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owner, he may, of course, waive them if he elect so to do. 22

§ 68. Right of Owner to Complete.-There is no doubt that the ordinary provision that, upon the failure of the builder to do the work, the owner may complete the contract and employ others to that end is good.23 The courts have been liberal in their construction of such provisions.24

Under the ordinary contract provision that, on the default of the contractor, the owner may provide the necessary labor or materials for the completion of the work and employ others to finish it and to provide the materials, the owner may complete the building himself and need not employ others to do so.2

Under a contract provision, however, which merely permits the owner to supply the contractor with the men and material necessary to complete the work, upon the failure of the contractor, after notice by the owner, to make adequate provision to this end, the owner is not authorized to take charge of the work, and if he does take charge of

22 Danforth V. Tennessee, etc., Co. supra; Bartlett v. Stanchfield, 148 Mass. 394, opinion by Holmes, J.

23 Mahoney v. Oxford Realty Co., 133 A. D. (N. Y.) 656; United States v. McIntyre, III Federal 590; White v. Abbott, 188 Mass. 99; Ramsey v. Perth Amboy Ship Building etc., Co., 72 N. J. Equity 165; National

Contracting Co. V. Hudson River Water Power Co., 118 App. Div. (N. Y.) 665; Kann v. Bennett, 223 Pennsylvania 36; Custard v. McNary (West Virginia), 102 S. E. 216; County v. Ogren, 177 N. W. 591.

24 Duplan Silk Co. v. Spencer, 115 Federal 689.

25 George A. Fuller Co. v. Doyle, 87 Fed. 687.

the work, he thereby violates the contract and a notice given by him thereafter, under the contract, is of no effect. 28

Where the contractor leaves the work unfinished and fails to complete and the owner, under his contract right to do so under such circumstances, comes in and completes, it has been argued, in behalf of the contractor, that the presumption is that the balance of the contract price remaining unpaid at the time of the abandonment of the work by the contractor will be sufficient to defray the expense of completing the work. This contention is manifestly untenable and the law will not raise or recognize any such presumption under these circumstances.27

§ 69. Suspension of Work by Mutual Consent. -It often happens that work is suspended by the mutual consent of the contractor and of the owner. In such a case, before the contractor can properly proceed to recover the profits of the contract, he must take some steps to continue the work. An action brought by him before he has made any attempt to continue the work, and when there has been no refusal on the part of the owner to allow him to continue the work and complete the contract, is premature.28

§ 70. Liquidated Damages.-Upon the question of liquidated damages it is very difficult, if 26 Gray v. Bekins (Cal.), Realty Co., 163 N. Y. A. D. 199 Pac. 767.

27 Brainard v. The County of Kings, 155 N. Y. 538; TriBorough, etc., Co. v. Wechsler

901.

28 Dreyer V. McCormack Real Estate Co., 164 App. Div. (N. Y.) 41.

not impossible, to state any definite, enforcible and yet comprehensive rule. The provision that, in the event of delay in the completion of the contract, a certain sum shall be paid to the owner, as damages for each day or similar period that the work shall remain unfinished, is usually and in itself unobjectionable.29 In one of the cases last cited 30 the clause in the contract provided that

"the contractor shall pay to the owner Ten (10) Dollars for every day thereafter that the said work shall remain. unfinished as and for liquidated damages,"

and in another case 31 it was provided:

"It is mutually agreed and understood that in the event of said interior finish herein contracted for not being entirely finished on or before the 15th day of March, 1905, that the actual damages sustained by the owner will be difficult of computation; therefore it has been agreed and hereby is agreed by and between the parties hereto that in the event of the failure of said contractor to have all of said interior finish of main entrance and eighth floor completed on or before the 15th of March, 1905, there shall be due and payable and said contractor shall pay to the said owner the just and full sum of $50.00 per day for each and every day after March 15th, 1905, that the same or any part thereof, remains unfinished and incomplete, and that said sum is hereby agreed upon as liquidated damages."

These provisions were sustained as proper pro

29 Kelly V. Fejervary, 78 Northwestern 828; Mills V. Paul, 30 Southwestern 558; Chapman Decorative Co. v. Security, etc., Co., 145 Fed. 434, aff'd 149 Fed. 189.

30 Kelly v. Fejervary, 78 N. W. 828, supra.

31 Chapman Decorative Co. v. Security, etc., Co., 145 Fed. 434, supra; and see Standard Documents, Appendix B, p. 255.

visions, under the circumstances of their respective cases, for liquidated damages, as distinguished from penalties. It must not be considered, however, that it was due to any magic in the language used that the court sustained them, for it is a wellrecognized rule that in construing provisions of this character the courts consider the intention of the parties, the subject-matter, and the nature of the agreement, and from these determine the meaning of the wording used. 32

The reason that the courts will exercise special care in dealing with this point is that, under the law, provisions for liquidated damages are recognized as valid, while a provision which constitutes a penalty, will not be enforced; where such a provision is found the courts will use their own judgment in awarding such damages as they deem reasonable.

The question which must always be determined, therefore, is whether or not, in a given case, the words used, combined with the intention of the parties and with all the attendant circumstances, are to be construed as intending or providing for proper liquidated damages, or are to be construed, on the other hand, as a penalty, and therefore as unenforcible.

The wording, however, is not entirely negligible by any means, for where it is provided that the amount specified is to be considered as liquidated damages the burden is upon the builder to show that, in reality, the provision constitutes 32 Ward v. Hudson, etc., Co., 125 N. Y. 230.

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a penalty. If the sum named is alluded to as a penalty the burden is upon the owner to show, by a preponderance of proof, that it was intended to be and may properly be considered as liquidated damages. It has been held that where the sum mentioned is disproportionate to the damage which will presumably or probably ensue, or to a degree of loss which is ascertainable, it will be construed as a penalty.35 Similarly, an agreement to build in a specified time, and in a particular manner, and in the event of failure to meet these conditions, to pay a gross sum specified in the contract has been construed to be a penalty.36

In order that the provisions of the contract may be construed as calling for liquidated damages, as distinguished from a penalty, the damages provided for must be such as to be manifestly not unreasonable or unconscionable.87

The element most helpful in securing the interpretation of the contract provisions as provisions for liquidated damages is the element of uncertainty in the ascertainment of the loss which will

33 Mills v. Paul, 30 S. W. 558.

34 Small v. Burke, 92 A. D. (N. Y.) 338.

85 Coen V. Birchard, 124 Iowa 394-holding a proviso for the payment of $5 a day a penalty, where the rental value of the building was shown to be but $25 per month; and see Ward v. Hudson River, etc.,

Co., 125 N. Y. 230-indicating, however, that provision would have been held to be for damages, if house had been for private use as a residence.

36 Tayloe v. Sandiford, 7 Wheat (U. S.) 13, opinion by Marshall, C. J.

37 Banta v. Stamford Motor Co., 89 Conn. 51; Mills v. Paul (Tex.), 30 S. W. 558.

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