Court Opinion

ID: 8270795
Source: CourtListenerOpinion
Date Created: 2022-10-16 19:32:12.619259+00
Date Added: 2024-06-11T16:43:30.470940
License: Public Domain

The opinion of the court was delivered by
Dixon, J.
The first exception to be considered took its-rise from the fact that the structure was not completed within the time limited by the contract, nor' until ninety-four days- ■ after the expiration of a month’s extension of that time. The-defendant claimed a deduction or set-off of $100 for each day’s-delay.
The plaintiff met this claim by insisting that the clause in> the contract mentioning the $100 per day is unintelligible andi *140therefore nugatory, because in its opening line it reads: “ In case the said party of the first part shall * * * to fully and entirely,” &c., omitting any effective verb.
We agree, however, with the trial judge in thinking that the context shows the verb which should be supplied. It makes the $100 payable for each day that “ the party of the first part shall be in default.” This plainly indicates the verb “ fail ” as the omitted word, to be supplied as an equivalent for the expression “ be in default.”
The right of a court of law to read an instrument according to the obvious intention of the parties, in spite of clerical errors or omissions which can be corrected by perusing the instrument, is sufficiently vindicated by the decision of this court in Sisson v. Donnelly, 7 Vroom 432; see also Burchell v. Clark, 2 C. P. D. 88.
Taking the clause thus perfected, the plaintiff urged that the $100 a day was a penalty, and so the trial judge ruled, requiring that the defendant should prove the actual damages and be allowed only for what was proved. To this ruling the defendant excepted.
In determining whether a sum, which contracting parties have declared payable on default in performance of their contract, is to be deemed a penalty or liquidated damages, the' general rule is that the agreement of the parties will be effectuated. Their agreement will, however, be ascertained by considering, not only particular words in their contract, but the whole scope of their bargain,'including the subject to which it relates. If, on such consideration, it appears that they have provided for larger damages than the law permits, e. g., more than the legal rate for the non-payment of money, or that they have provided for the same damages on the breach of any one of several stipulations, when the loss resulting from such breaches clearly must differ in amount, or that they have named an excessive sum in a case where the real damages are certain or readily reducible to certainty by proof before a jury, or a sum which it would be unconscionable to award, under any of these conditions the sum designated is deemed a penalty. *141And if it be doubtful on the whole agreement whether the-sum is intended as a penalty or as liquidated damages, it will be construed as a penalty, because the law favors mere indemnity. But when damages are to be sustained by the breach of a single stipulation, and they are uncertain in-amount and not readily susceptible of proof under the rules of evidence, then, if the. parties have agreed upon a sum as the measure of compensation for the breach, and that sum is not disproportionate to the presumable loss, it may be recovered as liquidated damages. These are the general principles-laid down in the text books and recognized in the judicial reports of this state. Cheddick’s Executor v. Marsh, 1 Zab. 463; Whitefield v. Levy, 6 Vroom 149; Hoagland v. Segur, 9 Id. 230; Lansing v. Dodd, 16 Id. 525.
In the present case the default consists of the breach of a single covenant, to complete the grand stand as described in the approved plans and specifications within the time limited. It is plain that the loss to result from such a breach is not easily ascertainable. The magnitude and importance of the grand stand may be inferred from its cost — $133,000. It formed a necessary part of a very expensive enterprise. The structure was not one that could be said to have a definable rental value. Its worth depended upon the success of the entire venture. How far the non-completion of this edifice might affect that success and what the profits or losses of the scheme would be were topics for conjecture only. The conditions therefore seem to have been such as to justify the parties in settling for themselves the measure of compensation.
The stipulations of parties for specified damages, on the breach of a contract to build within a. limited time, have frequently been enforced by the courts. In Fletcher v. Dycke, 2 T. R. 32, £10 per week for delay in finishing the parish church; in Duckworth v. Alison, 1 Mees. & W. 412, £5 per week for delay in completing repairs of a warehouse; in Legge v. Harlock, 12 Q. B. 1015, £1 per day for delay in erecting a barn, wagon-shed and granary; in Law v. Local Board of Redditch (1892), 1 Q. B. 127, £100 and £5 per week for *142-delay in constructing sewerage works; in Ward v. Hudson River Building Co., 125 N. Y. 230, $10 a day for delay in erecting dwelling-houses, and in Malone v. City of Philadelphia, 23 Atl. Rep. 628, $50 a day for delay in completing a municipal bridge, were all deemed liquidated damages. Counsel has referred us to two cases of building contracts, where a different conclusion was reached — Muldoon v. Lynch, 66 Cal. 536, and Clement v. Schuylkill River R. R. Co., 132 Pa. St. 445. In the former case a statutory rule prevailed, and in the latter the real damage was easily ascertainable and the stipulated sum was unconscionable. In the case at bar, we have no data for saying that $100 a day was unconscionable.
