70 Tex. 442 | Tex. | 1888
This suit was brought in the • court below by appellees against appellant, and grew out of a , contract for the sale of cattle. The agreement was in writing, and by its terms appellees sold and contracted to deliver to appellant a certain stock of cattle, for the consideration of fifty thousand dollars, to be paid as follows: eight thousand dollars in sixty days; five thousand two hundred and fifty dollars in . six months; fifteen thousand seven hundred and fifty dollars ; in one year; five thousand two hundred and fifty dollars in ' eighteen months; and fifteen thousand seven hundred and fifty dollars in two years from the date of the instrument. For these payments appellant executed his promissory notes, all bearing ten per cent per annum interest, and dated the same day as the agreement. The note which first fell due is as folfows:
“$8,000. Paint Rock, Texas, Jan. 1, 1885.
“Sixty days after date I promise to pay to the order of J. H. Scott and G. S. Lowrey, at the Northern Bank of Kentucky, at Lexington, Ky., the sum of eight thousand dollars, with interest from date till paid at the rate of ten per cent per annum, with exchange on New York. This amount is° part payment of the*444 purchase money for the HS brand of cattle this day sold to me by the said Scott & Lowrey, and upon which property the said Scott & Lowrey have retained a vendor’s lien to pay said sum. It is agreed by me that the above amount shall act as a forfeiture in the event I shall abandon said trade.”
The agreement also contained this stipulation: “It is further agreed by said parties, that the first note of eight thousand dollars, due in sixty days from the date hereof, is to act as a forfeiture and be forfeited by the said Eakin in the event he abandons this trade; and upon payment of said sum of money at said, time, said property is to be delivered to said Eakin.” Appellant abandoned the contract and refused to pay the note for eight thousand dollars, although appellees performed all the stipulations of the agreement on their part. The suit was brought for the recovery of the eight thousand dollars, and the petition set forth the entire agreement, and alleged plaintiffs’ compliance with its terms and defendant’s abandonment of the trade. The case was tried upon an agreed statement, in which the facts stated in the petition were substantially admitted, and in which it was further agreed that no actual damages accrued to the plaintiffs from the. defendant’s failure to comply with the contract.
The correctness d'f the judgment depends upon the question whether the stipulation for the forfeiture of the eight thousand dollar note is to be treated as an agreement for liquidated damages, or as a mere penalty to recover such damages as the plaintiffs should actually sustain. The questions presented by this class of contracts are a fruitful source of litigation, and are usually difficult to be determined. Stipulations for liquidated damages are generally for amounts in excess of the actual damages, and in such cases work a hardship upon the parties in default. In consequence the courts strongly incline to treat all agreements to pay a lump sum, in case of the failure to perform the terms of a contract, as a mere penalty, and in all doubtful instances to allow a recovery only for the actual damages. This is even so when the contract expressly names the sum as “liquidated damages,” if the damages are such as can be asoertairied with reasonable certainty according to the rules of law, and if, from an inspection of the entire instrument, it appears that the sum may have been named as a penalty only, still it is generally admitted that a contract for liquidated
The damages recoverable in this case for a mere breach of the contract of sale, in the absence of an express stipulation as to the amount, were capable of being definitely ascertained, and hence this comes within that class of contracts in which the courts have usually held the sum specified in the contract as a mere penalty. But we are of opinion that if we are to construe the language of the note and agreement before us as the parties themselves construed it, and to give effect to their intention, we must hold that the eight thousand dollars was-intended as liquidated damages, and that it was understood between them that if the defendant abandoned the contract he should pay the plaintiffs the first note at all events, and without reference to the actual damages sustained. We are aware that there are many cases which hold that the word “forfeiture” as used in such contracts is equivalent to the word “penalty.” (Betts v. Burch, 4 Hurl. & N., Exc., 505; Chaddock’s Ex’r v. Marsh, 21 N. J. Law, 463; Salters v. Ralph, 15 Abb. Pr., 273; Taylor v. Marcella, 1 Wood C. C.s 302; Richards v. Edeck, 17 Barb., 260.) It is doubtless true that in law the two words may be used to mean the same thing, for & forfeiture is usually a penalty, though a penalty is not necessarily a forfeiture. The primary use of the word forfeit is to lose, and this is also its legal meaning. To forfeit a sum of money means to lose the right to it in favor of another party. If the word used in the note in controversy was synonymous with “penalty,” and this was the sole stipulation in the contract upon the subject, it is clear the sum named could not be held as liquidated damages. But the phrase “shall act as a forfeiture” means something different from the words “shall act as a penalty;” and when we refer to the stipulation in the contract, we think the meaning is made clear. The words there used, “shall act as a forfeiture and shall be forfeited,” indicate, as we think, that the parties meant that the defendant, in th© event he abandoned the trade, should pay absolutely to the plaintiffs the sum named in the first note as their agreed damage; and it would seem that, after having first written th© words “shall act as a forfeiture,” they were not considered suf
Our courts have decided that contracts to pay a certain sum is a forfeit for failure to run a horse race are valid; and that : hey are based upon the actual damages resulting from loss of Lime and charges and expenses necessarily incurred in preparations for the race. (Wheeler v. Friend, 22 Texas, 683; Kirkland v. Kandon, 8 Texas, 10); and we see no reason why similar stipulations for a forfeit in case of a failure to carry out any other contract, where the future damages may be uncertain, should not be enforced. We find no error in the judgment and it is affirmed.
Affirmed.