Jewett v. Detroit Edison Co.

274 F. 30, 1921 U.S. App. LEXIS 1307
CourtCourt of Appeals for the Sixth Circuit
DecidedJune 17, 1921
DocketNo. 3473
StatusPublished
Cited by6 cases

This text of 274 F. 30 (Jewett v. Detroit Edison Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jewett v. Detroit Edison Co., 274 F. 30, 1921 U.S. App. LEXIS 1307 (6th Cir. 1921).

Opinion

DONAHUE, Circuit Judge

(after stating the facts as abové). [1] It is insisted by the plaintiff in error that this judgment should be reversed for error of the court in holding that the provisions of the contracts relating to stipulated damages gave the Edison Company a right to elect to accept such damages, or to recover its actual damages. The provision of the contract in that respect is not subject to such construction. The term “liquidated damages” means a definite sum or amount, which has been determined by agreement of the parties or by litigation. At the time this contract was written, these damages had not [33]*33been ascertained by litigation. Therefore the provision in this contract that “the Edison Company shall have the right to charge the coal company as its liquidated damages 20 cents per ton for each ton short in shipping” necessarily means that the parties had determined, or believed they had determined, by agreement between themselves, the precise amount of damages the Edison Company would sustain by reason of any failure on the part of the coal company to keep its contract and deliver the amount of coal named therein. Otherwise the term “liquidated damages” would have no place or meaning, in this contra ct.

The further provision of that paragraph, that “the Edison Company may deduct such damages from any moneys due to the coal company,” con in no way change or alter the terms of the contract in reference to liquidated damages. The intention and purpose of the parties to ascertain and determine by agreement a sum certain as liquidated damages for a breach of the conditions of this contract by either party further appears by the provisions of paragraph 3 of the conditions written therein, in ^rhich paragraph it is provided that, upon the failure of the Edison Company to accept the full tonnage, it would pay to the coal company liquidated damages in the sum of 20 cents per ton for such tonnage as it fails to accept. Under this provision of the contract, if it is not invalid for other reasons, the coal company would be bound to accept 20 cents a ton in full of its damages. There is nothing in this contract to indicate that these two provisions as to liquidated damages in case of default by either were not correlative, and equally bind: ing on each of the parties thereto.

In the construction of this contract it must also be remembered that these contracts were on printed forms or order contracts used by the Edison Company in Idle conduct of its business, and must therefore be construed more strongly against the contracting party, that prepared and used these printed forms for this purpose. Texas & Pacific Ry. Co. v. Reiss, 183 U. S. 626, 22 Sup. Ct. 253, 46 L. Ed. 358; Bank v. Employers’ Liability Ins. Co. (C. C. A.) 270 Fed. 567. However, recourse to this rule of construction is hardly necessary in this case. The language of the contract in this respect is sufficiently clear to indicate the intent and purpose of the parties to fix by agreement, binding on both parties, a fixed and definite amount as liquidated damages in case of default by either of the contracting parties. It is not to be presumed that the Edison Company, studiously and adroitly, so framed this contract that any part of its terms and provisions should be optional as to it, but binding on the coal company. In any event, it must be held ' to the terms of the contract as written, and, construing this contract as a whole, the conclusion follows that the provision as to 20 cents a ton as liquidated damages necessarily means that such liquidated damages have been determined by agreement between the parties, which agreement, if valid, is mutually binding upon both parties to this contract.

Upon the question as to the validity of this provision for liquidated damages, it is insisted on the part of the defendant in error that these [34]*34are Michigan contracts, and must be construed in the light of the decisions of the Supreme Court of that state; that under these decisions, in the state of Michigan^ liquidated damages may be agreed upon only when the actual damages are not capable of being readily ascertained. The decisions of the Supreme Court of Michigan were fully discussed and considered by this court in. the case of Board of Commerce of Ann Arbor v. Security Trust Co., 225 Fed. 454, at page 461 et seq., 140 C. C. A. 486. From the opinion in that case, it appears that this court' reached the conclusion that the Supreme Court of Michigan had not limited the validity of contracts for liquidated damages to cases only, in which the loss cannot be measured by a pecuniary standard, but that, even in cases where such damages are capable of being readily ascertained, the court will disregard the express stipulation of the parties only where it is obvious, from the contract before it and the whole subject-matter of the contract, that the principle of compensation has been disregarded. The conclusion reached by this court in that case is fully sustained by the leading Michigan cases on this subject.

In the case of Jaquith v. Hudson, 5 Mich. 123, Christiancy, J., discussed at great length contracts of this character applying to cases where actual damages might be readily ascertained, and in conclusion, at pages 136, 137, said:

“The foregoing remarks are all to be confined to that class of eases where it is clear, from the sum mentioned and the subject-matter, that the principle of compensation has been disregarded.”

Then he proceeds to discuss a second class of cases, m which actual damages are not easily ascertainable, and concludes with this statement:

“In all such eases, the law permits the parties to ascertain for themselves, and to provide in the contract itself, the amount of the damages which shall be paid for the breach”

■ — but further says that, even in this class of cases, the law does not lose sight of the principle of compensation, but merely accepts the estimate of damages fixed by the parties as the best and most practicable mode of ascertaining the sum which will produce just compensation. The contract before the court in that case was such a contract, so that what the learned judge said in reference to provisions in other contracts for liquidated damages, where the damages are easily ascertainable, is wholly obiter; nevertheless in subsequent Michigan cases the Supreme Court of that state has discussed the opinion of Judge Christ-iancy at great length, especially in the case of Calbeck v. Ford, 140 Mich. 56, 103 N. W. 516, and Ross v. Loescher, 152 Mich. 386, 116 N. W. 193, 25 Am. St. Rep. 418, in each of which cases the contract under consideration was one within the second class named by Judge Christiancy.

It is, however, expressly stated in the opinion in Jaquith v. Hudson, supra, that—

“The court will apply tbis principle, and disregard tbe express stipulation of parties, only in those eases where it is obvious from the contract before them, and the whole subject-matter that the principle of compensation has been disregarded.”

[35]*35Discussing this question further, the court said:

“The violation or disregard of this principle of compensation may appear to tiio court in various ways — from the contract, the sum mentioned, and the subject-matter.

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Cite This Page — Counsel Stack

Bluebook (online)
274 F. 30, 1921 U.S. App. LEXIS 1307, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jewett-v-detroit-edison-co-ca6-1921.