Wright v. Dobie

Appellee sued appellant to recover damages in the sum of $2000 for breach of a written contract, whereby appellant agreed to deliver to appellee a number of cattle at so much per head.

Appellee paid to appellant upon the contract the sum of $500, which was stated in the contract as a "forfeit on said cattle." The appellee, as a part of his damages, sued to recover the $500 so paid, alleging that appellant violated his contract in refusing to deliver the cattle as he had agreed, and that the $500 was paid simply as a part of the purchase price of the cattle.

Appellant denied this, and claims that he complied with his contract, and that appellee refused to receive the cattle; and in effect, that the $500 was paid as liquidated damages, and was to be retained by appellant in the event appellee violated the contract.

There was evidence offered by each party tending to establish these issues as presented in their pleadings.

The jury returned a verdict in appellee's favor for the $500 so paid appellant.

The court below instructed the jury, that the $500 so paid must be held to be "intended by the parties as a penalty or security advanced by the plaintiff as part payment for the cattle under the contract, and which, therefore, the defendant has no just right to retain as agreed or stipulated damages, he not having delivered to the plaintiff any cattle to cover the same;" and instructed the jury to find a verdict for appellee for that sum. This charge is assigned as error.

This charge was evidently predicated upon the idea that the use of the word "forfeit" in the contract has a fixed legal meaning, and that it is synonymous with the word penalty, and that the employment of such word is destructive of the idea that the amount paid should be regarded as liquidated damages.

There are authorities that support this view of the question. A different rule is announced in the case of Eakin v. Scott,70 Tex. 443. There the court say: "In the construction of these contracts, as in all others, the intention of the parties must govern. * * * If we are to construe the language of the note and agreement before us as the parties themselves construed it, and to give effect to their intention, we must hold that the $8000 was intended as liquidated damages, and that it was understood between them that if the defendant abandoned the contract, he should pay the plaintiffs the first note at all events, and without reference to the actual damages sustained. We are aware that there are many cases which hold that the word `forfeiture,' as used in such contracts, is equivalent to the word `penalty.' It is doubtless true that in law the two words may be used to mean the same thing, for a forfeiture is usually a penalty, though a penalty is not necessarily a forfeiture. The primary use of the word forfeit is to lose, and this is also its legal meaning. To forfeit a sum of money means to lose the right to it in favor of another party."

In this case the court held that the word "forfeiture" was not used in the sense and meaning which is usually given to the word penalty.

It has been also held, that the words "liquidated damages," when employed in a contract, may be construed in the light of the intention of the parties to mean a penalty. Durst v. Swift,11 Tex. 281; Yetter v. Hudson, 57 Tex. 612 [57 Tex. 612], and cases there cited.

The true construction of such words rests upon the intention of the parties to the contract. This intent should be discovered, if possible, from the language of the contract itself; but when the sense in which the parties intended to use the word is in doubt, the facts and circumstances attending the execution of the contract and the surroundings of the parties at the time with reference to the subject matter of the contract may be looked to in ascertaining that intention and the meaning that should be given to the word.

We are not prepared to hold that the contract before us upon its face is conclusively expressive of the intention of the parties. The intention of the parties in the use of the words as a "part of the forfeit on said cattle," should have been left to the jury. The remaining assignments of error are without merit.

Judgment reversed and cause remanded.

Reversed and remanded.