Jones v. Mississippi Farms Co.

76 So. 880, 116 Miss. 295

• Court: Mississippi Supreme Court
• Decided: October 15, 1917
• Status: Published

Opinions

Ethridge, J.,

delivered the opinion of the court.

(After stating the facts as above.) The direct appeal is prosecuted by J. T. Jones, and he contends that under clause 11 above set out he was not compelled to perform the contract, but had the option of retiring at any time he saw proper, and that clause 11 at all events fixed the damages which should be paid for a default in the contract. He contends further that the Mississippi Farms Company, not being a party to the contract,' can recover no damages suffered by it by reason of the failure of Jones to carry out the contract to buy and operate the railroad. The Farms Company claims that it is not only entitled to a decree for the balance of the purchase money of the road, but that it is entitled to damages for moneys expended, and profits lost, by it in carrying out the development scheme or undertaking to do so contemplated by Jones and the Finkbine Company.

It appears to us that clause 11 of the contract was made with the view of fixing damages for the failure to carry out this contract, and that the moneys'paid under this contract are to be considered as liquidated damages and not as a penalty. Under this clause, it is declared by the parties that time is the essence of this contract, and that it is to he taken strictly and literally; and that, upon the event of the failure to make the payment strictly and promptly as of the date, the contract is to be null and void and the rights of J ones were to cease at once ipso.facto, and the property should revert and immediately reinvest in the Finkbine Company without any declaration or forfeiture or act of re-entry and without any other act to be performed by it, as fully and as perfectly as if the contract had never been made; and that the moneys paid should be held absolutely as liquidated damages for the breach of the contract. It is difficult to conceive of how any stronger contract could be made than the one that is here made bearing upon this matter.

It is fundamental that the right to make contracts pertaining to business is one of the rights guaranteed by the law of the land, and especially the fourteenth amendment to the Constitution of the United States. Unless the parties dealing with the subject-matter by their conduct modify or change the contract originally made, or so act in reference to it as to make it inconsistent for a party to claim or rely upon the contract contrary to its agreement and stipulations, it must be enforced as written. To quote from the United States supreme court in Cheney v. Libby, 134 U. S. 68, 10 Sup. Ct. 498, 33 L. Ed. 818:

“The parties in this case, in words too distinct to leave room for construction, not only specify the time when each condition is to be performed, but declare that ‘time and punctuality are-material and essential ingredients ’ in the contract; and that it must be ‘ strictly and literally’ executed. However harsh or exacting its terms may be, as to the appellee, they do not contravene public policy; and therefore a refusal of the court to give effect to them, according to the real intention of the parties, is to make a contract for them which they have not chosen to make for themselves”- — citing authorities.

In the headnotes to this case in the Law Edition report these principles are stated as follows:

“Time may be made of the essence of the contract by the express stipulations of the parties, or it may arise by implication from the very nature of the property, or Die avowed objects of the seller or the purchaser.

“Where the parties specify the time of performance, and declare that ‘time and punctuality are material and essential ingredients’ in the contract, and that it must be ‘strictly and literally’ executed, however harsh or exacting its terms may be, a refusal of the court .to give effect to them is to make .a contract which the parties have not made for themselves.”

The United States supreme court has recognized these principles in numerous other oases, among which I cite the following: Taylor v. Longworth, 14 Pet. 172, 10 L. Ed. 405; Secombe v. Steele, 20 How. 94, 15 L. Ed. 833; Waterman v. Banks, 144 U. S. 394, 12 Sup. Ct. 646, 36 L. Ed. 479. See also Slater v. Emerson, 19 How. 224, 15 L. Ed. 626, Bank of Columbia v. Hagner, 1 Pet. 455, 7 L. Ed. 219, Heppurn & Dundas v. Colin Auld, etc., 5 Cranch, 262, 3 L. Ed. 96. That time will he regarded as the essence of the contract when stipulated hy the parties by distinct agreement is well settled in numerous state authorites. Davis v. Isenstein, 257 Ill. 260, 100 N. E. 940, 45 L. R. A. (N. S.) 52; Heckman’s Estate, 236 Pa. 193, 84 Atl. 689; Hahn v. Concordia Society, 42 Md. 460; Bodina v. Glading, 21 Pa. 50, 59 Am. Dec. 749; St. Mary’s Church v. Stockton, 8 N. J. Eq. 520; Webster v. Bosanquet, Ann. Cas. 1912C, 1019; Phelps v. I. C. R. R. Co., 63 Ill. 468; Stow v. Russell, 36 Ill. 18; Heckard v. Sayre, 34 Ill. 142; Steele v. Biggs, 22 Ill. 643; Chrisman v. Miller, 21 Ill. 227; Ewing v. Crouse, 6 Ind. 312; Foot v. Rush, 100 Iowa, 522, 69 N. W. 874; Carter v. Walters, 91 Iowa, 727, 59 N. W. 201; Garcin v. Pennsylvania Furnace Co., 186 Mass. 405, 71 N. E. 793; Judd v. Skidmore, 33 Minn. 140, 22 N. W. 183; Jewett v. Black, 60 Neb. 173, 82 N. W. 375; Brown v. Ulrick, 48 Neb. 409, 67 N. W. 168; Patterson v. Murphy, 41 Neb. 818, 60 N. W. 1. In the case of Webster v. Bosanquet, supra, we quote from the headnote as follows:

