Buchanan v. Louisiana Purchase Exposition Co.

OPINION.

BOND, C.

— I. It is insisted by respondents, that the order of approval of the bill of exceptions which was made in vacation was not then signed by the trial judge, and that this omission is fatal to the consideration of said bill on appeal. It appeals, however, from a supplemental abstract filed by appellants, a certificate . of the clerk, and also the certificate of the trial judge, that an order approving the bill of exceptions was made by the trial judge on the 15th of September, 1908, and was entered in the vacation docket on that .date, and a recital thereof on, the same day was entered on the judgment roll, and that the omission of the trial judge to affix his name to this order at the time he made it was supplied by his subsequent signature affixed on the 3d of April, 1912. ' This nunc pro tunc entry cured the imperfection. [R. S. 1909, Secs. 2119, 2120; Cooley v. Railroad, 149 Mo. 487 .] The record proper shows the entry of an order permitting the filing of the bill of exceptions in this case in vacation and prior to the 4th of October, 1908. It was approved and endorsed by counsel for respondent, and submitted to the trial judge to be signed, approved and ordered to be made a part of the record within the currency of time previously allowed appellants. The only irregularity that occurred was his omission to affix his signature to a proper order of approval and directing the record of the bill of exceptions made by him. This having been properly rectified, the bill of exceptions was filed in substantial compliance with the statute. [R. S. 1909, Sec. 2029.] And we overrule the contention of respondent on this point.

*345 II. Appellants assign for error tlie refusal of the trial court to make any finding in their favor under the clause of the lease providing for the surrender of the premises at the expiration of the term. This clause obligated the lessee to deliver to the lessors the free and peaceable possession of very part of said lands, or in default thereof to pay sixty-six dollars for each day it was withheld. This provision of thé contract was unconditional, unambiguous and certain in its terms, and clear and distinct in meaning. At the time of the accrual of this obligation, the wrecking-company was in possession of the lands, engaged in tearing down and removing the buildings and structures and material thereon, which had been sold to them by the lessee. The possession „of the lands by the wrecking- company was acquired under contract and in privity with the lessee, and was used by it for the purpose of taking away its own property and of discharging the obligation of removal assumed by the lessee under the terms of the lease to it. Neither of these duties had been fully performed by the wrecking company on the 30th of June, 1905, the date of the expiration of the lease to the exposition company. The impossibility of then delivering the premises was the direct result of the action of the lessee in putting the wrecking company on the premises to do work of a kind that necessitated the possession of the lands until fully performed, and which had not been done at the expiration of the lease. The failure of the wrecking company to remove the buildings and structures on the land before the expiration of the lease to' the exposition company, and the continued occupancy of the property thereafter by the wrecking company constituted a breach of the unconditional contract on the part of the exposition company that the wreckage should be removed before, and the premises delivered .at the time of the expiration of the lease to it. Its liability for the first breach was properly adjudged by the *346 trial court, and no appeal was taken from that finding. That it should have been adjudged also for the second breach, we think, under the facts of this case, 'can admit of no doubt. There is no principle of law better settled than that a breach by the promisor of his unconditional contract lawfully entered into, is not to be excused by any act of his own or those in privity with him which prevented or rendered impossible the performance of his agreement. [Jones v. United States, 96 U. S. 24 ; Clark on Contracts, Sec. 281, p. 679.] In this case the only obstacles to the performance of the positive engagement made by the exposition company to put its lessors in the full possession of every part of the leased premises at the expiration •of the term, was- caused by the occupancy of the lands of persons in privity with the lessee. This was not a contract known, when made by the parties thereto, to be impossible of performance. It was not unlawful when made nor did it become so afterwards. Hence it could not be breached by the promisor without answering in damages. The particular relationship of the wrecking company to the lessee, whether tenant or licensee, is a matter of no legal significance. The wrecking company was on the premises by virtue of a possession delivered to it by the lessee, and the lessee was legally powerless to deliver to anyone a possession which could thereafter be used to defeat, its own obligation to restore the premises to its lessors. Whatever the status of the wrecking company, it was created solely by contract with the exposition company, and' hence made the contractee, the wrecking company, a privy of the contractor. This is self-evident. When the time came to vacate the premises, the exposition company simply proposed itself to withdraw but did not propose to compel the withdrawal of the wrecking company, whom it had previously placed in possession of the premises, and who refused to withdraw but continued for 1501 days thereafter to hold *347 possession against the lessors. In the face of these facts, the proposal contained in the letter of Jnne 30, 1905, from the lessee „to the. lessors was an inutile formality which did not amount to a surrender of the premises either in fact or in law, for at the time it was written the lands were in the adverse occupancy of the wrecking company under the possession given to it hy its contract with the exposition company, and neither in said letter nor otherwise did the exposition company propose to effectuate its tender of surrender of the premises by dispossessing the wrecking company. The responsibility of the exposition company to its own lessors was full, complete and binding under the terms of the lease and could not he changed or shifted to another without the consent of its lessors. It is not claimed that the lessors have in any manner consented that the contract of the exposition company with them should he lessened or altered by the results of the contract made between the exposition company and the wrecking company. Certainly the exposition company can no more defend a breach of its own contract by setting up the wrongdoing of one whom it placed in a position to cause such breach, than it could to set up its own act as the defense to such breach.

