*1 In Bank. Feb. 22373. [L. 1953.] A. No. Appellant, (a Corporation), MARKETS, INC.
BETTER FOOD TELEGRAPH COM AMERICAN DISTRICT . v PANY Respondent. Corporation), (a *3 Eugene Appellant. Ives and John S. Goddard Lawler, Felix M. & Hall, Reed A. Stout and John Hall Respondent.
SHENK, J. brought alleged This is an action on counts plaintiff in tort and in contract wherein the seeks to recover damages resulting alleged from the failure of the defendants properly burglar signals transmit guards alarm to their own headquarters and to the municipal police department. alleged permitted Such failure is burglar have to escape with $35,930 the sum of taken from the food market.
On the granted first trial the court a motion for nonsuit in behalf of all except the defendants the American District Tele- graph Company, judgment and ordered for those defendants. against As Telegraph defendant American District Com- pany jury on the trial plaintiff, first found for the but a granted new trial ground insufficiency was on the evidence. jury On the second agree trial the was unable to and dismissed. successfully Thereafter the defendant moved for a pursuant directed verdict to section 630 of the Code of (ordering judgment Civil Procedure where motion for directed should been, not, granted), verdict have but was judgment the court ordered for the defendant. On this appeal taken from that contends that there is negligence sufficient evidence of the defendant’s breach of sustain a verdict for the plaintiff, and grant it was error to the motion for a directed verdict.
In June 1947 the agree- entered into a written whereby ment the defendant was to install and maintain its standard Burglar “Central Station Alarm Holdup Sys- tem” in provided food market. The contract burglar defendant “on receipt alarm signal from the [plaintiff’s] premises, Subscriber’s agrees to send premises, representatives to said agent its to act as of and in the interest of the . . hereby Subscriber. . The Subscriber authorizes and directs the Contractor to cause [defendant] any person persons the arrest of unauthorized to enter his premises and to hold him or until them released the Sub- . . Contractor, receipt scriber. . The on of a holdup alarm signal premises, agrees from the Subscriber’s to transmit *4 promptly headquarters alarm public police depart- of the ment.”
Viewing light in the evidence the most favorable to the appeal judgment on this from on a directed ver defendant, (Anthony dict for Hobbie, the 25 Cal.2d 826]) following P.2d the facts were established: On 16, 1947, approximately November at p.m. 7:30 the assistant manager market set burglar system the the alarm in building. parking he entered his car the As and locked the gunpoint and at an armed robber lot he was accosted open the inner and the store, and the office forced to return safe, taped the The robber took the contents safe. Approximately elapsed 14 minutes manager, assistant and left. reopened the the time when the store was and when between signals During period loot. this robber left the store with the being the defendant’s central in- were received at station sequence closing and of the doors. dicating opening the operators The defendant’s at the central station did call guard police after 7:51, or inform the until nine minutes signal indicating opened, that the safe had been was re- the manager knocking The assistant had succeeded in ceived. help telephone calling approximately hook for at off the and 7:52, police The arrived at market at within one 7:50. the receiving guards minute after a call. defendant’s arrived shortly manager’s The assistant was broken thereafter. watch taped stopped at the time he was and the hands had at 7:50. the Under circumstances of this ease would have duty to conclude been reasonable that the defendant had a police guards the call as well as its own to the plaintiff’s premises. Promptness being the essence the defendant’s obligation, delay acting reasonably its could be found to be an omisison to render the service and a failure of performance of the contract.
There evidence it could have which been proximate found that the loss was the result the defendant’s delay responding to the alarms. There was but one in committing deliberately burglary. dividual He acted agreement is reason to there believe that between the providing entered into with intention apprehension he person premises. of such a before left the particular The time and distance factors indicate that burglar caught police guards have been been had premises earlier, called to the minutes and that few delay opened permitted of nine minutes after the safe had been escape. probabilities weighed light Such are to be experience present of common in such a triable matters issue of fact. There was substantial evidence jury proxi could have found that the loss was the mate result of defendant’s breach of its contract. Therefore it was error for the order de trial court to motion for fendant on its a directed verdict.
