Court Opinion

ID: 6602368
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:08:53.162305+00
Date Added: 2024-06-11T15:58:03.649436
License: Public Domain

RyaN, C. J.
I concur in the judgment of this case, but desire to say something for myself of the grounds on which I do so.
I think that the true construction of contracts like those in this case and Jackson v. Cleveland is, that the periodical estimate is fully earned by the contractor, and due to him when made, and that the percentage reserved is in the nature of *685debitum in prcesenti, solvendum in futuro, subject to contingent deduction for damages incurred by future failure.
And there appear to me to be but three aspects in which the reserved percentage can be regarded: first, as a penalty, limiting the amount of damages to be proved under it; second, as liquidated damages agreed on by the parties; third, as a mere security for damages, neither limiting nor liquidating the amount. In either of these aspects, the periodical estimate is debitiwn in prcesenti, of which payment is deferred to abide a future contingency. And subject to such deduction, the contractor has a right of action for it upon the determination of the contract, however determined.
I am not at all sure that the better view is not that the reserved percentage is a mere security. I have seen no case, however, so holding it. The only question seems generally to have been, as in Jackson v. Cleveland, whether it was in the nature of a penalty, or of liquidated damages.
Judge Eedfield, in his work on Eailways, says that the amount so reserved is in the nature of liquidated damages. 2 Eedfield on Eailw. (5th ed.), 427. But that view appears to me contrary to sound principle, and is, on several grounds, inadmissible in this state. Layman v. Babcock, 40 Wis., 503. In Jackson v. Cleveland the reserved percentage is held to be in the nature of a penalty. And if it be either penalty or liquidated damages, I have no doubt that it was correctly held to be the former.
If it could be held to be liquidated damages, it would be by force of the provision that it is payable only upon final completion of the contract. That provision has an effect nearly or quite equivalent to calling it liquidated damages. But, by the rule of this court, no words can operate to make that liquidated damages, which the nature and justice of the case require to be held in the nature of a penalty. Yenner v. Hammond, 36 Wis., 277; Lyman v. Babcock, supra.
If the fifteen per cent, reserved by the appellants in this case *686be regarded as debitum in proesenti, sol/vendum in futuro ¡ retained by the appellants by way of penalty, to cover any damages which they might sustain by failure of respondent’s assignor to complete his contract, I have no doubt of the respondent’s right to recover the amount, deducting the appellant’s actual damages by reason -of the failure. And this appears to be the ground of the recovery in the court below.
It is remarkable that both parties relied on Jackson v. Cleveland. And, upon a critical examination of the case, I confess that I am unable to reconcile different things said in that case, or all that is said to any theory, either of penalty, or of liquidated damages, or of mere security. There are passages in the case which appear to me to regard the reserved percentage in all three of those lights.
Jackson sued for the reserved fifteen per cent., not having completed his contract. And the judgment, in two passages, seems to hold that he could not recover it without showing performance, or excuse for nonperformance. That appears to me to enforce the provision that the reserved percentage is recoverable only upon full performance, and to deal with it as liquidated damages.
Cleveland sued by counterclaim for his actual damages by Jackson’s nonperformance, and the judgment holds him entitled to recover. This appears to me to deal with the reserved percentage as a penalty.
If it were in the nature of a penalty, Jackson was clearly entitled to recover it, subject to deduction of Cleveland’s actual damages. If it were liquidated damages, Cleveland was entitled to retain it absolutely, without showing any actual damages. And his defense was complete without counterclaim.
In another passage it is held that Cleveland should apply the reserved percentage upon his actual damages, and have judgment for the excess. This appears to me to deal with it as security merely, neither liquidating nor limiting the damages.
*687And in that light, I cannot understand on what ground the judgment appears to hold that Jackson could not recover it, subject to Cleveland’s actual damages. Indeed, holding it pro tanto an offset to Cleveland’s damages, implies Jackson’s right to recover it.
I cannot doubt that what seem to me inconsistencies and inaccuracies in the judgment, were mere oversights; or that the judgment was intended to be as Mr. Justice Cole’s opinion in this case suggests. It is only wonderful to me that such inaccuracies do not more frequently arise, from the hurry in which this overburdened court is obliged to discharge its duties.
If I could think the opinion of the court in Jackson v. Cleveland, as reported, could bear the construction now put upon it by Mr. Justice Cole, I think that I could concur in all of its positions, except Cleveland’s right to recover more than the reserved percentage, of which I entertain great doubt.
Be this as it may, it appears that Jackson v. Cleveland has misled the bar, and might do so again. And I have deemed it due to the court and to the profession to make these comments upon it, as my dissent from things said in it.
By the Court. — The judgment of the circuit court is affirmed.