Stark v. Shemada

California Supreme Court Jan 27, 1922 No. L. A. No. 6915. In Bank.Published

Before: Sloane, Wilbur

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Holding. A contractual provision for liquidated damages for the breach of a contract to sell ordinary personal property is unenforceable when the actual damages are readily ascertainable under statutory rules, regardless of the parties' stipulation that damages are difficult to fix.

Issues

Whether a stipulated damages clause for the breach of a contract to sell second-hand furniture is enforceable as liquidated damages.
Whether the trial court's finding that damages were impracticable to fix is a conclusion of law subject to review when based on insufficient underlying facts.

Disposition. reversed

Quotations verified verbatim against the opinion

“Whether this stipulation is for a penalty or as liquidated damages, we are satisfied it will not support the judgment appealed from.”

“The essential facts are that this- second-hand furniture as shown by the pleadings and findings was an ordinary commodity of personal property to be bought and sold on the open market.”

“Even where the parties to the contract for liquidated damages have by written stipulation agreed that it would be impracticable and extremely difficult to fix the actual damages, if the facts do not support such stipulation it cannot be enforced.”

Synopsis

APPEAL from a judgment of the Superior Court of Los Angeles County. Leslie R Hewitt, Judge. Reversed.

The facts are stated in the opinion of the court.

Opinion — Sloane

SLOANE, J.

Defendant appeals from a judgment awarding plaintiff as liquidated damages the sum of five hundred dollars for breach of a contract for the sale of certain second-hand household furniture.

By the terms of the agreement defendant sold to the plaintiff the furniture and furnishings of the premises known as the Federal Hotel in the city of Los Angeles for the agreed price of one thousand seven hundred dollars. It was stipulated by the parties that should the plaintiff fail to take the goods or pay the purchase price on the 24th of January, 1919, he was to forfeit the .sum of fifty dollars cash on the purchase price, and the sum of $450 additional, which he had deposited in bank on account of said transaction; and should the defendant refuse to deliver to plaintiff the possession of the goods on said 24th of January, 1919, defendant should pay to plaintiff the sum of five hundred dollars. The defendant defaulted in the delivery of the goods on tender of performance by the plaintiff at the date stipulated.

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The stipulated damages, therefore, on the part of the defendant are all we are concerned with on this appeal.

The precise terms of the contract in this particular are as follows: “It is also agreed that in case the said Shemada [the defendant] fails to deliver said furniture to said B. Stark [the plaintiff] on January 24th, 1919, he is to pay

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B. Stark the sum of $500.00 as a forfeit for his failure to deliver said furniture.”

Whether this stipulation is for a penalty or as liquidated damages, we are satisfied it will not support the judgment appealed from.

It is pleaded as liquidated damages in the amended complaint.

In an attempt to avoid the application of sections 1670 and 1671 of the Civil Code, wherein it is declared that; “Every contract by which the amount of damage to be paid or other compensation to be made, for the breach of an obligation, is determined in anticipation thereof” shall be void except “when, from the nature of the ease it would be impracticable or extremely difficult to fix the actual damage,” the amended complaint contains the following allegations :

Stark v. Shemada

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Synopsis

Opinion — Sloane

SLOANE, J.

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Concurrence — Wilbur

WILBUR, J.,

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