184 question
There remains the of following provisions of liquidated for damages: contract “It is agreed by parties and between the is not that the Contractor insurer, payments an that the hereinbefore named are based solely on the value of the service in the maintenance of system impracticable described, extremely that it is and difficult damages, any, may proximately to fix if the actual re- which perform from a failure sult to such services and in of case perform a resulting failure to such services and loss its liability hereunder shall be limited to fixed and at the sum of fifty liquidated dollars as damages, penalty, and not as a and liability shall be exclusive.” generally recognized valid-agreement may is
It that a payment liquidated of damages, be made for the an whereas agreement payment for the of penalty a invalid. is Un generally parties der the law are allowed to liquidated damages necessary if it do so to in order that they may certainty know with reasonable the extent lia of bility agreement. for breach Where the proAdding exercise their business im it is practicable extremely damages difficult to fix the which may result from the defendant’s failure to render its service controlling is not provision difficulty such a as actual although fixing damages, weight. it is entitled to some (See Shemada, Dyer v. 785, ; 187 Cal. 788 Stark P. [204 214] West Iron Works Bros. v. Iron 182 Works, Golden Central 588, see, 592 P. ; also, Contracts, Cal. Restatement of [189 445] 339(f), 544.) p. § statutory interpretation law and its in this state are general accord with law. Civil section Code 1670 states provision in a proAddes contract which for the amount paid damages to be in the event of a breach the contract except void, expressly provided as in section 1671 as follows: agree
“The
to a contract
therein
an amount
presumed
damage
shall
be the
amount
sus
thereof, when,
case,
tained
a breach
nature of
impracticable
extremely
would be
difficult to fix the
damage.”
liqui
providing
actual
Unless
clause
provisions
dated
falls within
of section 1671 it
(Dyer
is invalid
Bros.
West Iron Works
Golden
v. Central
Works, supra,
588,
Long
City
593;
Iron
182
Beach
Cal.
School
401,
Dodge,
499]);
v.
135
405
except
Dist.
on
question
generally
admitted facts this is
to be resolved
(Rice Schmid,
382,
the trier of fact
385
v.
P.2d
498,
The
argues
difficulty
is
present
there
no
in the
case in fixing
damage
the actual
money
and that the amount of
stolen
damage.
should be the actual
Its contention is that
the time for
question
the determination of the
of the im
practicability
difficulty
and
in fixing
damages
the
is after
the loss has occurred. This is not the rule.
In determin
ing
question
the
place
should
position
court
itself in the
of the
at the time the contract was made and should
consider the nature of
might
the breaches that
any
occur and
consequences that
reasonably
were
foreseeable.
In Hanlon
.
Drydock Etc.
McNear,
Co. v.
Inc.,
In the ease finding respect there was no with to impracticability difficulty fixing or extreme damages. Where a trial court does find that such a situation did exist appears but it reviewing to a that from nature court possible of detriment the could have been fixed (cid:127) difficulty, without a judgment finding based on the will be (Stark reversed Shemada, supra, 785). 187 The dispute the facts are
question one of law where becomes present is the single Such of but a conclusion. admit might have as to what When the uncertainties case. is viewed happened if were entered store satisfactorily ap parties, it position contracting for a conclusion that no basis whatever pears there is reasonably possible practicable have or would been upon the damage. question, The probable fix parties to facts, clearly law. admitted one of failure of the consequences of a possibilities of the are obligation under the contract perform to its defendant respond signals, to or innumerable. A failure to receive a viola- plaintiff would be report them the them, or to building after work- agreement. tion Entrances authority as by persons having made ing might hours be They by persons mischief. by burglars or bent well as might be the theft damage. There might not cause might or of a safe. or the contents ham, goods, or of a truckload no breaking purpose in for of theft might There be many dollars or money might be a few If was taken it theft. with, papers ab- tampered might be Books thousands. ways were many caused Damage stracted. *7 extremely predict difficult to short, In it was not foreseeable. Furthermore, there was of the loss. nature and extent the any sustained portion of loss way ascertaining of what no perform. failure to defendant’s to the could be attributed not the defendant was provided that specifically The contract fully performed on Therefore, if it should have an insurer. way it in no nevertheless could loss resulted contract and a the might have then, that losses recognize, parties The be liable. de- causally connected with the were not which resulted been a Where there had performance. fendant’s failure of loss loss, part what of that a performance and of failure performance; or how of failure to the could be attributed a been resulted had there would