Court Opinion

ID: 8197348
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:20:48.885237+00
Date Added: 2024-06-11T16:40:45.122638
License: Public Domain

Owen, J.
(dissenting). The effect resulting from the use of a telescope depends upon the end through which one looks. By the inverse application of a wholesome rule, it seems to me that the opinion of the court'arrives at an incongruous result, and utterly fails to give effect to a simple, plain, and express agreement of the parties.
A great deal is said in the opinion about a forfeiture, but no one in this case is seeking to enforce a forfeiture. Neither is any one seeking to be relieved from a forfeiture. The facts stated in the complaint in this case disclose an executed transaction between the parties, and I am utterly unable to see what principles relating to forfeitures have to do with the rights of the parties to this action.
The principle stressed in the opinion is that an ordinary stipulation in a lease providing for a forfeiture .in case of a breach of any of the covenants of the lease, is placed there for the benefit of the lessor, and he has the option of enforcing the forfeiture or ratifying the breach. The provision in this lease which controls the decision is of a different *83character. It goes much' further, and, to properly construe it, we should place ourselves in the position of the parties at the time the lease was drawn.
The lease in question was for a term of five years, at a rental of $250 per month. It is apparent that the lessor required some security that the rent would be' paid. It was agreed between the parties that this security should consist of a deposit of $1,000 by the lessees with the lessor as a guaranty that the conditions of the lease would be fulfilled. It was then expressly agreed, in language containing no ambiguity whatever, that if “the lessees fail to fulfil the terms and conditions of this lease, that the $1,000 cash money deposited with the lessor as guaranty shall be forfeited and become the property of the lessor, without any notice whatsoever, and this lease shall be null and void.” I can see no reason why this covenant thus solemnly and deliberately made between the parties should not be enforced, especially in view of the fact that it is an executed transaction, and the lessees are not seeking to have it treated as an unconscionable penalty, nor to be relieved therefrom. The lessor received this money into his keeping under the terms of this covenant. This covenant constituted the only right which it had to it. When the premises were abandoned it kept the money. It kept it under the conditions of the covenant, which constituted the only right it had to keep it. The covenant under which it received it and kept it expressly provided that it should become its property in case of the failure of the lessees to fulfil the terms and conditions of the lease, and that the lease should be entirely void. I can entertain no doubt that this was the intention of the parties at the time the lease was entered into, and I can see no reason why a court should decline to give effect to such an agreement.
The opinion of the court seems to proceed on the theory that because circumstances may be conceived under which a forfeiture would not be enforced, that therefore the lessees *84cannot submit to a forfeiture. This is the inverse application of a rule for which application there is no authority. Courts will not apply a rule of law intended for the protection of a class to the injury of the class which the rule was designed to protect. Washington County v. Groth, 198 Wis. 56, 223 N. W. 575. That equity might relieve the lessees under certain circumstances from the so-called forfeiture furnishes no ground for saying that the lessor may enforce rights greater than those it agreed to receive.
But if the rights of the parties depend upon whether the provision we are considering is one for a penalty or liquidated damages, I am clearly of the opinion that it is one for liquidated damages. The conclusion of the court that the provision provides for a penalty seems to be based upon the use of the word “forfeiture.” Such provisions are to be construed the same as any contract, to give effect to the intention of the contracting parties. The use of the expression “stipulated damages” or “penalty” in such connection is not conclusive upon the question of whether the provision is one for a penalty or liquidated damages. “The nature of the provision in that regard merely bears on the question of whether they intended to provide for liquidated damages or a mere penalty which would be limited to actual damages.” Grant M. Co. v. Marshall & Ilsley Bank, 166 Wis. 547, 165 N. W. 14. In all such cases it is the duty of the court to ascertain the intention of the parties notwithstanding the use of language which in and of itself might indicate superficially that it was intended to be the one or the other.
But the use of the word “forfeiture” in this covenant, I submit, does not indicate whether the parties intended the $1,000 to be paid as liquidated damages or as a penalty. It seems to be conclusively assumed, because the provision is that the $1,000 shall be “forfeited,” that a penalty was intended. I think the word “forfeited” is appropriately used *85whether a penalty or liquidated damages was intended. The intent of the parties was that the $1,000 deposited with the lessor should become its property in case of a breach of any of the covenants of the lease. What better word could be used to indicate that intention than the word “forfeiture?” It seems to me that it is just as consistent that it should be forfeited as liquidated damages as that it should be forfeited as a penalty.
When we place ourselves in the position of the parties, it is clear to me that liquidated damages and not a penalty was in the minds of both parties. The lessor apparently had in mind that the lessees might not be able to go through with the lease and pay the rent. It was evidently apprehensive upon this question. It appears that by the payment of $1,000 it would have an advance payment of rent for a period of four months, which period it was thought would enable it to re-lease the premises. The intention of the parties seems to me plainly to be this: in case the lessees could not carry out the conditions of the lease and pay the rent, the $1,000 as security was to become the absolute property of the lessor, in consideration for which payment the lease was to be terminated. If this was the situation, then the lessor could not terminate the lease at its option. It had agreed with the lessees to terminate the lease upon the payment by the lessees to the lessor the sum of $1,000. The lessees paid this sum and are entitled to the benefit of their contract.
I am authorized to state that Mr. Justice Fritz and Mr. Justice Nelson concur in the foregoing dissenting opinion
A motion for a rehearing was denied, with $25 costs, on May 10, 1932.