Knight v. MacNeil , 91 Vt. 214 ( 1917 )

Haselton, J.

This is an action of assumpsit brought to recover on a promissory note for five hundred dollars. The general issue was pleaded, and thereunder notice was given of the defence relied on, a matter that will hereinafter be referred to. The cause was tried by the court, and, upon findings of fact made by the court, judgment was rendered for the defendants. The plaintiff excepted.

By a written contract entered into July 9, 1915, the plaintiff agreed to sell to the defendants, and the defendants agreed to purchase of the plaintiff a dry goods business, stock, fixtures and good will. Provision was made for an invoice to be commenced not later than August 1, 1915, and upon the completion of the inventory the plaintiff was to deliver the property and the defendants were to accept and pay for the same. The amount required in payment was to be determined by the inventory. The plaintiff agreed to assign to the defendants a lease held by him of the store wherein the business was conducted, and the defendants agreed to take over the lease and carry out its terms or otherwise save the plaintiff harmless from all loss in consequence thereof.

The defendants agreed to carry out certain advertising contracts that the plaintiff had entered into so as to save him. harmless therefrom, and to take over and pay for, at their unexpired value, certain insurance policies on the stock of goods in question,

The contract contained this provision: “Whereas it is agreed that the time and expense taking an inventory, and the loss of trade thereby occasioned would give damage to the seller in case the purchaser should fail or neglect to carry out his part of this agreement, now therefore to obviate dispute and litigation, as to the amount of damages in that event, it is hereby agreed that the damage to the seller in such case will be the sum of five hundred dollars. ’ ’

For this sum it was agreed that the defendants should execute and deliver to the plaintiff their promissory note to be as and for liquidated damages if the defendants should fail to carry out their part of the “articles of agreement”, but to be treated as a part of the purchase price in case they should carry out their part of the agreement.

In accordance with the contract the defendants executed and delivered to the plaintiff the five hundred dollar note in suit, a note which became payable August 8, 1915. The contract further provided that the plaintiff should execute and deliver to the defendants his promissory note for five hundred dollars to be for liquidated damages in case the plaintiff should not carry out his part of the agreement, but in ease he should perform on his part to be null and void and to be returned to him. The plaintiff gave his note accordingly. The two notes were correlative in purpose and obligation. Each was given with a view to the exigency of a failure fully to perform on the part of the one or ones giving it.

Two days before the taking of the inventory was to begin, the defendants wrote the plaintiff that they would not make the purchase that they had agreed to make, and that there was no occasion to take an inventory or to close the store. They sent the plaintiff his note and asked for the return of theirs, that is, of the note in suit. No inventory was taken and the store, was not closed.

The defendants distinctly and definitely broke the contract on their part. But they say that their note was to take effect only in case an inventory was taken, and that the events which would have made the note effective have never happened and, by their refusal to purchase as they agreed to do, can never happen.

However, their construction of the contract that they entered into is a mistaken one. Notwithstanding the words in the contract showing that it was agreed that the taking of an inventory would cause damage and loss of trade, as to the amount of which no agreement was made, and that such fact suggested the idea of liquidated damages, the sum of five hundred dollars was fixed upon as the damage to the plaintiff in the event that the defendants should fail or neglect to carry out their part of the contract or articles of agreement, which was to purchase the business in question, its merchandise, fixtures and good will, and to take over the lease, advertising contracts and insurance policies.

The plaintiff offered to show that the value of the stock of goods and of the fixtures was about six thousand dollars, and that he had in fact suffered a loss of more than five hundred dollars by reason of the failure of the defendants to carry out their agreement. Evidence under this offer was excluded and the plaintiff took an exception.

But we have no occasion to consider this exception. The question of whether the sum of five hundred dollars should be considered as a penalty rather than as liquidated damages is not raised by the defendants. Their claim, as above stated, is simply the mistaken one that the events which were to make the note effective have never taken place.

• Judgment reversed and judgment for the plaintiff to recover five htmdred dollars with interest thereon from August 8, 1915, and his costs.