Wait v. Stanton

Hart, J., (after stating the facts). The contractors filed a list of the alterations and additions which they made to the building, pursuant to the directions of the architect and their statement of the cost thereof. The chancellor allowed some of these items and disallowed others. We do not deem it necessary to set out in detail the proof taken in regard thereto. It is sufficient to say that the evidence was conflicting, and, after a careful consideration of it, we are of the opinion that the finding of the chancellor is not against the clear preponderance of the evidence, and under the settled rules of this court his finding of fact in regard thereto will be sustained. 2. The contract provides that the building should be completed on or before the 1st day of November, 1909, and that the contractors shall pay the owner $25 per day for each and every day that the building remains unfinished after that date. The evidence shows that the building was not completed until January 1,1910, and the chancellor disallowed the claim of plaintiff for damages in the sum of $25 per day for the sixty days intervening between the 1st day of November, 1909, and the 1st day of January, 1910. The chancellor in rendering his decision seems to have proceeded upon the theory that the ordering of the extra work by the plaintiff and the failure of the architect to furnish the specifications were acts on the part of the owner which operated to change the time limit, but in reaching this conclusion he did not take into consideration all of the provisions of the contract. The contract provided that changes and alterations might be made to the plans of the building by the architect. Article 6 provides that it shall be completed on or before the 1st day of November, 1909. Article 7 provides that, if the contractors be delayed in the prosecution or completion of the work by the act, neglect or default of the owner or architect the time herein fixed for the completion of the work shall be extended for a period equal to the time lost by reason of any such cause. But it also provides that no such allowance shall be made unless a claim therefor is presented in writing to the architect within forty-eight hours after the occurrence of such delay. Thus it will be seen that the contract expressly provides for a notice in writing, and the owner can not be deprived of the benefit of that stipulation in his agreement. The obligation of the contractor to make claim for an extension of time in the manner prescribed by the contract was a condition precedent to his right thereto. Ward v. Haren, (Mo. App.) 119 S. W. 446; Curry v. Olmstead, 26 R. I. 462; J. G. Wagner Co. v. Cawker, 112 Wis. 532; Feeney v. Bardsley, 66 N. J. Law, 239, 49 Atl. 443; Kelly v. Fejarvery (Ia.) 78 N. W. 828; Davis v. LaCrosse Hospital Assn., 121 Wis. 579; 1 Am. & Eng. Ann. Cases, 950. In 30 American & English Encyclopedia, (2 ed.), § 1260, the doctrine is stated as follows: "Where the contract requires that the contractor shall give notice of delay' arising from stipulated causes, the contractor must give .such notice to entitle him to be excused for the delay.” The evidence shows that the building was not completed until sixty days after the time limit specified in article 6 of the contract. Therefore, the views which we have already expressed makes it necessary for us to determine whether the clause which provided that the contractor should pay the owner $25 per day for each day the building remained unfinished after the date named for its completion should be construed as a penalty or liquidated damages. In discussing this subject in the case of Nilson v. Jonesboro, 57 Ark. 168, the court said: "The authorities, however, show that where the intention to liquidate the damages is not obvious, the stipulated sum will be given the effect of a penalty if it exceeds the measure of á just compensation and the actual damage sustained is capable of proof. (Citing authorities). But where the contract is of such a nature that the damage caused by its breach would be uncertain and difficult of proof, the sum named by the parties is generally held to be liquidated damages if the form and language of the instrument are not unfavorable to that construction and the magnitude of the sum does not forbid it.” In the case of Stillwell v. Paepcke-Leicht Lbr. Co., 73 Ark. 432, the court said: “Usually, the surest test of liquidated damages is where the actual damages caused by the breach would be uncertain and difficult of proof, and the sum stipulated appears to be reasonable compensation for the injury occasioned by the failure to perform the contract. The purpose for permitting such stipulation for damages as compensation is to render definite and certain that which appears to be uncertain and not easily susceptible of proof. But the damages so stipulated for must be such as to amount to compensation only, and not so excessive or unreasonable as to amount purely to a penalty without being confined to the elements of fair compensation.” In Streeper v. Williams, 48 Pa. St. 450, Mr. Justice Agnew, speaking for the court, said: "Upon the whole, the general observation we can make is that in each case we must look at the language of the contract, intention of the parties as gathered from all its provisions, the subject of the contract and its surroundings, the ease and difficulty of measuring the breach in damages, and the sum stipulated, and from the whole gather the view which good conscience and equity ought to take of the case.” Guided by the principles above announced, it will be seen that each case must be decided according to its own peculiar facts. The building in question was a flat or apartment house , consisting of twelve apartments, and was erected for the sole purpose of being rented. The cost of its erection as provided by the terms of the contract was $21,073. The damages sustained by the owner were easy of ascertainment; its rental value could be easily estimated. In view of its intended use and the cost of erecting it and the ease with which the actual damages suffered by the owner could be ascertained, and of the other surrounding facts and circumstances in the case, we are of the opinion that the sum agreed to be paid was out of proportion to the probable or presumable damage, and should therefore be construed as a penalty, and not as liquidated damages. It will be noted that the sum agreed to be paid was $25 for each day; this would amount to $750 per month; to $1,500 for the sixty days for which it is claimed; or to an annual amount of $9,000. It is evident that this sum would be greatly out of proportion as compared to the rent which would be presumably received orto a fair interest on the amount invested. For the error indicated, the decree will be reversed; and inasmuch as the chancellor tried the case upon an erroneous theory, in accordance with the ruling in the case of Long v. Chas. T. Abeles & Co., 77 Ark. 150, the case will be remanded with directions to the chancellor to grant leave to the parties to take proof upon the fair rental value of the house for the sixty days for which the plaintiff claims damages for delay in the completion of the building. It is so ordered.