Lee Oldsmobile, Inc. v. Kaiden

Powers, J., delivered the opinion of the Court. Lee Oldsmobile, Inc., as a part of its business operation at Glen Burnie, deals in Rolls-Royce automobiles, under the trade name of Gladding Rolls-Royce, Inc. Having learned through a dealer in Brooklyn, New York, that Gladding had on order as a part of its allotted quota of 10 or 11 automobiles for 1973 a Rolls-Royce of the style and color which she wanted, Mrs. Ada Kaiden of Hewlett, New York, sent to Gladding in August 1973, through her dealer, a $5,000.00 deposit on the purchase of the automobile. Lee Oldsmobile confirmed the request by transmitting a regular order form, which Mrs. Kaiden signed and returned. The price was $29,500.00.

Some of the correspondence, as well as a notation on Mrs. Kaiden’s check, indicated that delivery was expected in November. The order form, however, specified no delivery date. Further, it contained a disclaimer of liability for failure to deliver or delay in delivery for a cause beyond the dealer’s control, or without fault or negligence of the dealer. On 21 November 1973 Mrs. Kaiden notified Lee Oldsmobile by telephone that she had purchased another Rolls-Royce elsewhere.

She told the salesman to cancel her order. On 29 November, Lee Oldsmobile notified Mrs. Kaiden that the car was ready for delivery. She declined to accept delivery, and demanded the return of her deposit. The dealer refused.

On 17 January 1974 Lee Oldsmobile sold the Rolls-Royce to a purchaser in Atlanta, Georgia, for $26,495.00. A few months later Mrs. Kaiden, joined by her husband, filed a suit at law against Lee Oldsmobile, Inc. in the Circuit Court for Anne Arundel County, claiming damages of $5,000.00, plus interest. Trial was held before Judge E. Mackall Childs, without a jury, on 24 April 1975. The ultimate result of the trial was that after receiving memorandum arguments from both ⁵⁵⁸ sides the court, on 24 June 1975, entered judgment nisi and on 26 June 1975 entered judgment absolute in favor of the plaintiffs against Lee Oldsmobile, Inc. for $2,924.93.

Lee Oldsmobile filed a timely appeal from that judgment, and an appeal by the Kaidens followed. In this Court the appellant raised and argued one question: “Is a defendant entitled to present evidence in its behalf after moving for dismissal at the end of the plaintiffs case?” Cross-appellants raised two questions in their brief, but at oral argument they yielded on the first, 1 and argued the second. It was: “Did the trial court err in deducting from Cross Appellants’ deposit certain incidental damages associated with the automobile’s resale when the resale was not made in a commercially reasonable manner and not in good faith?” Lee Oldsmobile as cross-appellee, in a separate brief, responded to the brief of the cross-appellants. Evidence presented at the trial included the testimony of Ada Kaiden and William Kaiden, excerpts from depositions of Anithalee Alex, Jr., salesman, and Ernest Swanson, president, of Lee Oldsmobile, and several exhibits, all offered by the plaintiffs, and one exhibit, offered by the defendant and received in evidence during the cross examination of Mrs. Kaiden.

Counsel for the Kaidens announced that the plaintiffs had concluded their case. Counsel for defendant said, “I move to dismiss under Rule 535.” From that point the case took a somewhat unconventional turn, Jbut one which, upon careful examination of the record, we consider eminently practical, and certainly not impermissible. Counsel for Lee Oldsmobile ⁵⁵⁹ argued, briefly, that there was uncontradicted evidence of a written retail order for an automobile, with no specific delivery date, and that plaintiff cancelled early, and bought another car. Counsel then said: “I needn’t belabor the point, I don’t believe.

I would like, unless the Court requests me to do otherwise, to move on to the issue of damages. Does the Court wish me ... to say anything else on the issue of liability?” It is entirely clear to us that this argument was directed to the question of who breached the contract — whether it was Lee Oldsmobile, by failure to deliver as allegedly promised, or Mrs. Kaiden, either by an anticipatory breach, or by refusal to accept delivery when delivery was offered. In the background of this argument, and basic to the entire case, was the established fact that Lee Oldsmobile had received $5,000.00 from Mrs. Kaiden, for which she received nothing in return. If Lee Oldsmobile breached the contract, she was entitled to her money back.

