Allison v. Dunwody , 100 Ga. 51 ( 1896 )

Beck, Judge.

The official report states the facts. The main question in this -case is, whether the sum specified in the contract, which is the basis of the plainitifPs action, is a mere penalty or was in.ten.dod as compensation — “liquidated damages,” to use the language -of the parties. Considering the entire contract, the unilateral instrument executed by the assignor of plaintiff together with the acceptance by defendant, we. unhesitatingly hold the sum specified to be stipulated or liquidated damages. Section 3794 of the Civil Code provides that, “If the parties agree, in their contract, what the damages for a breach shall be, they are said to be liquidated, and unless tbe agreement violates some principle of law, the parties are bound thereby.”

Upon tire subject of liquidated damages, the decisions are seemingly, perhaps actually, very ctonflicting. “Liquidated damages” by construction is made to signify a penalty, and on tbe other band, the word “penalty” is. sometimes, upon consideration of the combined stipulations, rendered liquidated damages. Bishop, Oon. §1452. As is said in Pierce v. Jung, 10 Wis. 25, one class of cases “lean towards treating such provisions as in the nature of penalties, and to do so> have Sometimes disregarded the positive and explicit language of the parties. Another class of oases, on the other hand, go for upholding contracts as •made, treating thei parties as equally competent to provide for the amount of damages to be paid, in case of failure to perform, as to determine any other matter contained in •them. . . But even the first class of cases concede the power of the panties to- liquidate the damages by their agreement in case of a non-performance. And they profess also to go upon the intention of the parties. And, perhaps the only real difference between the two is that the former take greater liberties than the latter with the words of the parties, in determining what the intention is.”

Again, in the case of Lea v. Whitaker, 8 L. R. C. P. 70, Keating, J., says, “The cases upon the subject of penalty or liquidated damages are very numerous. The result of them sectas to- be this, that what the courts look at is the real intention of the parties as it is to be gathered from thelamgua'ge ’they have used. No ease that I -am aware of has decided that, if it be manifest that the panties meant the sum fixed to be liquidated damages, the court will interfere to frustrate that intention.”

Much to- the same effect as in the two cases thus quoted,. is the tehor of the decisions of this court. Sims v. Cox, 40 Ga. 76; Goodman v. Henderson, 58 Ga. 567. And in this last case Justice Jackson lays especial stress upon the fact that “the damages Were: agreed upon by the parties themselves; they fixed them, not as a penalty, but as stipulated and liquidated, and so wrote it down in the agreement.” “The language of the instrument itself must of course be primarily looked to and Considered, though the use of the words penalty ’ or ‘ liquidated damages ’ will by no means always be conclusive,” is the bolding of' this court m the case of Sanders & Ables v. Carter, 91 Ga. 450, in which Justice Lumpkin deals with the subject of “penalties” and “liquidated damages” at Considerable length. This and the other Georgia, decisions upon this-subject manifestly lean to that class 'of cases in which no-“greater liberty is taken with the language of the parties” than is necessary to ascertain the true intent of the contract’ and to prevent the exaction of harsh penalties under the: guise of liquidated damages.

From the contract which we have had to- construe in this: case, it appears 'that the parties mutually agreed in express. terms that, .in case one of them should fail or refuse to comply with its Covenants, the other should retain as liquidated damages a stated sum of money already received by the-latter from the former. The sum which was to be retained upon the happening of the contingency provided for was-not unreasonable in amount; and it appearing from the’ contract 'as a whole that the damages resulting from a. breach -thereof were th'e subject-maltter of calculation and’/ adjustment between the parties, and that the sum specified:. was mot intended as a penalty, but as fixed, and settled, damages, the law will not frustrate that intention. On the contrary, it will uphold and enforce the contract as-made, thereby giving effect to the intention of the parties-to it and recognizing their competency to provide for damages and. the amount thereof, if not unreasonable, or grossly excessive, in the event <of failure to comply with its covenants.

It follows from what we have just said, taken in connection with the principle announced in the second headnote, that the court below did not err in sustaining the demurrers and dismissing plaintiff’s actions.

Judgment in each case affirmed.