a case which involves many complicated and confusing aspects. The contract, as construed by the parties, provided that checks issued by the plaintiffs in the name of Irving's Tractor Lug Company were required to be countersigned by one of the defendants. It stated that: Plaintiffs' second cause of action charges the defendants with violation of this provision. The plaintiffs introduced in evidence two checks drawn on the Dakota National Bank, dated November 18, 1950, for $60 each, payable to C. Mevorah and Martin A. Sills, respectively. The checks represented amounts which the parties agreed the plaintiffs might draw personally from the business. There is no contention that they were not issued for a proper business purpose. Irving Goodman had testified that he countersigned every check presented to him when there was money in the bank to meet it. Thus it became important to establish whether on November 18, 1950, when Irving Goodman refused to countersign the checks to Mevorah and Sills, there was money in the bank to meet them. The plaintiffs produced a letter, exhibit 77, dated November 18, 1950, purporting to be written by A. M. Eriksmoen, cashier of the Dakota National Bank, which the cashier gave to the plaintiffs. Sills testified that he showed the letter to Goodman at the time of and in connection with his request that Goodman countersign the two checks. The letter is addressed to Irving's Tractor Lug Company and states: This letter was admitted in evidence over the vigorous objection of defendants' counsel that it was not the best evidence and that it was hearsay and that no foundation was laid for it. The further objection was made that the letter showed the bank balance but did not show what the balance would be after the deduction of outstanding checks. This letter was subject to all of the objections made to it. It was not the best evidence of the bank balance, the records of the bank itself being the best evidence of that fact. If it is to be construed to state what books of the bank showed, it is also hearsay. Furthermore, *610 there was an entire absence of foundation in that there is no evidence of the functions of the cashier, if any, with respect to or knowledge of the balances of the bank's depositors. In fact, the letter does not purport to state that the information therein contained was obtained from the bank records. Whether there was money enough in the bank to pay these two checks and any outstanding checks that might have been previously countersigned was an important issue under plaintiffs' second cause of action. The trial court erred in admitting the letter in evidence over objection. The witness Conoboy was called by the defendants. He was a certified public accountant of considerable experience who had examined the books and accounts of Irving's Tractor Lug Company during the period it was operated by the plaintiffs up to the close of business February 3, 1951. He was permitted to testify in detail as to the facts which he found during the audit. He stated that there were 409 invoices that were missing and unaccounted for in any manner, whereupon he was asked these questions to which objections were sustained: At another time during this witness' testimony he pointed out errors or discrepancies in the books and accounts and was then asked: The defendants specify as error the refusal of the trial court to permit these questions to be answered and cite Wishek v. United States Fidelity &amp; Guaranty Co., 55 N.D. 321, 213 N.W. 488, 491, wherein this court said: The rule thus stated is not sufficiently broad to cover the questions propounded in this instance. It is obvious from these questions that they were intended to draw from the witness conclusions of intent, motive, or purpose of the persons handling the books or accounts or operating the business. Such conclusions, if they are to be drawn at all, are for the jury and not for the witness, be he ever so expert an accountant. This becomes obvious when we consider the reason for permitting an accountant or auditor to give conclusions with respect to his examination. Books and accounts are the best evidence of what is contained therein. Dr. R. D. Eaton Chemical Co. v. Doherty, 31 N.D. 175, 153 N.W. 966; Great Western Life Assurance Co. v. Shumway, 25 N.D. 268, 141 N.W. 479. The rule stated in Wishek v. United States Fidelity &amp; Guaranty Co., supra, is one of convenience which permits an expert to assist the court and jury by summarizing and pointing out salient facts which are difficult to ascertain because of voluminous figures and documents and intricate details of accounting. Linnell v. London &amp; Lancashire Indemnity Co., 74 N.D. 379, 22 N.W.2d 203. The accountant or auditor so permitted to testify does not become an expert for the purpose of testifying to conclusions outside of the strict scope of his business or profession. His conclusions may not invade the province of the jury where the jury is competent and qualified to draw its own conclusions. The testimony sought to be elicited by inquiries here under consideration called for determinations exclusively within the province of the jury. The trial court did not err in this respect. See annotations 135 A.L.R. 1145; 52 A.L.R. 1268; Shreve v. United States, 9 Cir., 77 F.2d 2. The witness Conoboy testified that at the end of business on February 3, 1951, there was an overdraft of $116.76 in the bank account of Irving's Tractor Lug Company in the Dakota National Bank. The plaintiffs were