Court Opinion

ID: 9687218
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:19:05.166001+00
Date Added: 2024-06-11T18:15:21.968079
License: Public Domain

TEIGEN, Judge
(dissenting).
This appeal was taken on October 18, 1971, subsequent to the effective date of Rule 52(a) of the North Dakota Rules of Civil Procedure, as amended. This new rule provides that in an action tried to the court the trial court shall find the facts, which “findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.”
This case was tried to the court and, on appeal, is governed for review purposes by the above rule. Under this rule the findings of the trial court are presumptively correct and the burden is on the appellants to persuade this court that the findings of the trial court are “clearly erroneous.” We have not heretofore construed this rule *417in this state, however many federal cases in considering an identical federal rule (Rule 52(a), Federal Rules of Civil Procedure) have construed the identical federal provision.
It has been said that the term “clearly erroneous” is difficult of decision. However the United States Supreme Court in United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948), announced that what is meant by “clearly erroneous”, under the federal rule, is as follows:
“A finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”
The appellate court is not to consider and weigh the evidence de novo. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 1576, 23 L.Ed. 2d 129 (1969).
The fact that the appellate court, on the same evidence, might have reached a different result does not justify it in setting aside the findings of fact. United States v. National Ass’n of Real Estate Bds., 339 U.S. 485, 70 S.Ct. 711, 717, 94 L.Ed. 1007 (1950). It may regard the finding as clearly erroneous only if the finding is without adequate evidentiary support or is induced by an erroneous view of the law. If the evidence will sustain a finding either way it is not “clearly erroneous”, and thus it is not enough that the reviewing court might give the facts another construction or resolve the ambiguities another way. United States v. National Ass’n of Real Estate Bds., supra; United States v. Yellow Cab Co., 338 U.S. 338, 341, 70 S.Ct. 177, 94 L.Ed. 150 (1949).
The respondent is entitled to the benefit of all reasonable inferences and to have the evidence viewed in the light most favorable to him. Stacher v. United States, 258 F.2d 112 (9th Cir. 1958).
Considerable evidence was introduced by both parties. Based on the evidence introduced at the trial, the trial court found that the plaintiffs and the defendants negotiated and entered into a so-called “package deal” for the purchase and sale of a large quantity of land (about 4,400 acres). The “package deal” was divided into two contracts. One of such contracts was referred to as the “earnest money” contract, covering about 2,200 acres, and the balance of the land was represented by another contract. However, this latter contract was never signed because difficulties arose after the signing of the earnest money contract which was followed by a rescission by the plaintiffs. The trial court found that the sale was negotiated in this manner in order to provide the plaintiffs with a satisfactory arrangement for the financing and payment of the total purchase price of $800,000; that the earnest money contract took care of the down payment because, under the second contract, no payment was to become due until October 1, 1969, almost a year after the date of the earnest money contract; and that, during this time, the plaintiffs were to be in possession of and farm all of the land. The trial court found that this “package deal” arrangement was understood and agreed to by all of the parties concerned. The trial court also found:
“It is readily understandable that in an $800,000 land deal, the sellers would of necessity require an earnest money payment, and that such down payment be forfeited upon default by the purchaser. The defendant company was required to cancel all outstanding written leases in order to give possession of the lands to the plaintiffs as agreed. A default by the plaintiffs must cause damages and expenses to the defendant company for the making of new leases with new tenants. Uncertainties as to advantageous new leases were incapable and very difficult of accurate estimation. The parties herein, in the Court’s opinion, made every reasonable endeavor to fix a fair *418compensation under such uncertain and unpredictable future consequences. Further in the Court’s opinion, the stipulated $50,000 bears a reasonable relation to probable damages, and is not disproportionate to any damages reasonably to be anticipated in a transaction of the size herein involved and no part of it can be recovered by plaintiffs on the theory that it was a penalty.”
Based upon these findings, the trial court concluded that the defendants are not liable to the plaintiffs.
The majority found that the defendants, upon receipt of the $50,000 as a down payment, paid off mortgages on the land approximating that amount, and concluded:
“This would seem to support the contention that the $50,000 payment was not an attempt to arrive at probable real damages from a breach, but instead was an amount requested by the seller to facilitate the closing of the deal.” [Emphasis added.]