have of that loss much complexity the cir- of the performance? Under of failure answer this parties could not the in this case cumstances upon which to basis being reasonable question. There no loss, much of that any or how extent of predict the nature for, might account performance failure of the defendant’s loss ex- “impracticable have been it would it is certain that 1671). Code, damage” (Civ. fix tremely § the actual difficult to damages re liquidated of clause upon an “agree therein to the contract quires parties the that presumed damages amount which shall be be the amount by (Civ. sustained a breach Code, § 1671.) thereof ...” This represent amount the must result reasonable endeavor by parties average compensation the to estimate fair (Dyer Bros. West Iron loss that be sustained. Golden Works, supra, 588; Works v. Iron Rice v. Central Schmid, supra, Restatement, Contracts, 382, 386; 339, p. 554.) suggested greater the It has been § difficulty by parties estimating encountered greater arise from a should be the breach, range uphold which the as reason estimates courts should (5 Contracts, 1059, p. able. Corbin on 291.) The § represent contention that the amount did not an en deavor by probable damage to estimate the is based liquidation on evidence part printed that the clause was material in form generally used the defendant in dealing plaintiff, with such as the and that subscribers investigate the defendant did not manner of conducting its business or the character and value of its stock. parties agreed liquidation provisions, Nevertheless to the fully they no there is evidence that were not aware liquidated damages making circumstances it desirable provided for. present In the case the impracticability or difficulty extreme fixing damages appeared actual as a matter of law. In
the exercise of their business reasonably agreed that all cases of breach the defendant the dam ages would be fixed at $50 whether in fact the defendant’s given loss for a greater breach was or less than that amount. previously As stated stipulation amount paid liquidated to be “as damages and not as penalty” while entitled to weight some is not conclusive. Never theless, it is clear that the actual loss resulting from a breach could in many cases be less than the provided amount for. equally It is clear that in many other cases the actual loss would exceed that amount. To construe this penalty as a *8 would have to be said that the provided amount paid to be bore no reasonable relation to the losses the thought might be may sustained. This not rightly be stated. plaintiff
The seeks to avoid the effect of liquidation ground clause on the application that it has no to a tort action. However, plaintiff makes no claim duty that a was owed to it outside of that created the contract, and no breach of
188
duty alleged other than a failure to render the contracted was in Although for an tort sometimes service. action duty brought negligent breach of a contractual for the (Jones Kelly, 942]), v. 208 251 P. still the nature Cal. [280 consequences duty and the of its breach must be of the owed by reference to the contract which created that determined duty by the duty. present In the ease the created fixed, liability a thereunder was one for which for breach brought in or in and whether the action is tort contract the plaintiff The duty of the the same. cites nature remains authority to the effect that no and none has been discovered only duty by contract the breach of a created where liquidated application a valid for negligent one the clause in by bringing an action tort. damages may be avoided holding upon a number of cases The relies liquidated damages for were agreements purporting to be (Pacific Adler, agreements penalties. in Factor v.Co. fact Shemada, supra, 187 supra, 110; 785; 90 Stark v. Cal. Cal. Schmid, supra, 382; Co., 18 Robert Marsh Rice v. & Inc., ; McMahon, Tremper, v. 210 572 P. Eva v. Cal. 950] Gray, 348 872]; Cal.App. P. Sherman liquidation in 1004].) The clause with be determined accordance the facts contract must particular case. The factual situations circumstances of each inapplicable present relied make them the cases they distinguishable upon ground group As a are case. (hat permit the were factors which would each there damages in fairly estimate actual the event of breach— every item of merchandise an predetermined as a amount uncertainty obligor failed to deliver. There was no inherent sustained, could be as in the as to the amount of loss that agreed sum in each of those present The function of the case. obligor performance prop and was cases was to insure erly penalty. held to be a n directing for the defendants involved order a verdict The been found in the questions of fact which could have only qualified However, warrants reversal the error favor. recovery $50 is limited to if judgment, as the prevail he on a retrial. should provide trial is modified to judgment court plain- ordered, adjudged and decreed that
as “It follows: Telegraph defendant, American District from the tiff recover costs.” As so modified Company, without $50.00 sum
189 party the is affirmed. Bach shall bear its own appeal. costs on
Gibson, J., Schauer, J., Edmonds, J., Traynor, J., C.