contending that the refusal of the *611 defendants to countersign checks on this account constituted violations of the contract. On the other hand, the defendants were contending that they countersigned all checks when they did not result in overdrafts. The evidence shows that the plaintiffs maintained another account in the same bank in the name of Irving's Tractor Lug Company which was known and designated as a special account. The defendants testified that they knew nothing about this special account and it seems clear that in any event the defendants were not required to and did not countersign checks on this account. The witness Conoboy, on cross-examination, testified that there was $1,074.42 in the special account. He was then asked: Over the objection that this evidence was immaterial, the witness was allowed to answer: "Yes. There would be a $900 net." The next question which the witness was permitted to answer over objection was: and the witness answered: "No. I know of no reason." This testimony was clearly immaterial and improper cross-examination. The issue at this point was whether the defendants breached the contract by refusing to countersign checks on the regular account which the witness had testified was overdrawn. Arbitrary or capricious refusal was a breach of the terms of the contract. It is clear that whether or not there was money in a special account was immaterial. The injection of evidence of the special account over which the defendants had no control could only confuse the jury. On direct examination the witness Conoboy testified that his audit showed that moneys to the extent of $2,100 had been received for parts, the parts not shipped, and the money not refunded. The audit covered the time the business was operated by the plaintiffs up to the close of business February 3, 1951. The business was repossessed by the defendants on February 5, 1951. On cross-examination the fact was emphasized that, having lost control of the business, the plaintiffs could not fill orders after February 5, 1951. Upon redirect examination counsel for defendants sought to counteract the implication that the unfilled orders had been received shortly prior to the time the business was repossessed and that the plaintiffs had not had an opportunity to fill them. After some preliminary colloquy between the lawyers and the court, the following took place: The court later permitted the defendants to introduce exhibits 513, 514, 515, and 516 containing some 1,000 instruments in the form of orders or invoices which presumably contained the information sought to be elicited from the accountant Conoboy. The court should have permitted the witness to answer the question which was one of fact peculiarly within the knowledge and experience of the witness. It called for an answer which could be obtained only by the examination of a large volume of papers. The question called not for a conclusion but for a statement of fact, knowledge of which the witness presumably had already acquired and which the jury could *612 otherwise acquire only by a detailed examination of numerous documents which could not be conveniently examined in court. See Linnell v. London &amp; Lancashire Indemnity Co., 74 N.D. 379, 22 N.W.2d 203. The court erred in sustaining the objection. The defendants complain of rulings of the trial court sustaining objections to questions put to the defendant, Stanley Goodman, on direct examination regarding a subsequent oral agreement between the plaintiffs and defendants as to the conduct of the scrap metal business by the defendants. We find no error here and, if the court had erred in this respect, the error would have been cured by testimony this defendant subsequently gave, as follows: The witness was not asked to repeat the conversation referred to in this testimony. Counsel left the details to inference. The defendants contend that the court erred in sustaining an objection to this question: The court did not err in sustaining the objection. Whether there was such a conversation or not was wholly immaterial and, if it were sought thereby to vary the terms of the written contract, the testimony would have been improper. Section 9-0607 NDRC 1943 provides: The contract contained this provision: On redirect examination of the plaintiff Mevorah it was brought out that at the time the stock of goods was repossessed by the defendants there were included therein items of merchandise in the inventory that had been paid for by the plaintiffs. The witness also testified that merchandise bought on plaintiffs' account came to the place of business after the repossession. The witness was then asked: Defendants' attorney objected on the ground that the question was improper surrebuttal and immaterial. The objection was overruled and the witness answered: This is an action for damages for breach of contract. There are no allegations in the complaint with reference to new merchandise other than that the defendants *613 "mingled new merchandise bought by the plaintiffs on their own account with the old merchandise sold conditionally to these plaintiffs." Repossession is not alleged and no damages are sought in connection therewith. If, as Mevorah testifies, the Goodmans, when they repossessed the stock covered by their conditional sales contract also seized other goods that was the property of the plaintiffs, the value of that property is wholly immaterial in this action. It bore no relation to the amount of damages that might be recovered for