If she breached the contract, she was liable for whatever was found to be the proper amount of damages. Those damages could constitute either a partial or a complete set-off against the amount which Mrs. Kaiden, in the absence of damages, would be entitled to recover. The argument of Lee Oldsmobile then proceeded to the issue of damages. Counsel said: “I think that in the plaintiffs’ case there is evidence to substantiate what appear as answer five to the plaintiffs’ interrogatories listing the actual damages sustained by the defendant as a result of the plaintiffs’ breach.” He then proceeded to itemize the figures.

As listed later in the Memorandum Opinion filed by Judge Childs, they amounted to $5,080.07. The total was made up as follows: ⁵⁶⁰ Difference between contract price of $29,500.00 and sale price of $26,495.00 $ 3,005.00 Commission to salesman on second sale 601.00 Commission to broker on second sale 1,000.00 Floor plan interest on cost of car, 52 days 334.72 Transportation expenses 2 139.35 Total $ 5,080.07 Counsel further argued, as an alternative claim of damages, that under the liquidated damage clause of the written contract, Lee Oldsmobile was entitled, upon breach by the purchaser, to retain as liquidated damages the entire cash deposit. Counsel for the Kaidens argued the applicability of the liquidated damage clause, and the proper measure of damages under the law when the seller fails to give notice of intention to resell at private sale. The trial judge interposed.

He said: “It’s clear to me that there was a breach by the plaintiffs. Now, the only thing that I’m concerned about is whether or not the liquidated damages clause contained in the contract can be applied by the Court. I would like some briefs on that matter, along with arithmetic as to what has been paid. * * * I rule that there was a breach of the contract by the plaintiffs and the only question to be decided or remaining to be decided is to what damages the plaintiff or the defendant is entitled under this breach pursuant to the matters in the Uniform Commercial Code and also the Laws of Maryland. Now, how much time do you want to submit briefs to me on that?” Lee Oldsmobile’s attorney called to the court’s attention that damages could be as liquidated in an agreement, or the actual harm caused by the breach.

He concluded: “I believe that the Court has before it at this very ⁵⁶¹ moment enough evidence as to the actual harm caused by the breach to make a ruling without the necessity for briefs, but if it feels otherwise, I’ll be glad to prepare one.” The court preferred written briefs. The time for filing them was agreed upon. 3 We hold that under the circumstances, as we have set them out in considerable detail, both sides submitted the whole case to the trial judge for a decision on the merits. It is true, as is argued in Lee Oldsmobile’s brief, that its counsel, during the course of his argument on the liquidated damage clause, commented that he had intended, and would if necessary, put on a witness to prove that the amount fixed was a reasonable forecast of the damages to be suffered. But our ruling on the applicability of the liquidated damage clause would not be affected by such evidence.

As the trial closed with the agreement on the time for filing briefs, there was no suggestion by either party of a desire to offer further evidence. The suggestion was to the contrary. It may be seen from our reference to the rulings made below, and from the issues raised in this appeal by the parties, that Lee Oldsmobile holds $5,000.00 of Mrs. Kaiden’s money; that Mrs. Kaiden breached her contract to buy a Rolls-Royce automobile; and that whatever damages flowed from the breach should reduce, pro tanto, Mrs. Kaiden’s right to get her money back. The question of law presented is how to determine the damages.

The question of fact is their amount. The order form signed by Mrs. Kaiden contained a clause providing that the dealer shall have the right, upon failure ⁵⁶² or refusal of the purchaser to accept delivery of the motor vehicle, to retain as liquidated damages any cash deposit made by the purchaser. The Uniform Commercial Code, as in force in Maryland, Code, Commercial Law Art., 4 § 2-718 (1) provides: “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.” In Traylor v. Grafton, 273 Md. 649 , 332 A. 2d 651 (1975), the Court of Appeals reviewed at length numerous