First Loan & Trust Co. v. Schanche , 48 S.D. 86 ( 1925 )

BURCH, Circuit Judge.

On the 10th day of August, 1881, the defendant, Herman Schanche, and one Andrew Stene, entered into a written contract, at Yankton, S. D., as follows:

“That said parties of the first part for and in consideration of the sum of five hundred dollars in hand to them- paid by the said party of the 'second paid, the receipt of which is hereby acknowledged, hereby contract and agree with said party of the second part, both for themselves, their heirs and administrators, that they will keep and maintain the said Maria Olsberg, party of the second part, during the period of her life commencing and continuing from the date of these presents — that by said keeping and maintenance it is understood that they shall furnish her with a good and comfortable home, at such place as may be most convenient for said parties of the first part — and with food, drink and clothing and all other things necessaiy and convenient for her maintenance and enjoyment according to the position and station in life, and such as she has heretofore been accustomed to enjoy and receive and for the true and faithful performance of each -and all the covenants and agreements above mentioned, the said parr ties of the first part, each and jointly and severally bind themselves to the said party of the second part in the sum of five hundred dollars as liquidated damages.”

On the 27th day of March, 1920, an action was commenced upon this contract to recover damages for its breach in the name of Maria Olsberg', by J. S. Olsberg, her guardian. During the pendency of this action, and before trial, Maria Olsberg died, and the First Loan & Trust Company of Yankton, S. D., was appointed admdnistr.ator and substituted as plaintiff herein.

The defendant answered, admitting- the execution and delivery of the contract, but denied its breach, and pleaded that the cause of action, if any, was barred by the statute of limitations, and that the contract was waived by both parties and abandoned.

After the execution of the contract, the said Maria Olsberg for about 22 years lived with either the defendant or Andrew Stene, until some time in the year 1903, when she left and thereafter lived with J. S. Olsiberg for a period of about 17 years. Maria Olsberg was the mother of J. S. Olsberg and the defendant Schanche, and the mother-in-law of Andrew Stene. It does not appear from the evidence why the mother left her residence with the defendant or Stene, and took up her residence with J. S. Olsberg.

This case may be disposed of by construction of the contract and its application tO' the statute of limitations.

As a general rule, the intention of the parties is an important, if not a conclusive, element in determining whether a sum stipulated to be paid in case of a breach of a contract is to be regarded as liquidated damlages or a penalty. That the parties declare the damages shall be liquidated is a circumstance to be considered. 8 R. C. L. 560.

There are no demands of equity requiring the court to construe this contract at variance with its expressed terms. The contract was made many years ago, when the mother was young, not then 50 years of age; there is no extraneous evidence to throw light upon the intention of the parties. The intention and meaning depends solely upon the written contract. Under the terms of the contract, and the facts and circumstances surrounding the case, we hold that damages stipulated in said contract are liquidated. The trial court should have confined the recovery to the amount stipulated in the contract.

The liability to pay the liquidated damages, however, depends upon whether or not the cause of action is barred by the statute of limitations. Plaintiff contends that the contract sued on was a continuing contract, and that during its existence the statute of limitations did not run in favor of defendant. It may be conceded that the contract is a continuing contract, and the question is: When does a right of action accrue on a continuing contract so as to set the statute of limitations in motion.

In determining when the statute begins to run upon the breach of a continuing contract, the question depends largely upon the inquiry whether a complete right of action accrues at the time of the first breach. If a full recovery of damages can be had upon the first breach, the statute then begins to run; and when this right of action becomes barred plaintiff cannot recover for any subsequent breach through which it accrues within the statutory period before action. 25 Cyc. 1105. There has been but one breach of the contract, and that breach occurred in 19,03, about 17 years prior to the commencement of the action. Under the terms of the contract, the full amount of the stipulated damages became due and owing upon the breach thereof, and could then have been recovered. It follows that at the time of the commencement of the action the cause of action was barred by the statute of limitations.

The judgment is reversed, and the action is dismissed.

BURCH, Circuit Judge, sitting in lieu of AND'ERSON, J., disqualified. DILE-O'N, J., not sitting.