Our conclusion is, that the failure of the exposition company to turn over to its lessors the free and peaceable possession of every part of their land on the 30th of Jnne, 1905, was a breach of its covenant so to do, and that the trial court erred in its ruling to the contrary.

III. The important question in this case is the extent to which plaintiffs should recover for breach of the contract to surrender the premises. By the terms of the lease, the damages stipulated therein are “a rental of sixty-six dollars for each and everyday that the said lessee fails to deliver said lands or any part thereof.” Was this snm a penalty or a proper *348 liquidation of damages? This must be determined by the intentions of the parties, the subject-matter of the contract, and the surrounding circumstances, for it 4s the established law that the inclusion of a penalty in a contract is not obviated by terming it liquidated damages or using any other form of expression for the purpose of disguising an attempt to enforce a penalty under the form of a contract. Disregarding nomenclature and turning to the essential character of the damages referred to in the contract, a comprehension of their real nature can be arrived at by considering, (1) whether the damages following a breach of the agreement are such as can be definitely or readily ascertained by evidence or fixed rules of computation; or, on the other hand, whether the damages are such that it would be difficult, if not impossible, to measure them by any exact pecuniary standard or calculate them with approximate accuracy. In the first instance, if the amount stipulated is- greatly disproportionate to the loss following a breach of the contract, the court will construe it to be a penalty and restrict the recovery to such damages as were actually suffered. In the second instance, if the amount specified appears to be a reasonable estimate of undefinabie and unascertainable damages, the court will construe it as a proper liquidation and enforceable according to the agreement of the parties. • A clear statement of the basis of this doctrine, after a review of the decisions, is made by Mr. Sutherland: “To be potential and controlling that a stated sum is liquidated damage, that sum must be fixed as the basis of compensation and substantially limited to it; for-just compensation is recognized as the universal measure of damages not punitory. Parties may liquidate the amount by previous agreement. -But when a stipulated sum is evidently not based on that principle, the intention to liquidate will either be found not to exist or will be disregarded and the stated sum treated as a penalty. *349 Contracts are not made to- be broken; and hence, when parties provide for the consequences of a breach, they proceed Avith less caution than if that event Avas certain, and they Avere fixing a sum to be paid absolutely. The intention :n all such cases is material; but to prevent a -stated sum from being treated as a penalty the intention should be apparent to liquidate damages in the sense of making just compensation; it is not enough that the parties express the intention that the stated sum shall be paid in case of a violation of the contract. A penalty is not converted into liquidated damages by the intention that it shall be paid; it is intrinsically a different thing, and the intention that it shall be paid cannot alter its nature. A bond, literally construed, imports an intention that its penalty shall be paid if there be default in the performance of the condition; and formerly that was the legal effect. Courts of law now, however, administer the same equity to relieve from penalties in other forms • of contract as from those in bonds. The evidence of an intention to measure the damage, therefore, is seldom satisfactory AV'hen the amount stated varies materially from a just estimate of the actual loss final!a sustained.” [1 Sutherland on Damages (3 Ed.), Sec. 283, pp. 722-730; Basye v. Ambrose, 28 Mo. l. c. 45; Potter v. McPherson, 61 Mo. 240 ; Cochran v. Railroad, 113 Mo. 359 ; May v. Crawford, 150 Mo. l. c. 531, 532; Thompson v. St. Charles County, 227 Mo. l. c. 238; Davis v. Gillett, 52 N. H. 126; Muldoon v. Lynch, 66 Cal. 536 ; Clements v. Railroad, 132 Pa. St. 445; 13 Cyc. 91, 92, 93, 94, 95, 96 and 97.]