Spence, J., concurred.
CARTER, J.I dissent. following provision This court holds the valid contract liquidated for damages: “It the between parties insurer, that the Contractor is not an [defendant] that payments the solely hereinbefore named are based on the value system described, the service in maintenance the of of impracticable that extremely to the difficult fix damages, any, actual proximately which result if from perform to such services and in case failure of failure perform such resulting liability services and a loss its here- under shall be limited fifty to and at the sum dollars fixed of liquidated as damages, and penalty, liability not as a and this shall be added.) exclusive.” (Emphasis
It is conceded perform that defendant duty; failed to its that loss therefrom; resulted that loss $35,930 was the sum of taken, by burglar, which was plaintiff’s food market.
In uphold order to liquidated $50 the so-called damage provision, necessary it was majority for the to find that dam- ages “impracticable were extremely difficult” to fix at the time the into, entered and further that $50 the provision bore a reasonable relation to loss which the parties contemplated might be as a result of a breach sustained of the contract. majority opinion determining is said in the “In
It that question might expected losses which the [the occur] place position court should itself the at the time the contract was made and should consider the nature might any consequences the breaches occur and reasonably Placing myself were foreseeable.” position in the T at time the into. contract was entered say way would that one ascertaining loss occur, average towas take an of the amount of cash left average overnight; inventory in the store safe an mer kept in the store. If the losses chandise sustained did approximate damages provided parties, the. Taylor Trust, Kothe v. R. rule forth C. set U.S. 382], applicable. S.Ct. 74 L.Ed. would be There the
parties provided liquidated damages, excessive and the Supreme damages provided Court held that for in the probable contract bore no reasonable relation to the loss to be provision penalty sustained and held the and therefore unen- is the rule provision forceable. It proved by seeking must be one enforce it. And as is majority opinion in the said “Where a trial court does find *10 [impracticability that such a situation did exist or extreme difficulty in fixing damages] appears but it to a reviewing possible court that from the nature of the detriment dam- ages difficulty, could have been fixed without finding (Stark based on the will be Shemada, reversed supra, 785).” 187 Cal. in majority opinion is also said question
It
that “The
one of
dispute
becomes
law where the facts are not in
single
admit of but a
conclusion.” Even if the facts are not
dispute, they
in
seldom admit of but one conclusion.
In this
ease,
jury
plaintiff
one
found for
jury
and the second
dis
agreed.
prove
Does this not
that these facts
of more
admit
than one conclusion? I think it does.
It is also said here
impracticable,
extremely difficult,
that whether
are
or
“except
fix
generally
on
. .
question
admitted facts
.
by
to be resolved
the trier of fact.
. . .’’In Rice v. Schmid,
498,
It is also that the amount parties “represent result a reasonable endeavor average to estimate compensation a fair loss (Dyer be sustained. Bros. Golden West Iron Works Schmid, Works, supra, v. Central Iron 588; Rice v. supra, 382, 386; Restatement, Contracts, 339, p. § ” 554.) words, In other agreed upon the amount must bear some reasonable relation to the losses which occur as a my result In opinion, of breach. provision $50 bears no *11 any reasonable relation to might amount which have been lost by system operate. failure of to
The characteristic
penalty
feature of a
bears
no
damage
relation to
actual
caused
breach,
arbitrarily
but
fixed
attempt
without
to esti
mate the amount of injury.
(8
847.)
majority
Cal.Jur.
liquidation
admits that the
of a
clause in a contract
must be determined in accordance with the facts
circum
particular
stances of each
case,
distinguishes
but
the follow
ing cases:
Adler,
Factor
36,
Co. v.
P.
[27
Pacific
[S. 1953.] HAL FIRE al., Respondents, M. ATKINSON et v. PACIFIC Appellant. COMPANY,
EXTINGUISHER