breach of contract. The admission of this evidence was error that might well have misled the jury in determining the amount of damages. Counsel for defendants predicates error upon the denial of two motions for a declaration of mistrial. We will consider them together. The first motion was made following the asking of this question of the defendant, Stanley Goodman: An objection was sustained, but counsel for the defendants nevertheless contends that it was prejudicial conduct on the part of plaintiffs' counsel to ask the question and the court therefore should have granted a mistrial. The second motion for a mistrial grew out of this situation that developed during the cross-examination of Irving Goodman: Defendants' counsel then moved for a mistrial. After comments by counsel for both sides, the court said: After further comment by counsel for the defendants, the court said: The question was highly improper. Chapter 27-10 NDRC 1943 sets forth the acts that may be punished as criminal contempts and those that may be punished as civil contempts, prescribes the punishment in each instance, the method of apprehension, trial, and appeal to the supreme court. The trial procedure prescribed for civil and criminal contempt is the same. Section 27-1013 NDRC 1943. No jury trial is provided for in either case. The court alone determines whether the accused has committed the offense charged and makes an order prescribing punishment within the limits provided by the statute. Section 27-1017 provides that a person who is punished for contempt may also be prosecuted criminally for the same conduct if it is a public offense, but the court, in such a case, is required to take into consideration the previous punishments. Section 12-1725 NDRC 1943 provides that a criminal act is not the less punishable as a crime because it is also declared to be punishable as contempt. But the court, authorized to pass sentence, may mitigate the punishment to be imposed in its discretion. These statutes make no distinction between civil and criminal contempts. Contempt proceedings are generally classified as neither civil nor criminal but sui generis. 17 C.J.S., Contempt, §62; 12 Am.Jur., Contempt, Sections 66 and 75. This court has held that contempt proceedings are quasi criminal in character. State v. Babcock, 64 N.D. 288, 251 N.W. 849; *614 State v. Harris, 14 N.D. 501, 105 N.W. 621. In Niemeyer v. McCarty, 221 Ind. 688, 51 N.E.2d 365, 154 A.L.R. 115, it was held that the trial court properly sustained an objection to the introduction in evidence of certain records of a contempt proceeding in which it was said that the plaintiff was convicted of contempt of court for perjury. This evidence was offered for the purpose of affecting the credibility of the plaintiff as a witness. The basis for the holding, as the court stated, was that contempt of court is not a crime, although the same act may be a crime and may also be contempt of court. In Farrell v. Phillips, 140 Wis. 611, 123 N.W. 117, 119, the court held that it was error to admit for purposes of impeachment the record of the prior conviction and fine of the witness for contempt of court. One of the reasons given for this holding is that: It is clear to us that the question propounded to the witness, Stanley Goodman, in an effort to test his credibility does not come within the rule that permits a cross-examiner to inquire whether or not the witness has been convicted of crime. See Engstrom v. Nelson, 41 N.D. 530, 171 N.W. 90; State v. Bossart, 62 N.D. 11, 241 N.W. 78, and cases cited therein. The defendants by moving for a mistrial after the ruling of the court in each instance took the steps to protect the record that was approved by this court in Stoskoff v. Wicklund, 49 N.D. 708, 193 N.W. 312. The question here is whether the asking of the questions created prejudicial error although objections to the questions were sustained. Every offer of improper evidence does not require a reversal. The ultimate question is whether the offer of the evidence was itself prejudicial despite the ruling of the court. Much depends upon the importance and character of the evidence and the circumstances under which it was offered. A collection of cases on the improper offer of evidence is found in an annotation in 109 A.L.R. 1089. The first question was asked upon the recross-examination of Stanley Goodman, one of the defendants. The question itself was a misstatement of the law in that it required the witness to state whether he ever had been adjudged guilty of the crime of criminal contempt of court, thus intimating that the witness had been guilty of a crime which in law did not exist. The second question under consideration was propounded to the defendant, Irving Goodman. The answer could have no bearing on the credibility of the witness. We do not believe that prejudice was alleviated by the subsequent instruction and comments of the court or the further testimony of the witness in effect denying the suicide. We have here a situation where the defendants, father and son, were co-partners. An improper question was asked of one, implying that he had been guilty of the crime of criminal contempt of court. A question was asked of the other defendant assuming that he had been guilty of a crime that was so heinous that another man connected with that crime had committed suicide. These questions were prejudicial and when considered together have the cumulative effect of reversible error. Our conclusion that there must be a