487 P.2d 593
No. 71-159.Colorado Court of Appeals. Division I.
July 7, 1971. Not Selected for Official Publication.
1. Contracts 322(3)
Evidence, in suit by vending company against bar operator for alleged breach of vending machines installation contract, supported trial court’s conclusion that defendant breached the contract.
2. Damages 78(2), 79(1), 80(1)
Trial court, in suit by vending company against bar operator for alleged breach of vending machines installation contract, properly awarded liquidated damages provided for in contract to plaintiff, instead of declaring such provision a penalty clause, where wording of contract referred to liquidated damages, anticipated damages at time contract was entered into were uncertain, parties clearly intended such interpretation and there was reasonable relationship between liquidated damages stated and actual loss suffered.
3. Damages 62(4)
Vending company’s removal of equipment from bar when bar went out of business and its return of some of it to distributor did not amount to mitigation of damages sustained by company as result of bar operator’s breach of vending machines installation contract where no part of damages awarded company for such breach
were attributable to damages resulting from its purchase of capital equipment, and action involved damages for loss of profits which were residue of gross income after deducting costs such as maintenance and depreciation.
4. Damages 85
Where vending machines installation contract between vending company and bar operator provided that in the case of breach the party at fault would pay the other party liquidated damages for loss of profits for each month or portion of month of unexpired term of the agreement, company, upon breach by bar operator, was entitled to damages for entire term of the contract.
5. Bills and Notes 534
In light of time spent in court, including several continuances, attorney’s fee of $250 awarded to vending company, in action against bar operator to recover on note executed by defendant in exchange for loan from plaintiff, was not excessive.
6. Judgment 163
Evidence, in suit by vending company against bar operator for alleged breach of vending contract, and to recover on note executed by defendant in exchange for loan from plaintiff, did not support defendant’s contention that he was not given opportunity to establish that his absence from trial, as well as that of his attorney, was excusable.
Suit by vending company against bar operator for alleged breach of vending contract, and to recover on note executed by defendant in exchange for loan from
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plaintiff. The defendant asserted a counterclaim for loss of profits due to plaintiff’s alleged breach of the contract. The District Court, Arapahoe County, Marvin W. Foote, J., entered judgment for plaintiff, and defendant brought error. The Court of Appeals, Enoch, J., held that trial court properly awarded liquidated damages provided for in the contract to plaintiff, instead of declaring such provision a penalty clause, where wording of contract referred to liquidated damages, anticipated damages at time contract was entered into were uncertain, parties clearly intended such interpretation and there was reasonable relationship between liquidated damages stated and actual loss suffered.
Affirmed.
Douglas F. Primavera, Denver, for plaintiff in error.
Raymond C. Johnson, Littleton, for defendant in error.
ENOCH, Judge.
This case was transferred from the Supreme Court pursuant to statute.
This action involves a suit by Arapahoe Vending, Inc., on a contract and note executed by Robert E. Carnes, individually and doing business under the firm name of The Clan and The Clan, Inc. Trial was held to the court which entered judgment
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for Arapahoe after hearing only the plaintiff’s evidence because of the failure of the defendant to appear. The defendant appeals this judgment.
The record shows that on December 12, 1966, Carnes entered into a three year agreement with Arapahoe to install a coin operated phonograph and cigarette machines in the bar which he operated. The contract provided for distribution of the profits from the machines and for liquidated damages of $100 per month for lost profits in the event of breach of the contract by either party. The contract further provided that Arapahoe was to pay Carnes $500 for rental of the space for the machines. Arapahoe paid Carnes the $500 and installed its machines on December 16, 1966.
On December 15, 1966, Arapahoe loaned Carnes $500. Carnes executed a note which contained a provision for 5% interest; repayment in weekly installments of $25 or more; 8% interest in the event of default; and reasonable cost of collection including $250 for attorney’s fees.
Carnes voluntarily went out of business on December 31, 1966, after having been credited with one payment in the amount of $44.20 on the note. After receiving no further payment for approximately two years, Arapahoe sued on the note. In his answer Carnes admitted non-payment, but alleged that his non-payment was caused by Arapahoe’s alleged breach of the vending contract. Carnes asserted a counter-claim against Arapahoe, claiming loss of profits due to Arapahoe’s alleged breach of the contract and demanded that the liquidated damages clause be enforced in his favor.
Arapahoe replied, alleging that the credit of $44.20 in favor of Carnes was attributable to his share of the profits collected from the machines from December 16 to December 31. Arapahoe denied breaching the contract and claimed that performance was made impossible by Carnes’s termination of business. Thereafter, Arapahoe amended its complaint to include Arapahoe’s claim of breach of the vending contract by Carnes and demanded that the liquidated damages clause be enforced in its favor.
