Krenek v. Wang Laboratories, Inc. (583 S.W.2d 454, 1979)

HALL, Justice.

In this case the lessor of certain equipment was awarded the liquidated damages provided for in the lease agreement, after the lessee defaulted in his monthly rental payments. The main question for decision is whether the provision for liquidated damages constituted a penalty and was therefore unenforceable. We hold it was a penalty, and reverse the judgment based upon it.

Plaintiff-appellee Wang Laboratories, Inc., and defendant-appellant Stanley Kre-nek d/b/a Humble Yamaha, entered into a written agreement on April 22, 1974, under which plaintiff agreed to lease certain equipment to defendant for a term of five years and defendant agreed to pay monthly rental of $458.25 beginning July 1, 1974. Additional items of equipment were added to the lease by letter agreement dated July 25, 1974 (denominated “Appendix ‘A’ ” by the parties), and the monthly rental was increased to $817.02.

The description of the leased property is set forth in the original lease agreement and Appendix “A,” as follows:

1 2200B 3 Central Processing Unit (g) $7,800

1 Option 3 Character Edit ROM @ $400

1 2216/17 Combined CRT Executive Display ' Single Tape Cassette Drive (5) $2,300

1 2221 Line Printer (g) $5,400

1 2222 Alpha-Numeric Typewriter Keyboard (cv $700

2 2290 CPU/Peripheral Stands