Heard v. Dooly County , 1897 Ga. LEXIS 286 ( 1897 )

Little, J.

The plaintiff in error brought suit against the county of Dooly, to recover a balance alleged to be due for the construction of a court-house for that county, and for the value of extra work done on same. The defendant pleaded that it was not indebted to the plaintiff in any amount.

The work was undertaken and carried on under a written contract, and by its terms the rights of the parties are to be determined. The contract bears date November 8, 1890, and stipulates that the plaintiff will furnish material and erect the building in the manner set out in the contract and according to certain specifications, and deliver the same to the ordinary of the county on the first day of May thereafter, for which he shall be paid, as the work progresses, the sum of twenty-five thousand dollars. It was further stipulated, that the contractor should pay to the ordinary of the county as rent the sum of thirty-two dollars for every week that may elapse, in case the work contracted for shall not be done and completed by the time before mentioned. The suit was instituted to recover $557.71 for balance due plaintiff under the contract, and $68.50 extra work on the building. The defendant pleaded that it was not indebted. There was a verdict for the defendant. The defendant had a settlement with the plaintiff on July 1, 1891, and deducted from payments due under the contract the sum of $557.71, being thirty-two dollars per week. The first question presented for our consideration is, does a proper construction of the contract fix the sum of thirty-two dollars per week as liquidated damages, or is the sum which is stipulated in the contract in the nature of the penalty ?

As a rule, the measure of recovery for the breach of a contract is the amount of damage sustained; and if the parties agree what the damage shall be in case of a breach, a recovery can be had in a proper case for the stipulated amount. Civil Code, §3794. Unless, however, this amount which is stipulated is reasonable in view of the subject-matter, and was intended by the parties as a compensation to the injured one, it will be treated as a penalty for the breach; and as the law does not favor penalties or forfeitures, actual damages will only be given to the injured party, regardless of the amount named in the contract. Civil Code, §3795. In other words, for the breach of a contract the law will measure and award damages to the injured party, the object being to compensate the one sustaining the damage. If on entering into a contract the parties themselves, from calculation or with a view of simply compensating the one injured by the unauthorized act of the other, agree on a sum which is not excessive, as the damages to either in the case of a breach, such is then the measure of damages, because it has been settled between them. So, by contract parties may limit to a less amount than the actual damage what sum shall be paid over to the other in case of a breach. But if they agree on a sum to be paid in case one of them violate the terms agreed on, — in the nature of a forfeiture for such violation, irrespective of the damages sustained, and grossly excessive, — it can not be recovered; the courts will award only such a sum as will cure the hurt, notwithstanding such agreement. Indeed our code lays down a rule for recovery in all cases, when the damages have been agreed on by the contract: “where such damage is capable of computation and is not uncertain in its character,” the stipulations made will be declared to be penalties and not recoverable.

It becomes important to ascertain the intention of the parties ; whether the amount was ascertained and fixed to satisfy the injury which one would sustain if the other violated his contract, or whether it was a penalty he had to pay in case of violation so as to hold him to his bargain. It does not depend on what the parties designate it to be in the contract. It may be called liquidated damages, or penalty, or other terms be used. The intention of the parties from the whole instrument is to be gathered and thereby construed. In 7 C. B. 717-728, “under a penalty of 500 pounds,” was held to fix 500 pounds as liquidated damages; and in Kemble v. Farrer, 6 Bingham, 141, it was held that when the contract used the words “liquidated damages,” they were not decisive against holding the sum to be a penalty. See also Sanders & Ables v. Carter, 91 Ga. 453.

Again, the subject-matter and nature of the contract are important elements in determining whether the stipulation shall be treated as liquidated damages or held to be a penalty. Where it was agreed “that either party failing to perform their part forfeits to the other $1,000,” and the breach alleged was a failure to take and pay for two lots of turpentine, it was held that the damages were easily ascertained, and it was a penalty. Lee v. Overstreet, 44 Ga. 507. Contra, if the damages must necessarily be wholly uncertain and incapable of estimation, the party failing to perform will be held to pay the amount as liquidated damages. Sanders & Ables v. Carter, 91 Ga. 450, and authorities cited under first headnote.

The subject-matter in the present case was the erection of a court-house building to contain a place for holding the court, offices for the transaction of the public business of the county, places of safety for the records; — such are convenient for the dispatch and orderly transaction of the business of the county, but necessary, and expensive to be supplied by substitute. Such being the subject-matter of the contract, the parties entered into an agreement, the one stipulating with the other to do this public work in a given time — estimated to he ample in which to accomplish it; agreeing, if he did not do so, to pay as rent thirty-two dollars for every week. Why thirty-two dollars ? These figures to some extent indicate that they were the result of some kind of a calculation or compromise. But for the non-completion of the house which the county was ready to occupy by its officers, by which its business would be more safely carried on, its records more securely kept, the contractor agreed to pay as rent a given sum for each week beyond a time which he deemed ample for its construction. It seems to us that the parties to this agreement intended to fix the amount of damage to the county. It would he difficult to compute by ordinary rules the damage sustained, because proper accommodation could not be had in any other place than this house. Such damages, being for a deprivation, might be capable of estimation; but necessarily to a very great extent they would be uncertain, and being so, on the line of the authorities, the sum named should be held to be stipulated damages, rather than a penalty, and as such, recoverable.

The question raised in the pleadings, that the delay was occasioned by providential cause for which the plaintiff was not liable, was settled against him by the jury on ample evidence to establish their finding.

2. The plaintiff in error was not entitled to recover for the item of extra work as set out in his petition. Evidently the county by its contracting officer endeavored to guard against charges for extra work, and in this contract it was declared : “No new work of any description done on the premises shall he considered as extra, unless a separate estimate in writing 'for the same before its commencement shall have been submitted ■by the contractor to the architect and ordinary and their signatures obtained thereto.” This is strong language, and is binding on the plaintiff. Confessedly his extra work was not approved by the ordinary, who represented the other party to the contract. In no other way was such work to be classed as extra work, and his claim for it must fall.

Judgment affirmed.

All the Justices concurring, except Fish, J., disqualified.