“Where a contract provides that on breach thereof a specified amount should be paid ‘as liquidated damages and not as a penalty, ’ its true construction must have regard to the particular circumstances of the case, and not be such as to render it unconscionable and extravagant. Where it is impossible at the date of contract to foresee the extent of uncertain injury which might be sustained by its beach, or the cost and difficulty of providing it, and the amount is reasonable, it should be recovered as liquidated damages.”

Are there any such surroundings and circumstances in the present case as would warrant ns in construing the stipulation of the contract contained in clause 11 as a penalty and not as liquidated damages within the meaning of the rule laid down in this case ? When we take the surroundings of the parties into consideration and consider the uncertainty of the venture about which the parties were contracting and the extreme difficulty of proving damages in the case of a failure, it becomes manifest that the parties were themselves fixing what the damages should be. In the case of Jones’ failure to pay for the logging road, the Finkbine Company would have all the property which it had conveyed to Jones, and, in addition thereto whatever Jones had paid to it, the cash payment being thirty thousand dollars, and fifteen thousand dollars, additional accruing each year thereafter as the payments were made. Both Jones and the lumber company were persons experienced in business matters and well knew the uncertainty of a venture of this kind. They» took particular pains to make their intentions manifest that the contract was to be terminated at once in case of default, and that this amount so paid would he the exact amount of damages that would be suffered from such breach.

Of course, the intention of the parties is the thing the court is anxious to ascertain and give effect to. The general rule is that the intention of the parties must be drawn from the words of the whole contract, and if, viewing the language used, it is clear and explicit, then the court must give effect to this contract unless it contravenes public policy, if the language is doubtful, the court will look to the surroundings of the parties and to the construction placed upon the contract by the parties during its existence in order to learn the intention of the parties.

In considering whether or not damages stipulated for as liquidated damages was intended by the parties really to be paid if not disporportionate to tbe damages that might probably result from a violation of a contract, it will be held to be liquidated damages. If tbe contract is for tbe performance of a specific act for tbe nonperformance of which damages could easily be ascertained, then it may be treated as a penalty. The whole subject is treated in a case note to Ann. Cas. 1912C, 1021-1028. See, also, Selby v. Matson, 137 Iowa, 97, 114 N. W. 609, 14 L. R. A. (N. S.) 1210; Morrison v. Ashburn (Tex. Civ. App.) 21 S. W. 993; Lightner v. Menzel, 35 Cal. 452; Dakin v. Williams, 17 Wend. (N. Y.) 447; Holmes v. Holmes, 12 Barb. (N. Y.) 137; Welch et al. v. McDonald, 85 Va. 500, 8 S. E. 711; Pettis v. Bloomer, 21 How. Prac. (N. Y.) 317; Barnwell v. Kempton, 22 Kan. 314; Geiger et al. v. West Maryland R. R. Co., 41 M. D. 4; K. P. Mining Co. v. Jacobson, 30 Utah, 115, 83 Pac. 728, 4 L. R. A. (N. S.) 755.

On tbe proposition of compelling tbe operation for three years in tbe supplemental contract, our own court has held, in Sims v. Vanmeter Lumber Co., 96 Miss. 449, 51 So. 459, that equity will not direct a specific performance of a contract where it would require constant superintendence of tbe court from day to day for an indefinite time in order to enforce tbe carrying out of its decrees. This case refused specific performance of a contract for tbe construction of a logging road. See, also, Bomer et al. v. Canaday, 79 Miss. 222, 30 So. 638, 55 L. R. A. 328, 89 Am. St. Rep. 593.

On the proposition of allowance of damage in lieu of specific performance, we think that tbe appellees cannot recover because tbe Mississippi Farms Company, not being a party to tbe contract, cannot recover from the appellant tbe damages it may have suffered in Its dealings in this respect. If it could recover anything, it would be limited to the recovery of such damages as were suffered by tbe Finkbine Lumber Company under assignment of Finkbine’s contract to tbe Mississippi Farms Company. Tbe Finkbine Company has not suffered damage, because it sold its property at an average of six dollars per acre, when the proof shows that its real value is approximately two dollars per acre. The Finkbine Company will be precluded from maintaining suit for damages as to the development project independent of clause 11, because it had no charter power to make a contract as to the development proposition. Central Transportation Co. v. Pullman’s Palace Car Co., 139 U. S. 24, 11 Sup. Ct. 478, 35 L. Ed. 55; McCormick v. Market National Bank, 165 U. S. 538, 17 Sup. Ct. 433, 41 L. Ed. 817.

The case is therefore reversed, and bill and cross-bill dismissed. ■ '

Reversed and dismissed.