Summary
approving trial court's formulation
Summary of this case from Brew City Redevelopment Group, LLC v. Ferchill GroupOpinion
No. 29.
Argued May 3, 1971. —
Decided June 2, 1971.
APPEAL from an order of the county court of Milwaukee county: DONALD W. STEINMETZ, Judge. Affirmed.
For the appellant there was a brief and oral argument by Sidney Spector of Milwaukee.
For the respondent there was a brief by Grootemaat, Cook Franke, attorneys, and William L. Boyd of counsel, all of Milwaukee, and oral argument by Mr. Boyd.
This is an action for damages for breach of an automobile-purchase contract.
In its complaint, plaintiff alleges that on or about July 7, 1969, the defendant executed a contract to purchase from plaintiff a 1968 Shelby GT 500 automobile and that the defendant made a deposit of $100. The complaint further alleges that on July 16, 1969, plaintiff offered delivery of the automobile to defendant but that defendant refused to accept it and further refused to perform any of the other conditions of the purchase contract, including the following provisions:
"1. In the event the purchaser fails to take delivery of the vehicle as herein provided, it is agreed that in lieu of proving damages or other remedies under Chapt. 402 Wis. Stats., the dealer's liquidated damages (the same not to be a penalty) shall be 20% of the cash delivery price, and the dealer shall have the right to apply any down payment against such damages.
". . .
"3. In addition to the provisions of 1 above and as a deterrent to purchaser failing to take delivery of the vehicle as herein provided, the purchaser agrees that if he does not accept delivery, he shall at dealer's option forfeit to dealer, as a penalty, 5% of the cash delivery price of the vehicle as specified by Section 218.01 (5m), Wisconsin statutes."
Defendant demurred to the complaint on the ground that the complaint "does not state facts sufficient to constitute a cause of action."
The trial court, after a hearing, overruled defendant's demurrer.
Defendant appeals.
The sole issue presented on this appeal is whether the trial court was correct in overruling defendant's demurrer.
This court has repeatedly held (as the trial court noted):
"When a complaint is challenged by demurrer as not stating a cause of action, we adhere to the rule that it is to be liberally construed with a view to substantial justice to the parties, and it is entitled to all reasonable inferences to support the complaint which can be drawn from the facts pleaded. Secs. 263.07 and 263.27, Stats.; Wulf v. Rebbun (1964), 25 Wis.2d 499, 502, 131 N.W.2d 303."
Kelly v. Mohrhusen (1971), 50 Wis.2d 337, 342, 184 N.W.2d 149.
The trial court then stated:
"The complaint pleads a contract (duty), a breach of that contract and damages flowing reasonably from that breach and that totally states a cause of action."
Defendant now contends that the demurrer was proper for two reasons:
1. The liquidated damages are unreasonable and consequently void as a penalty pursuant to sec. 402.718 (1), Stats.;
2. The complaint does not state essential facts from which the damages, if legal, can be computed.
Neither of these assertions has any merit.
1. Legality of the liquidated damages. Admittedly liquidated damages provided in a contract must be reasonable to be enforceable. Sec. 402.718 (1), Stats., provides:
"(1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty."
See also: Restatement, 2 Contracts, p. 1087, sec. 579.
However, the statute contemplates that a liquidated damages clause may be enforceable if "reasonable." Such clauses are not void, as a matter of law. Therefore, it is necessary for some evidence to be presented on this matter. Even assuming arguendo that this particular clause is unenforceable, plaintiff is still entitled to recover whatever damages he can prove. The mere demand for an amount in damages which is excessive does not render the complaint subject to demurrer:
". . . A prayer for relief is no substantive part of a complaint and the fact that the plaintiff `asks for more relief than that which his pleaded facts entitle him to have is not reached by demurrer.'"
D'Angelo v. Cornell Paperboard Products Co. (1963), 19 Wis.2d 390, 398, 120 N.W.2d 70.
The unreasonableness of the liquidated damages, then, is properly a matter of defense. It cannot be reached here by demurrer but is a question to be determined after trial.
2. Ambiguity of the contract. Defendant also urges that the contract is ambiguous with respect to the manner in which the liquidated .damages are to be computed. He notes that the clause refers to liquidated damages equal to "20% of the cash delivery price." He then points to page one of the contract noting that the space designated "cash delivered price of vehicle" is blank, and argues that damages cannot then be computed under the liquidated damages clause.
This argument is entirely without merit. First, even a cursory reading of the contract indicates that the very next line reads: "1968 Shelby GT 500 . . . $4,538.77." The next several lines contain additions for extras and the "total cash price" is computed as $4,992.23. Hence the "cash delivered price" is clearly discernible as $4,538.77, without extras, or $4,992.23 with extras.
Furthermore, as noted above with respect to the liquidated damages clause itself, this objection is not properly raised by demurrer. This matter is also properly one of defense, going to the proper amount of damages which plaintiff is entitled to.
Id.
Finally, by demurring to the complaint, even under defendant's theory, he has admitted the damages.
As the trial court well stated:
"The complaint pleads a contract (duty), a breach of that contract and damages flowing reasonably from that breach and that totally states a cause of action."
By the Court. — Order affirmed.