105 Minn. 39 | Minn. | 1908
The facts in this case are as follows: Plaintiff is a corporation engaged in the business of manufacturing and selling threshing machines. On July 27, 1906, defendant entered into a contract with it for the purchase of a complete threshing outfit, consisting of a separator, with the necessary appliances and attachments, and a twenty-five-horse power straw-burning engine. The contract was in the
consideration of the expense incurred by the company in soliciting, investigating, and taking this order, the purchaser promises and agrees to pay all freight charges on said machinery from the factory and fifteen per cent, of the price above stipulated, in cash, in case he should cancel this order or decline to accept said machinery.” Plaintiff, in compliance with the contract, shipped the machinery to defendant; but upon its arrival at Beardsley the latter refused to accept or receive the same, or make payment therefor as agreed upon.
Plaintiff thereafter brought this action to recover the damages agreed to be paid by the terms of the contract above quoted, viz., fifteen per cent, of the purchase price of the machine, or $450, and the freight charges incurred by plaintiff in the shipment of the property. The complaint alleges that the freight charges incurred in the shipment from Racine, Wisconsin, where plaintiff’s factory is located, to Beardsley, were the sum of $94. Defendant answered, admitting the execution of the contract and the shipment of the machinery, and his refusal to accept or receive the same, and justified his conduct on the ground that the machine so shipped and offered to him was not in compliance with the terms of the contract, but, on . the contrary, was an old and secondhand rig.
When the cause came on for trial, plaintiff, after the introduction of other, pertinent testimony, offered in evidence the written order or contract, and it was excluded, on defendant’s objection, on the ground that the damages stipulated to be paid thereby for the refusal of defendant to perform the contract was a penalty, and not recoverable. Subsequent to the exclusion of the contract, plaintiff made certain offers of evidence, including an offer to prove the amount of the freight charges from Racine to Minneapolis and from Minneapolis to Beardsley. This evidence was also excluded, whereupon
Two questions are presented for consideration in this court, viz.: (1) Whether the stipulated damages agreed to be paid by defendant for his refusal to perform the contract is a penalty, and not recoverable; and (2) Whether, even if the stipulation be so construed, plaintiff may nevertheless recover the freight charges actually incurred in the shipment of the machinery to Beardsley.
1. Whether the amount stipulated in a contract to- be-paid by the party refusing performance is to be treated as a penalty, or liquidated damages, is frequently a question not easy of determination. The general rule controlling the question is well settled, but its application to particular cases is often difficult, and the authorities are not in full accord. The general rule, laid down in several cases in this state, is that where the actual damages are readily ascertained by the application of appropriate rules of law, and the amount stipulated to be paid is greatly in excess of the actual injury, the stipulated damages will be treated as a penalty, and the complaining party limited in his recovery to his actual loss. Fasler v. Beard, 39 Minn. 33, 38 N. W. 755; Taylor v. Times Newspaper Co., 83 Minn. 523, 86 N. W. 760, 85 Am. St. 473; Womack v. Coleman, 89 Minn. 17, 93 N. W. 663; Carter v. Strom, 41 Minn. 522, 43 N. W. 394. And such is the rule applied by the courts generally. See note to Condon v. Kemper, 47 Kan. 126, 27 Pac. 829, 13 B. R. A. 671, and cases cited in 13 Cyc. 93, and 1 Sutherland, Dam. 279, et seq. The rule requires no further discussion than will be found in the authorities cited. Whether a particular stipulation for damages should be held a penalty, or liquidated damages, must be determined by the language of the writing, the situation of the parties, the surrounding circumstances, and especially the particulars, when disclosed, in respect to which compensation was intended in the event of a failure or refusal to perform by one of the parties. If the particular elements of loss or damage be given, and the actual loss in those respects may be definitely ascertained and shown by evidence, an amount greatly disproportionate thereto will as a general rule be treated as a penalty.
Applying the rule to the case at bar, we have no difficulty in reach
2. We turn, then, to the question whether plaintiff may recover the freight charges incurred in the shipment of the machinery. We discover no valid, reason for holding that this item of expense may not be recovered. It is expressly provided for by the contract, and
The court suggests in its memorandum that the complaint did not cover this feature of the case. The court evidently overlooked the allegation to the effect that the freight charges incurred in the shipment of the machinery were $94, and the evidence on the trial tended to establish the fact so alleged. Whatever freight charges, therefore, plaintiff necessarily incurred in the performance of this contract, may be recovered. If the freight charge from Racine to Minneapolis was not incurred in the performance of this particular contract, plaintiff would be entitled to recover only the amount incurred in the shipment from Minneapolis to Beardsley. It follows that the court erred in excluding recovery for the freight charges, and that there must be a new trial.
Order reversed.