The sole question remaining on this exception, therefore, is whether the parties have agreed upon the sum named as liquidated damages.
Their language seems indisputably to have this meaning. They expressly declare the sum to be agreed upon as the damages which the defendant will suffer; they expressly deny that they mean it as a penalty, and they provide for its deduction and retention by the defendant in a mode which could be applied only if the sum be considered liquidated damages.
But it is argued that, as the contract authorized the engineer of the defendant to make any alterations or additions that he might find necessary during the progress of the structure, and required the plaintiff to accede thereto, it is unreasonable to ^suppose that the plaintiff could have intended to bind itself in liquidated damages for delay in completing such a changeable ■contract.
But this argument seems to be, aside from the present inquiry, which is, not whether the plaintiff became responsible for damages by reason of the non-completion of the grand stand on the day named, but whether, if it did become so responsible, those damages are liquidated by the contract. On the question first stated, changes ordered by the engineer may afford matter for consideration ; on the second question, they are irrelevant.
*143Certainly the bills of exceptions do not indicate any alterations or additions which, as matter of law, would relieve the plaintiff from responsibility for the admitted delay, and consequently there may have been ground for considering the ■defendant’s damages. If there was, the amount of the damages was adjusted by the contract at $100 per day.
We think the ruling at the Circuit, on this point, was ■erroneous.
We think, also, that the letter, Exhibit P8, written September 10th, 1890, by F. Latourette to the plaintiff, was illegally received in evidence. It was offered and admitted as a decision by the chief engineer of the defendant under the •contract. Since it was written after the completion of the work, and after the writer had ceased to be the engineer of the defendant, and without notice to the defendant, it could ■not possess the character attributed to it.
The only other exception which it appears useful to notice as that relating to the existence of claims by outside parties.
The agreement contains two clauses on this subject — one ■under the head “Specification;” the other under the head '“ Revised Specifications.” It seems proper to hold that the latter clause is substituted in the contract for the former, and, therefore, it only need be considered. It reads: “ Thirty ■days after the acceptance of the completed work by the owner, the retained ten ¡per cent, will be paid the contractor, upon bis furnishing satisfactory evidence that no liens or unsatisfied ■claims exist on the work or any part of it.”
. The expression “ liens or unsatisfied claims on the work ” must mean claims which can be enforced against the work, und such claims ■could exist only under our Mechanics’ Lien law. By “liens'” the parties intended claims filed under that law.; by “unsatisfied claims” they intended claims which were not, but might be, filed under that law.
The statute (Rev., p. 668, § 2) provides “that when any building shall be erected in whole or in part by contract in writing, such building and the land whereon it stands shall be liable to the 'Contractor alone for work done or materials *144furnished in pursuance of such contract; provided, such contract or a duplicate thereof be filed in the office of the clerk of the county in which such building is situate, before such work done or materials furnished;” and (§ 13) “that no debt shall be a lien by virtue of this act, unless a claim is filed as hereinbefore provided within one year from the furnishing the materials or performing the labor for which such debt is due.”
The contract between these parties was filed January 2d, 1890. Hence, no liens could arise in favor of outside parties for work done or materials furnished after that date. For work done or materials furnished before that date, no debt would be a lien unless a claim were filed within a year, i. e., before January 2d, 1891. At the date last named no such claim was filed, and so far as appears no such claim was ever filed. The suit was commenced March 32th, 1891.
We think these facts furnished satisfactory evidence that there were no liens or unsatisfied claims on the work when the action was brought, and that on this point there was no error at the trial.
The other exceptions adverted to by counsel for the defendant are either untenable or on questions not likely to arise upon a new trial.
Let the judgment be reversed and a venire de novo be awarded.
For affirmance — None.
For reversal — The Chancellor, Chief Justice, Depue, Dixon, .Garrison, Maoie, Reed, Bogert, Brown, Clement, Smith. 11.