Summary
In Nolan v. Kirchner, 98 N.J. Eq. 452, Vice-Chancellor Leaming said: "The general view is that the primary object of contracts of this nature is deemed to be performance, not non-performance, and it is not to be presumed that stipulated damages for non-performance is intended to defeat that primary object in the absence of terms of the contract or its relation to the subject-matter which adequately disclose the contrary to have been the intent of the parties."
Summary of this case from Bridge Land Improvement Co. v. MyersOpinion
Submitted November 23d 1925.
Determined December 1st, 1925.
Where a contract for sale of land provides for liquidated damages, there must be something apart from the fact that there is such provision in the contract to show that the payment of the damages named is to be equivalent to performance, and that the contract is therefore an alternative one.
By his bill complainant, as vendee, seeks to compel defendant, as vendor, to specifically perform a contract for the sale of real estate.
A motion which has been made by defendant to strike out the bill raises the single question whether a certain clause in the contract, a copy of which contract is annexed to the bill, and which clause stipulates a specific amount as liquidated damages in case of breach, is operative to deny to complainant the remedy now sought.
The clause relied upon in support of the motion is as follows:
"It is further understood and agreed that each of the parties makes this agreement only upon the express agreement and understanding that in the event of default of the other party in performing the terms of this agreement the defaulting party shall be bound to pay unto the other party the sum of $2,000 as liquidated damages and not as a penalty to cover all damages for said breach."
On bill for specific performance. On hearing on motion to strike out bill of complaint.
Mr. William Harris, for the defendant.
Messrs. Carr Carroll, for the complainant.
Since Crane v. Peer, 43 N.J. Eq. 553, it has been uniformly held in this state that the mere presence of a stipulation for liquidated damages for breach of a contract of this nature does not make the contract an alternative one. As expressed by Vice-Chancellor Reed in Avon-by-the-Sea Land Improvement Co. v. Thompson, 60 N.J. Eq. 207, 211, "there must be something apart from the fact that there is a provision for liquidated damages to show that its payment is to be the equivalent for performance." The general view is that the primary object of contracts of this nature is deemed to be performance, not non-performance, and it is not to be presumed that stipulated damages for non-performance is intended to defeat that primary object in the absence of terms of the contract or its relation to the subject-matter which adequately disclose the contrary to have been the intent of the parties. The cases in this state supporting that view are the following: Crane v. Peer, supra; Brown v. Norcross, 59 N. J. Eq. 427; Avon-by-the-Sea Land Improvement Co. v. Thompson, supra; Myers v. Steel Machine Co., 67 N.J. Eq. 300; Resnick v. Campbell, 68 N.J. Eq. 348; American Ice Co. v. Lynch, 74 N.J. Eq. 298; Porter v. Williams, 93 N.J. Eq. 88; affirmed, Ibid. 505; Rittenhouse v. Swiecicki, 94 N.J. Eq. 36; Coltinuk v. Hockstein, 95 N.J. Eq. 513; Randolph v. General Investment Co., 96 N.J. Eq. 227. An extended review of authorities in other states will be found in 32 A.L.R. 584, et seq.
No circumstances are here disclosed in aid of the terms of the contract above quoted.
It is urged in behalf of the motion that the word "only," as there used, adequately discloses an intent of the parties to give to the damage clause a force the reverse of that ordinarily attributed to clauses of that nature. The word "only," as there used, may be given appropriate force in the defined purpose of the parties to fix a given amount as the measure of damages in the event of non-performance; consistently with the authorities above cited, the word, as there used, cannot be understood as disclosing an additional purpose of the parties to confer an exemption from performance at the option of the defaulting party.
In the motion which has been filed it is specified that the contract is not in the alternative. I have assumed that this was intended by counsel as a specification to the effect that the contract is in the alternative.