new trial in the interests of justice is further accentuated by other errors to which we have already referred. The specifications of error also cover other points dealing with the court's ruling on the admission of evidence, but none of them are of sufficient merit or importance to require consideration here. Several specifications of error are based upon instructions given by the trial court or requested instructions by him denied. One situation is presented which requires discussion and clarification in view of the fact that the same question is likely to arise on a new trial. *615 Paragraph H of the contract contains these provisions: After quoting sections 3 and 4 of Paragraph H above, the trial court said to the jury: The defendants argue that the court erred in permitting the jury to consider the matter of liquidated damages upon the violation of the provision regarding conducting business in the name of Irving's Tractor Lug Company. They argue that the purpose of Paragraph H was to prevent the defendants from entering into competition with the plaintiffs and that without evidence of such competition the liquidated damage provision cannot be applied. The instruction given was erroneous for reasons akin to those urged by defendants' counsel. Of similar provisions in the South Dakota law, it is said in International Milling Co. v. Reierson, 55 S.D. 139, 225 N.W. 218, 221: An examination of section 1 of Paragraph H of the contract above quoted discloses that the sellers agree not to engage in foreign export of certain items or engage in certain types of business within *616 a definite territory for a period of 15 years. Such provisions are generally held to be a proper basis for contracting for a reasonable and definite sum as liquidated damages. Berghuis v. Schultz, 119 Minn. 87, 137 N.W. 201; Kelso v. Reid, 145 Pa. 606, 23 A. 323, 27 Am.St.Rep. 716. The second section of Paragraph H is much like the first except that its restrictions are conditional. However, it is not for a violation of these provisions that the plaintiffs seek damages in this action. Recovery is sought under the provision that the sellers agree that they shall not conduct any other business in the name of Irving's Tractor Lug Company. This provision, if taken alone and separate from that which goes before, would seem to give the right of recovery of $10,000 against the sellers if they conducted a non-competing business in the forbidden name, regardless of the location, kind of business, and the amount of damages inflicted. This appears to be the construction given this provision by the plaintiffs and by the court in his instructions. As so construed, it is a drastic provision which bears the earmarks of a penalty rather than liquidated damages. If section 3 is wholly independent of the two sections which precede it and is given the construction placed upon it by the plaintiffs and the court which permits recovery for violation of section 3 as a separate and independent covenant, the provision for liquidated damages is void as a gross penalty provided for breaches of the whole of Paragraph H and of each of its separate provisions which vary materially in import and importance. In Raymond v. Edelbrock, 15 N.D. 231, 107 N.W. 194, 196, it is said: In Henry v. Louisville &amp; N. R. Co., 91 Ala. 585, 8 So. 343, 344, it is said: In 15 Am.Jur., Damages, Section 253, it is said: In 25 C.J.S., Damages, Section 111, we find these statements: Discussions of this question may also be found in Sutherland on Damages, 4th Edition, Section 294; Williston on Contracts, Revised Edition, Section 784; Sedgwick on Damages, 9th Edition, Section 413. See note L.R.A.1915E, 374. Paragraph H which is headed "Sellers not to Compete" must be construed as a whole in furtherance of the purpose expressed in the heading. The provision for liquidated damages does not purport to apply separately to each provision but to Paragraph H generally. It refers to "violation of this covenant." The exact meaning in this respect is somewhat obscure and may be said to be ambiguous. But it may be presumed that the parties intended to make a valid agreement and one not violative of an express statute. The statute is not violated if Paragraph H is construed to provide liquidated damages for the use of the name Irving's Tractor Lug Company in connection with any other business in which the defendants are forbidden to compete under the terms of the first two sections of the paragraph. This would in effect result in liquidated damages being applicable only in breaches involving the contract as a whole and not to a breach, if so it might be termed, resulting from the use of the name Irving's Tractor Lug Company in a wholly non-competing business. In Raymond v. Edelbrock, 15 N.D. 231, 107 N.W. 194, 196, from which we have already quoted, the court reached the conclusion that: In this case the court erred in instructing the jury to return a verdict of $10,000 in event they determined that the defendants have conducted any business in the name of Irving's Tractor Lug Company, since the contract had been in operation, if the plaintiffs had sustained damages that would be impracticable or extremely difficult to fix. Other questions raised regarding instructions are without merit and do not require that this opinion be further prolonged by their consideration. The judgment appealed from is reversed because of the errors herein noted and a new trial is granted. BURKE, SATHRE, CHRISTIANSON and GRIMSON, JJ., concur.