In the case before us the subject-matter of the lease was termed ‘ ‘ acre land. ’ ’ It contained°no houses or buildings, and had no rental value for such purposes. It could only have been, rented for farming or tillable, purposes. The productive or income value thus arising was a matter of definite and easy ascertainment. With no buildings or improvements on it, *350 it could only have a value for urban purposes not requiring these, or for farming purposes. Whether its market value for either purpose was increased or diminished during the five months plaintiffs were deprived of its possession was a matter within the knowl- - edge of competent witnesses. A stipulation for damages at the rate of sixty-six dollars per day seems to be out of just proportion to the loss actually suffered by plaintiffs. The land in question was so situated that its acquisition for their purposes became practically indispensable after the location of the World’s Fair, for it was contiguous to the portion of the park allotted by the city for that purpose. Under the stress of the necessity to obtain it, the exposition company paid $1000 a month for its temporary use. The lessors, however, prescribed as a further condition, that in case, the property was not redelivered on the day of the expiration of the lease they should receive $1980 per month, or about twice what they had been able to obtain during the continuance of the lease. We think the inclusion of this large sum although termed a rental, was the insertion of a penalty in the lease contract far beyond any loss which the lessors experienced by the constructive holding over of the premises for five months, and that the recovery of plaintiffs should be measured within the limits of the contract by what they were actually damaged by being kept out of possession of their “acre land” for the time stated. A fair and just measure of the damages actually sustained by the lessors can be ascertained and definitely fixed upon a hearing of relevant testimony on a retrial of this case. To that extent they should recover for the breach of the covenant to surrender the premises on the part of the exposition company, in that it failed to cause the removal, by legal necessary steps, of the persons whom it placed in possession of the premises and who continued thereon after the expiration of the lease. In *351 all other respects the exposition company sought in every possible way to restore these premises at the time it agreed to do so. It clearly was not guilty of a willful holding over. Hence the statutes (R. S. 1909, secs. 7877, 7879) have no application.' Neither was there anything in the facts in this case which likens it to the case before the court where it was ruled that a lessee might make a valid agreement for liquidated damages enforceable as such where it appeared that he had rented a city building subject to forfeiture of the lease thereof in case of alterations without the consent of the lessor and that he made such alterations and refused thereafter to surrender the property. In that case the court said: “In thus voluntarily retaining the property, it is to be presumed that he considered the use of it of greater value to him than the double rent. ’ ’ [Walker v. Engler, 30 Mo. l. c. 134.]

In the case at bar the lessee had no intention to retain possession and used every effort, except force or legal process, to remove the party whom it had let into possession of the property. Moreover, the future possession of this vacant land could have been of no possible advantage or benefit to the lessee,, since the purpose for which it had been rented ceased to exist after the close of the fair.

For the foregoing reasons, the judgment is reversed and the cause remanded.

Broion, G., concurs. PER CURIAM.

— The foregoing opinion of Bond, C., is adopted as the opinion of the court.

All the judges concur; Woodson, J., in separate opinion.