George W. Muller Bank Fixture Co. v. Georgia Railway & Electric Co.

Atkinson, J. 1. The rulings announced in the first and second headnotes do not require elaboration. 2. The judgment, however, must be reversed upon one controlling question, which renders it unnecessary to deal with other questions. The plaintiff elected to sue for stipulated damages upon the authority of the provision of the contract which declared: “It is agreed that if the customer violates this contract, there shall immediately become due and payable as damages, not as penalty, first, the minimum payment named herein for the entire unexpired term of the contract or existing extension thereof; second, the construction expense incurred by the company upon the premises of the customer, including the connection to its street system.” It was contended by the defendants that this provision of the contract was in the nature of a penalty and was not enforceable as a contract to pay fixed damages. If it was void, it could not be [490] the basis of a recovery. In Mayor &c. of Brunswick v. Ætna Indemnity Co., 4 Ga. App. 722, 726 (62 S. E. 475), it was said by Powell, J.: “The rule is well recognized that a stipulation for the payment of a definite, unvarying sum, on the breach of any of several promises of varying degrees of importance, especially where the damages for the breach of some of them would be easily ascertainable, is to be construed as a penalty.” This pronouncement is but an application of the rule almost similarly expressed in Swift v. Crow, 17 Ga. 609. The rule was also applied in Floding v. Floding, 137 Ga. 531 (75 S. E. 729), where it was held: “Where a contract contains several stipulations, and the sum named in the contract as ‘liquidated damages’ for a breach of the agreement can apply to the breach of any stipulation of the contract, and it is apparent that the damages which could result from the breach of some of the stipulations would be so small in comparison with the sum named as liquidated damages as to make the latter excessive and unjust, the amount of damages stipulated will be held to be in the náture of a penalty, and not ‘liquidated damages.’” Applying the rule to the .present case, the provision of the contract quoted above, relied on as a basis for stipulated damages, when considered in connection with the various obligations imposed upon the customer by the terms of the contract, for the breach of any one of which it was stipulated that the plaintiff should have the right to sue for stipulated damages, it is manifest that the provision of the contract was an agreement for a penalty, and unenforceable. As the suit was for stipulated damages based on the validity of that clause of the contract, it follows that the verdict for the plaintiff was unauthorized. Judgment reversed. All the Justices concur.