Court Opinion

ID: 6565375
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:19:19.913721+00
Date Added: 2024-06-11T15:56:42.516169
License: Public Domain

Mr. Justice Gabbert,
dissenting:
As said in the majority opinion, no rule can be formulated which will serve as a universal test by which to ascertain whether a sum fixed by contract shall be treated as liquidated damages, or as a penalty in case it is violated. In a measure, at least, the character of the agreement controls. The test applied by the majority is correct if the agreement was such that it was applicable. In the opinion of the writer it is not.
The contract contained several .independent covenants on the part of the plaintiff, and Bilz is not entitled to recover the sum named as liquidated damages unless it be held that it applies to- each covenant on the part of plaintiff, and can be recovered for a breach of either. Plaintiff agreed to remain in the employ of the defendant for one year; to give his whole time and energy in discharging the duties which he engaged to perforin; to at all times conduct himself in a sober and gentlemanly manner ; and to use his best efforts to make sales of automobiles and automobile equipment. Assuming, *499then, that the so-called liquidated damages applies to each of the covenants, what is the result? If plaintiff did not remain in defendant’s employ for-the full period of one year, the defendant could declare the sum deposited as forfeited. If he failed to devote his whole time or his whole energy to the business, the sum might he forfeited, notwithstanding the fact that the period during which he was inattentive to the discharge of his duties was exceedingly short, and the damages resulting from his failure to comply with his contract in this respect merely nominal. If his engagement to use his best efforts to make sales of automobiles was violated, it could also be forfeited, or he might employ his best efforts in making such sales, and his failure to do so in selling automobile equipment would result in a forfeiture, according to the construction of the contract in the majority opinion. In short, if he violated any one covenant on his part, even to a slight extent, the deposit would be forfeited, although he scrupulously complied with every other covenant upon his part, and the one he did violate resulted in nothing more than nominal damages. This is grossly disproportionate to the actual damage or injury. Certainly, the parties did not intend such unjust and inequitable results, but must have regarded the sum named which was to- be deposited as a penalty, rather than fixed or liquidated damages.
As applied to the conditions of the contract under consideration, the rule is, that, where a contract specifying a fixed sum as liquidated damages for its breach contains various conditions of different degrees of importance, to each of which the agreed measure of damages is made by the terms of the contract - to apply with equal force, without reference to the real damage that would ensue from a violation of any one of them, and the *500damages resulting from a breach of any one of such conditions would obviously be inconsiderable as compared with the sum stated in the contract as damages, the stipulated sum will be regarded as a penalty and not as liquidated damages. In short, as applicable to this case, where there are numerous covenants of the most varying kind, and importance, and yet the sum named is payable for the breach of any, even the least, it is a penalty. — Wilhelm v. Eaves, 21 Oregon 194; Carter v. Strom, 41 Minn. 522; Staples v. Parker, 41 Barb. (N. Y.) 648; Keck v. Bieber, 148 Pa. St. 645; Raymond v. Edelbrock, 107 N. W. 194; Boulware. v. Crohn, 122 Mo. App. 571; 13 Cyc. 101.
So that the sum named in the contract can only be declared liquidated damages upon a theory contrary to this rule.
In the majority opinion it is sought to take the case without this rule by giving the contract the.construction that it does not contain numerous covenants, but that, in fact, there is but one general covenant on the part of Powell. In the ■opinion of the writer, this construction is not correct. Powell was' to remain in the employ of Bilz a specified time, and in the discharge of his duties was to do certain-specific acts in a specific manner, all of which it is apparent, from a reading of the contract; are independent of each other. Certainly, according to the language of the contract itself, he could violate it by not conducting himself in a sober and gentlemanly manner,- or by not remaining in the employ of Bilz for the specified length of time, or by not using his best efforts to make sales -of automobiles or automobile equipment, each and all of which are independent of any implied covenant upon his part not to establish a rival business or undermine that of his employer. A violation of either one of these *501covenants wonld not constitute a violation of any other; and yet, according to the construction given in the majority opinion, the violation of any one, insignificant as it might be, insofar as damaging Bilz, would result in Powell forfeiting a large sum.
There is another rule which, in the judgment of the writer, is controlling. Certainly, when defendant claims that the sum named in the contract is to be treated as liquidated damages, the contract, in connection with the facts, must show that this is the case. In the opinion of the writer this has not been shown. Powell agreed “to work for Bilz in his automobile business, and to give his whole time and energy to said business, and at all times to conduct himself in a sober and gentlemanly manner, and to use his best efforts to make sales of automobiles and automobile equipment for Bilz.”
These covenants were in the conjunctive.. Bilz only claims that he was justified in discharging Powell because he sought to establish a, rival business, and secure for himself the agency which Bilz then had. Conceding that this is a violation of one of the covenants on the part of Powell, it is not a violation of all. A violation by Powell of either of the covenants specially named would not constitute a violation of the contract which the majority holds justified his discharge. There is no provision that if Powell violated any one of the covenants upon his part, that he would forfeit the sum named and designated ‘! stipulated damages, ’ ’ but that the sum which Bilz was to hold out of the commissions earned by Powell was to be “held as a fund to secure the performance by Powell of his part of this agreement. ’ ’ From this language of the contract it must be conclusively presumed that what the parties had in mind was its breach as a whole; so that, adopting what is said in the majority opinion, to the effect *502that where the damage resulting from the violation of the terms of a contract are incapable of being readily ascertained, and for such damages the contract provides that a- specified sum shall be treated as liquidated damages, is one of the tests by which to- ascertain whether such sum is to be treated as penalty or liquidated damages, and assuming that it would be applicable to- the case at bar if the contract on the part of Powell had been violated as a whole, Bilz has not shown himself entitled to the deposit, because no such violation is claimed or shown.
The contract imposed a liability for the .violation of the agreement on the part of Powell, and not for some one of the obligations thereby assumed by him. It is certainly unreasonable to impose the payment of a considerable sum of money on a party upon the violation of one of several obligations, the performance of all of which was intended to- assure to- the other the performance of the contract as a whole. — Brounold v. Roddell, 130 App. Div. Repts. (N. Y.) 371.
1 In my opinion, Powell was entitled to his commission on the Boettcher transaction. He had earned this commission before he was discharged, because he was the inducing cause of the Boettcher purchase. Where one who has employed another for a definite period discharges the employee before the expiration of the time, even for good cause, he is responsible to him for his services as agreed upon up- to- the date o-f his discharge. — Hilderbrand v. American Fine Arts Co., 85 N. W. (Wis.) 268; Mallonee v. Duff, 72 Md. 283; Hoffman v. The World’s Columbian Exposition, 55 Ill. App. 290.
I concur in the conclusion that Powell was not entitled to- a commission on the Traylor transaction. In my view of the case, the question of whether or not Bilz was justified in discharging Powell is not *503involved. Bilz did not claim special damages for the alleged miscondnct of Powell.
The canse should be remanded to the district court with directions to modify its judgment to fhe extent of deducting the amount awarded on account of the Traylor sale, and as thus modified it should stand affirmed.