Brevard v. Wimberly

BLAND, P. J. The principal question presented for decision is, whether the $1,000 stipulated to be paid for a failure to perform the mail services, contracted to be performed by Wimberly, is a penalty or stipulated damages. The parties expressly stipulated that the sum of $1,000, for a failure or refusal on Wimberly's part to perform the mail service, should become immediately due as liquidated damages and not as a penalty. In Morse v. Rathburn, 42 Mo. l. c. 601, the authorities were examined, and the general rule derived from them was announced to be, “that when an agreement contains several distinct covenants, on which there may be divers breaches, some of an uncertain nature and others certain, with one entire sum to be paid on breach of performance, then the contract will be treated as one for a penalty and not for liquidated damages.” In Hamaker v. Schroers et al., 49 Mo. 406, it was held, that “when the parties have agreed that in case one of them shall do a stipulated act or omit to do it, the other party shall recover a certain sum as the just, appropriate and conventional amount of damages sustained by such act or omission, courts will not interfere to grant relief, but will decree the parties entitled to fix their own measure of damages, provided that the damages do not assume the character of gross extravagance or of wanton and unreasonable disproportion of the nature and extent of the injury; and whether a sum inserted in an instru [337] ment, to be paid in case of breach, is to be regarded as a penalty or liquidated damages, must be determined by the nature of the contract and its provisions.” The Morse and Hamaker cases are leading eases in this State and state the general rules as found in the text-hooks on the subject of damages and are in accord with the best-considered cases in other jurisdictions. That they correctly announce the law is beyond doubt. The difficulty that usually arises and that is present in this case, is not in ascertaining the correct rules of law in this class of cases, hut is to apply the rule to the facts as ascertained from the language of the contract, its subject-matter, the situation of the parties, and the nature of the act stipulated to be done, or omitted. Under the terms of the contract, Wimberly agreed to become liable for all fines and deductions imposed upon Brevard by the Postmaster General for failures and delinquencies in the performance of mail service under the contract. It is admitted that these fines and delinquencies might and probably would amount to only a few dollars. If for .incurring one of these fines, or being guilty of a mere delinquency in- the performance of' the mail service, Wimberly agreed to pay the $1,000 as stipulated damages, it is clear on the authority of the Hamaker case and of May v. Crawford, 150 Mo. 504, that the sum should he held as a penalty, notwithstanding the contract stipulated that it should be liquidated damages. But we do not think that the parties had in contemplation that the $1,000 should become immediately due, on the imposition of a small fine on Brevard by the Postmaster General for the non-observance of some departmental rule in the performance of the mail service by Wimberly; neither will the contract bear that interpretation. The same clause which stipulates that Wimberly shall pay these fines, provides a coercive mode of enforcing their col [338] lection from him by providing that the Auditor of the Treasury for the postoffice department may enforce the agreement (to pay the fines) by “deduction from any compensation due Wimberly for services under his contract,” but waiving this we find that Wimberly also agreed to comply with all postal laws and regulations and to be subjected to and comply with all the requirements of the contract which Brevard had made with the United States. The fourth clause of Brevard’s contract is as follows: “Fourth. To be accountable and answerable in damages to the United States, or any person aggrieved, for the faithful performance by the said contractor of all the duties and obligations herein assumed, or which are now or may hereafter be imposed upon him by law in this behalf; and, further to be so answerable and accountable in damages for the careful and faithful conduct of the person or persons who may be employed by said contractor and to whom the said contractor shall commit the care and transportation of the mails, and for the faithful performance of the duties which are or may be by law' imposed upon such person or persons in the care and transportation of said mails; and, further, that said contractor shall not commit the care and transportation of the mail to any person under sixteen years of age, nor to any person not of good moral character, or who has not taken the oath prescribed by law, or who can not read and write the English language.” This clause is as much a part of Wimberly’s contract and bond as if it had been bodily incorporated therein; under its terms he ágreed to answer to the United States or to any person for any damages that might accrue by reason of any miscarriage of any packages of any value whatever or for any injury suffered by his failure to faithfully transport the mail. If damages accrued to any one on account of Wimberly’s negligence in transporting the mail, for instance the loss of a [339] registered package or unregistered letter containing a small sum of money, if but for one dollar, he and his sureties would, under the terms of this clause of the contract, be liable for such loss on their bond. Brevard, by the sixth clause of his contract, agreed to account for and pay over any money belonging to the United States which might come into his hands. Wimberly as a subcontractor agreed to perform this stipulation and under such agreement would be liable on his bond should he fail to account to the United States for any sum of money that might come into his hands as a carrier of the mail, however insignificant the sum. It would not be difficult to get at the damages that might accrue to the United States or to any individual for a violation of the provisions of either the fourth o'r sixth clause of the contract and it would lead to an absurdity and work an intolerable injustice to hold that for the loss of one dollar by the negligent performance of his duty to transport the mails, Wimberly should forfeit to Brevard the sum of $1,000 as liquidated damages, and yet this is what might follow if it should be held that the $1,000 mentioned in the bond is liquidated damages and not penalty. As was said in May v. Crawford, supra, “if the whole of the sum specified to be for liquidated damages would work absurdity and oppression, or if the damages through a breach can be computed with certainty by definite rules, the court will construe it to be a penalty.” Such a computation can be made for all damages that might accrue for any breach of the fourth or sixth clause of the contract, and we construe the sum stipulated in the bond to be paid as liquidated damages for any such breach, to be a penalty. It was admitted by Wimberly, as a witness, that he did not in any respect comply with his contract to transport the mails," in short, that he committed a breach of the bond. In this state of his evidence appellant was entitled to nominal damages. Fulkerson v. Eads, 19 Mo. App. 620; Dulaney v. [340] St. Louis Sugar Refining Co., 42 Mo. App. 659; Weber v. Squier, 51 Mo. App. 601. It was, therefore, error to peremptorily instruct to find for appellant and tbe judgment is reversed and cause remanded.