I don’t agree; it is immaterial what the money was used for. The question is: Does the amount agreed upon bear a reasonable relation to probable damages and is it, as a matter of law, disproportionate to any and all damages reasonably to be anticipated from a failure to perform.
From the following statement of the defendant :
“This was a percentage of the total package price and we had to have enough money down so that the Hutteri-an Brethren would not willingly give it up because who are we to go to should trouble develop. I believe that most everyone understands that the Hutterian Brethren do not own individually property. The Sandlake Association was — I may stand corrected on this by the Brethren, but I never heard that it was incorporated. We were putting all tenants off the land, the entire package, turning it over, the total of this land over to the Hutterians.”
the majority found:
“From this aspect [the above testimony] the $50,000 payment appears to be more in the nature of a penalty than liquidated damages.” [Emphasis added.]
The majority then conclude, contrary to the findings of the trial court, that the defendants have failed to prove that (1) “the parties made a reasonable endeavor to fix fair compensation” and (2) “the $50,000 figure bears a reasonable relationship to the probable damages that would result from a breach.” Thus they decided that, under the guidelines laid down by the South Dakota Supreme Court, Mrs. Scott and the defendant corporation “had not established their case.”
It appears to me that the majority have treated this review as one de novo and have found the facts anew and, by so doing, have not given the evidence the benefit of all reasonable inferences and have not reviewed the evidence in the light most favorable to the defendants, nor have they given any weight to the trial court’s findings. The majority have given the facts another construction and resolved the ambiguities another way, which are contrary to the application of the federal rule by the federal courts, which rule we adopted as our rule with knowledge of the federal construction placed upon it.
In reviewing the evidence it is my conclusion that the finding of fact by the trial court that there was a package deal is not “clearly erroneous” but is well supported by the evidence. Mrs. Scott testified in relation to the amount that “this was a percentage of the total package price.” It is also clear from the evidence that the second part of the package gave the plaintiffs possession and use of the lands described without requiring any down payment or prepayment of any kind.
In light of these facts the testimony of the defendant, Mrs. Scott, quoted by the majority, and other evidence in the case, were properly construed by the trial court *419as the basis for a finding that there was a reasonable endeavor to fix a fair compensation under uncertain and unpredictable future consequences, which compensation would bear a reasonable relation to the probable damages. Further, there is no evidence to establish that the amount agreed upon is disproportionate to damages that might reasonably be anticipated in a transaction involving a package deal of this magnitude and, under South Dakota law, proof of actual loss or damages is immaterial and irrelevant. Dave Gustafson & Co. v. State, 83 S.D. 160, 156 N.W.2d 185 (1968).
It is my opinion that there is substantial evidence to sustain the judgment of the trial court, and that the record will not sustain a holding that the findings of the trial court are “clearly erroneous.” This, I think, is particularly true in view of the light in which the South Dakota Supreme Court approved Dave Gustafson & Co. v. State, supra, when it quoted with approval a statement from Vol. 5, Williston on Contracts, 3rd Ed., § 785, at 733, as follows:
“ ‘Accordingly, unless the sum fixed in the contract is very unreasonable the provision is treated as one for liquidated damages.’ ”
The South Dakota Supreme Court then concluded:
“For the same reasons we must conclude the amount stipulated in the contract bears a reasonable relation to probable damages and is not, as a matter of law, disproportionate to any and all damage reasonably to be anticipated from the unexcused delay in performance.”
The South Dakota Supreme Court in Gustafson said that Anderson v. Cactus Heights Country Club, 80 S.D. 417, 125 N. W.2d 491 (1963), reflects the modern tendency not to “look with disfavor upon ‘liquidated damages’ provisions in contracts. When they are fair and reasonable attempts to fix just compensation for anticipated loss caused by breach of contract, they are enforced * * * ” and it is only when the sum fixed in the contract is very unreasonable that the provisions will be treated as a penalty.
In light of these cases showing the direction which the South Dakota Supreme Court has taken on this question, it is my opinion that this court should affirm the district court as there is adequate eviden-tiary support in the record to sustain the trial court’s findings, and it took the correct view of the South Dakota law.