Court Opinion

ID: 9584928
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:54:00.179511+00
Date Added: 2024-06-11T15:22:43.050150
License: Public Domain

Evans, Judge,
dissenting. The question at issue here is as to whether the State Highway Department of Georgia is entitled to collect liquidated damages from Hall Paving Co., Inc. because of the latter’s failure to complete a contract within the number of days specified therein, which contract contained a provision for the contractor’s payment of "liquidated damages” in the event of such failure. The contract provides: "Liquidated damages shall start in accordance with the above schedule upon notification to the contractor in writing that all the original contract time as stated in the proposal has been consumed.” The record clearly shows that no such notice in writing was given by the Highway Department to the contractor, although certain progress reports were supplied to the contractor from time to time; and it appears without question that the contractor had knowledge that the contract was not completed within the time limitation.
It is the contention of the Highway Department that a substantial compliance with its written contract as to "notification to the contractor in writing” is sufficient.
Clearly, the imposition of liquidated damages in this case is in the nature of a forfeiture or penalty. The law is quite plain that forfeitures are looked on with disfavor.
In Pearson v. George, 209 Ga. 938, 945 (77 SE2d 1) the *632Supreme Court states: "Forfeitures of rights under valid legal contracts are not favored under the law. Our courts generally are quick to seize upon any waiver of a forfeiture, the rule being that the right to rescind for any breach must be asserted promptly, and a waiver of a breach or forfeiture can not be recalled. 17 CJS 897, § 409; 17 CJS 917, § 433; 12 AmJur 1016, §436; McDaniel v. Mallary Bros. Machinery Co., 6 Ga. App. 848 (66 SE 146); Williams v. Empire Mutual &c. Ins. Co., 8 Ga. App. 303, 304 (7) (68 SE 1082); Farmers Mutual Co-operative Fire Ins. Co. v. Kilgore, 39 Ga. App. 528 (147 SE 725); Grolier Society v. Freeman, 45 Ga. App. 465 (165 SE 290); Cartwright v. Bartholomew, 83 Ga. App. 503, 507 (64 SE2d 323).” (Emphasis supplied.) Code § 20-902 provides: "A condition, precedent or subsequent, not complied with, want or failure of consideration, or any act of the opposite party, by which the obligation of the contract has ceased, may be pleaded as a defense.”
One who asserts the right to a penalty or forfeiture against another must strictly comply with the terms of the contract which affords him such right. In the case of Hubert v. Luden’s, Inc., 92 Ga. App. 427 (5) (88 SE2d 481), an employer sought to defeat the right of the employee to earned commissions. The contract provided that if the employer gave the employee written notice of the intention to terminate the contract one day in advance, in accordance with its terms, no right to earned commissions would inhere in the employee. But the employer failed to strictly and literally comply with the provisions of giving one day’s notice in advance of termination, and this court holds, at p. 431: "This contract was not canceled according to its terms, although it was undoubtedly canceled. The defendant having notified the plaintiff by letter of its termination of the contract in a manner not provided for by the contract (that is, 'effective at once,’ and without giving the one-day notice of intention to terminate), the plaintiff had a right to treat the letter as a breach of the contract, which it was . . .” Headnote 5 holds: "The failure of the defendant to give the plaintiff written notice of intention to terminate the *633contract between them one day in advance, in accordance with its terms, constituted a breach, this provision requiring a forfeiture of the plaintiff’s earned commissions and subjecting the contract to strict construction. Accordingly, the plaintiff was entitled to treat the contract as breached and recover his earned commissions.” (Emphasis supplied.)
The State Highway Department’s contention that it complied "substantially” with the contract as to notice will not suffice. There must have been an exact, strict and literal compliance. The State Highway Department contends no notice was necessary because plaintiff had knowledge of the situation. Code § 37-116 provides: "Notice sufficient to excite attention and put a party on inquiry shall be notice of everything to which it is afterwards found such inquiry might have led. Ignorance of a fact, due to negligence, shall be equivalent to knowledge, in fixing the rights of parties.”
If the State Highway Department’s burden had been simply to show that the contractor had knowledge, it would be entitled to collect the forfeiture or penalty, but it had a much greater burden, that is, of showing that the Highway Department strictly complied with the terms of the contract as to notice. Under the contract no liquidated damages "shall start” until the State Highway Department has "notified the contractor in writing that all of the original contract time as stated in the proposal has been consumed.”
While Hall Paving Company, Inc. may have had copies of the reports sent by the engineer, this did not comply with the requirements of the contract. Where liquidated damages are involved in a contract, I feel that it should be strictly construed.
Therefore, the State Highway Department, having failed to comply strictly with the terms of its contract, cannot legally enforce a penalty or forfeiture against the contractor. I dissent from the majority opinion.
I am authorized to state that Judges Pannell and Quillian concur in this dissent.