Trial was set for September 8, 1969 at 9:30 a. m. Attorney for Carnes appeared on the morning of the trial and requested a continuance on the grounds that Carnes was ill. The court granted a continuance and reset the trial date for October 14, 1969 at 9:30 a. m. Arapahoe again appeared at that time and date with its witnesses. However, neither Carnes nor his attorney appeared. Some time during the morning, defendant’s .attorney apparently called the court clerk and indicated he was having car trouble. Consequently, the court postponed the matter until 1:30 p. m. that afternoon. Prior to that hour, the judge received a note from defendant’s attorney which said that he had arrived at court at 12:15 p. m. and was advised that no one would be back until 2:00 p. m. Upon reconvening at 1:30, the case was further postponed until 2:00 p. m., when once again neither Carnes nor his attorney appeared. After hearing Arapahoe’s testimony, the court entered judgment in favor of Arapahoe in the amount of $4,132.72, representing the balance due on the note, interest to date of judgment, attorney’s fees of $250 and liquidated damages of $3,-600. On October 27, 1969, Carnes filed a motion for new trial without benefit of a supporting brief. Though the motion was subject to dismissal for failure to file a brief, the court proceeded to rule on the motion because of matters alleged which did not go to the merits of the case. The motion for a new trial was denied.
I
[1,2] On appeal Carnes claims the trial court erred in not finding that the liquidated damages clause was in fact a penalty clause and that the court should therefore have required actual proof of damages. This claim is without merit. By his own pleadings, Carnes admitted that the contract provision was intended to be liquidatedPage 596
damages. He further agreed to the pre-trial statement that one of the contested issues was whether Arapahoe or Carnes breached the contract and was liable for the liquidated damages. There is ample evidence in the record to support the trial court’s conclusion that Carnes breached the contract. The court was also correct in awarding liquidated damages instead of declaring the contract provision to be in the nature of a penalty. The evidence shows that the wording of the contract referred to liquidated damages. The anticipated damages at the time the contract was entered into were uncertain. The parties clearly intended such an interpretation and there is a reasonable relationship between the liquidated damages stated and the actual loss suffered. See, Perino v. Jarvis, 135 Colo. 393, 312 P.2d 108; Bilz v. Powell, 50 Colo. 482, 117 P. 344.
II
[3] Carnes claims the trial court should have found that there had been mitigation of damages by Arapahoe and that such amount should be applied in his favor. Carnes bases this assertion on the fact that Arapahoe removed the equipment in February, 1970 and was able to return some of it to the distributor.Mitigation of damages is a defense which must be affirmatively pled. R.C.P.Colo. 8(c). Carnes did not plead this defense, raise it at pre-trial, nor was it made an issue at the trial. In any event, mitigation of damages is not involved in this case. What Arapahoe did with the equipment after breach by Carnes was irrelevant to this action. No part of the damages awarded was attributable to damages resulting from Arapahoe’s purchase of capital equipment. This action involves damages for loss of profits which is the residue of gross income after deducting costs such as maintenance and depreciation.
III
[4] It is claimed that the trial court erred by accelerating the damages provided for under the contract in awarding damages for the entire term of the contract. Acceleration of damages is inapplicable. The contract plainly states, “that in case of breach of the Agreement, the party at fault, shall pay to the other party as liquidated damages for loss of profit resulting from such breach the sum of One Hundred Dollars ($100) for each month or portion of a month of the unexpired term of this Agreement.” (Emphasis added.) The unexpired term of the contract as of Carnes’ breach was 36 months. Thus, the trial court did not err in awarding damages for the entire term of the contract.IV
[5] Carnes claims that a fee of $250 for collection of the note was excessive. Under the facts of this case and the time in court, including the several continuances, we find that the attorney’s fee was reasonable.V
[6] Lastly, Carnes claims he was not given an opportunity by the trial court to establish that his absence from the trial, as well as that of his attorney, was excusable. We find this argument wholly untenable and unsupported by the record.We note that there is apparently a clerical error in the amount of the judgment. The judgment entered in the record is for the sum of $4,132.72 and its (plaintiff’s) costs. Considering the award of $456.84 (principal due on the note), interest on the note, attorney’s fee of $250 and the $3,600 for liquidated damages, the total should be $4,382.72. The amount of the attorney’s fee was not added into the total judgment.
The judgment is hereby amended to read $4,382.72 and costs, and as amended is hereby affirmed.
COYTE and DUFFORD, JJ., concur.
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