176 Wis. 154 | Wis. | 1922
The following opinion was filed December 13, 1921:
The defendants, upon the trial, relied upon fraud as a defense to the action, claiming that they were unskilled in business ways, particularly in the matter of contracts; that the amount of tillable land was misrepresented; that the plaintiff represenfed, contrary to the fact, that she had received a. cash offer of $9,600 for the premises. The trial court said:
“The issues in the case utterly fail to show any fraud or advantage perpetrated on the part of the plaintiff in securing the contract whatever. The defendants are people of considerable experience in the purchase and sale of property and were familiar with the value of land in the vicinity where this land was situated, so on this branch of the case I think the defendants’ claim entirely fails.”
The trial court’s findings upon this branch of the case cannot be disturbed.
Some contention was made here and in the court below
The contract was in the usual form of exchange contracts. The first paragraph described the parties, recited the consideration, and contained a covenant on the part of the plaintiff to convey to the second parties the farm in question upon the second parties assuming mortgages amounting to $7,500. The second paragraph contained a clause that the second parties would convey the Chicago flat, the first party to assume the $2,300 mortgage, and this provision:
“Further it is agreed by Joseph Stachura and his wife to pay in cash money to Rose Dekowski $500 exchange, and if first party finds conditions wrong this contract is void.”
The third clause contained the covenants as to exchange of abstracts and papers and provided that mutual delivery should be made on or before the 28th day of November, 1920, in the office of F. J. Glowinski. The brokerage fees of Anna Passouicz were to be paid, $100 by the first party and $150 by the second parties, and this provision:
“It is further agreed that in case either party to this agreement shall fail, refuse, or neglect to perform his part of this agreement within the time mentioned, to wit, 29th of November, 1920, or to execute and deliver the deeds of conveyance by him to be executed and delivered, then and in such case the said party who is in default shall forfeit and pay to the other party the sum of five hundred and no-100 dollars as liquidated damages for such failure and breach of contract.”
The question arises whether the sum of $500 named in this'clause is a penalty or liquidated damages. It is the well established r-ule in this court that where damages are stipulated by the parties the sum named will be treated as Iiqui-
Having by the terms of the contract stipulated the damages, in case of breach will a court of equity grant specific performance? This question does not seem to have arisen in this state. The rule is laid down in 1 Pomeroy’s Equity Jurisprudence (4th ed.) § 447:
“Where, however, the parties to an agreement have added a provision for the payment, in case of a breach, of a certain sum which is truly liquidated damages, and not a pen-' alty, — in other words, where the contract stipulates for one of two things .in the alternative, the doing of certain acts, or the payment of a certain amount of money in lieu thereof, — -.equity will not interfere to decree a specific performance of the first alternative, but will leave the injured party to his remedy of damages at law.”
It has also been held that whenever it appears that the intention of the parties was that the contract should be performed and that a stipulation for liquidated damages or a penalty was inserted merely as a security for such performance, then the contract will be specifically enforced, notwithstanding the contract is alternative in form. 25 Ruling Case Law, p. 231, § 29, and cases cited..
In the notes to 1 Pomeroy’s Equity Jurisprudence (4th ed.) p. 852, it is said that by the great weight of authority equity makes no distinction between a provision for a penalty and a provision for liquidated damages so far as the right to the specific performance of the contract containing such provision is concerned, citing a number of cases.
“But what is a still more satisfactory reason' for withholding a decree for specific performance is, that the party who asks for it has an entirely adequate remedy provided by the reservation in his deed, and by the contract itself. . . . This is a remedy more adequate and full than any decree for specific performance could give him, and it renders such interference of a court of equity entirely unnecessary.”
It is no doubt true that specific performance will not be denied in every case where. liquidated damages are stipulated, nor granted in every case where a so-called penalty is provided. The vital question is whether or not the parties intended that by the terms of the contract one or both might be released by paying a stipulated sum. Where, by the express terms of the contract, the party may pay damages or convey in the alternative, the rights of the parties are usually plain. In the case at bar no language in the alternative is used. 25 Ruling Case Law, p. 230, § 29.
A contract, after, providing for the exchange of certain real estate in the city of Chicago, contained the following provision:
“The wilful neglect or failure by either of the parties hereto to perform his or their respective parts of the undertaking hereunder is to subject such party to the payment of the sum of $1,500 fixed and liquidated damages to the party injured, and upon payment thereof this contract is to become null and void.”
It contained a further provision by which each party was to deposit the amount of $1,500 in escrow. One of the parties refused to convey. An action for specific performance was begun, and it was held that specific performance would not be granted. The court said:
“By this contract the sum of $1,500 is not only fixed as liquidated damages to the party injured in case of nonperformance, but it is also provided that upon the payment of that sum the contract is to become null and void. . . . While it is not by express terms made an option contract, the language employed will admit of no other construction. By*159 electing to pay the penalty instead of complying with the other terms of- the contract, and by tendering the money to appellant, appellees exercised the option given them, and the contract, by its terms, became null and void.” Davis v. Isenstein (257 Ill. 260, 100 N. E. 540) 45 L. R. A. n. s. 52, and note. See, also, Koch v. Streuter (218 Ill. 546, 75 N. E. 1049) 21 L. R. A. n. s. 210.
In the present case it is to be noted that the plaintiff reserved the right to cancel the contract if she “finds conditions wrong.” In this case, as in Davis v. Isenstein, supra, each party agreed to pay as liquidated damages the sum of $500 in case of default. We think under the language Of this contract each party reserved the right to withdraw from the contract and upon refusal to convey became indebted to the opposite party in the sum of $500. The language, “if first party finds conditions wrong this contract is void,” is ambiguous, but when applied to the situation as disclosed by the evidence it was inserted for the purpose of enabling the plaintiff, if the condition of the Chicago property was not as represented, to cancel the contract and relieve herself from the payment of the $500. If she failed to perform for any other reason the contract was to be binding. Upon the whole case we are satisfied that the right of the opposite party upon the default of one is measured and prescribed by the language of the clause stipulating the amount of the liquidated damages and that the trial court was in error in granting specific performance. In justice to the trial court it should be said that this subject was not urged upon his attention nor was it argued here. If the facts were not all here and the question presented simple and plain, we should follow the customary practice of ordering a re-argument, but we deem it unnecessary in this case.
By the Court. — Judgment reversed, and cause remanded for further proceedings according to law.
A motion for a rehearing was denied, with $25 .costs, on February 7, 1922.