Dennis v. Cummins. DENNIS against CUMMINS. A. and B. entered into a written agreement, by which A. agreed to convey to B. 700 acres of land to be appraised, in part payment for a farm, valued at 3,750 dollars, which B. agreed to sell to A. and it was covenanted that in case either party failed to fulfil the agreement, the party failing to per form, "should forfeit and pay to the party who should fulfil the agreement, the sum of 2,000 dollars, as damages." It was held, that the 2,000 dollars was, according to the intention of the parties, as inferred from the whole agreement, to be considered as a penalty, and not as stipulated damages. THIS was an action of debt, for 2000 dollars, founded on an agreement made between the parties, for the exchange of certain lands; whereby the plaintiff agreed to let the defendant have 700 acres of land, in the county of Ontario, at the appraisal of men, in part payment for a farm which the defendant agreed to sell the plaintiff, lying in the town of Canaan, in the county of Columbia, valued at 3,750 dollars. The agreement, after mentioning the terms of the exchange, contained the following covenant: "And it is further covenanted in and by the said agreement, by and between the said parties, that in case of failure to fulfil the aforesaid agreements or covenants, on the part of either of the said parties, that the party not fulfilling the said ageeement shall forfeit and pay to the other party who shall fulfil the said agrement, the sum of 2000 dollars damages." And the question now submitted to the court was, whether that sum was to be considered in the nature of a penalty, or as damages liquidated and agreed on between the parties, to be recovered against the party in default. The case was submitted to the court, without argu ment. *THOMPSON, J. delivered the opinion of the court. [*298] I think this sum ought to be considered as a penalty, and not as liquidated damages. The real intention of the Dennis v. Cummins. parties ought to be sought after, and carried into effect, where it can be discovered from the instrument itself. If recurrence be had to this agreement, it never can be presumed that the parties had the sum in view, as the measure of damages, for the full value of the defendant's property, which was to be exchanged, was only 3,750 dollars; and the value of the plaintiff's considerably less. It would be a strange construction to suppose that the damages, on a failure in fulfiling such a bargain, should be 2000 dollars. It is true, that where it is clearly inferrible, from the nature and terms of the contract, that the parties have estimated and liquidated the damages, and have inserted that sum, as the amount to be paid, in case of non-performance, the court would be bound so to consider it. The cases, however, in the books, (4 Burr. 2228; 2 Term Rep. 34,) where penalties have been considered in the nature of liquidated damages, are either where it appears from the contract that the penalties have barely exceeded the damages sustained, or where, from the nature and circumstances of the case, no rule for estimating the actual damages could be adopted, or it was manifestly the intention of the parties, that the sum inserted should be considered as a compensation, and not as a penalty. But those cases by no means compare with the present. This is a case of strict penalty, and for which there does not appear to be any equivalent to the other party. To consider this 2000 dollars as the measure of damages in the present case, would be excessive and unreasonable in the extreme. We are, therefore, of opinion, that it must be viewed only in the nature of a penalty, and that the plaintiff ought to [*299] assign *breaches under the statute, and assess the damages by a jury. Judgment accordingly.(a)(b) (a) [Old note. In Astley v. Weldon, (2 Bos. & Pull. 346.) Lord Eldon and the other judges of the court of C. B. acknowledge the difficulty of lay (b) In Dukin & Bacon v. Williams & Seward, (17 Wendell, 447, 454,) where the plaintiff's gave $3000 for the patronage and good will of a Dennis v. Cummins ing down any principle for the decision of cases of this nature. That case was an action of assumpsit, on an agreement made with a theatrical performer, in which it was stipulated, at the conclusion, "that if either party neglected to perform the agreement, according to the tenor and effect and true intent and meaning thereof, he should pay to the other the full sum of 200 pounds, to be recovered," &c. And the court held that the sum was a penalty, and not liquidated damages. The different adjudications on this subject are stated, and examined, by Mr. Evans, in the Appendix to his translation of Pothier on Obligations, (vol. 2, p. 93-98.) He inclines to the opinion that the penalty ought to be regarded as stated damages, unless there is some particular reason, in the nature of the contract, to the contrary; and his observations are calculated to excite doubts as to the correctness of the above decision. But see infra, n. (b.) newspaper establishment, and $500 for the type and printing apparatus, and the defendants (the vendors) covenanted that they would not publish, or aid or assist in the publishing of a rival paper, and fixed the measure of damages at $3000, the case from its peculiar nature and the total uncertainty of arriving at a correct conclusion as to the amount of damages, was held to be a fit and proper one for the application of the rule that the sum agreed upon should be regarded as stipulated damages, and not as a penalty. In this case, Chief Justice Nelson said: " The next question presented is, whether the sum of $3000 is to be viewed as damages liquidated by the contract of the parties, or only in the light of a penalty? There are many cases in the English books in which this question has been very fully examined and considered, but it would be an unprofitable consumption of time to go over them with a view or expectation of extracting any useful general principle that could be applied to this case. (The following are the leading cases: Astley v. Weldon, 2 Bos. & Pul. 346; Barton v. Glover, Holt's N. P. R. 43, and note; Reilly v. Jones, 1 Bing. 302; Davies v. Penton, 6 Barn. & Cress 216; Crisdee v. Bolton, 3 Carr. & Payne, 240; Randall v. Everest. 2 id 577; Kemble v. Farren, 6 Bing. 141. In our court are the following: Dennis v. Cummins, 3 Johns. Cas. 297; Slosson v. Beadle, 7 Johns. R. 72; Spencer v. Tilden, 5 Cowen, 144, and note, p. 150; Nobles v. Bates, 7 id. 307; Knapp v Malthy, 13 Wend. 587.) From a critical examination of all these cases, and others that might be referred to, it will be found that the business of the court, in construing this clause of the agreement, as in respect to every other part thereof, is, to inquire after the meaning and intent of the parties; and when that is clearly ascertained from the terms and language used, it must be carried into effect. A court of law possesses no dispensing powers; it cannot inquire whether the parties have acted wisely or rashly, in respect to any stipulation they may have thought proper to introduce into their agreements. If they are competent to contract within the prudential rules the law has fixed as to parties, and there has been no fraud, circumvention or illegality in the case, Dennis v. Cummins. the court is bound to enforce the agreement. Men may enter into improvident contracts where the advantage is knowingly and strikingly against them; they may also expend their property upon idle or worthless objects, or give it away if they please without an equivalent, in spite of the powers or interference of the court; and it is difficult to see why they may not fix for themselves by agreement in advance, a measure of compensation, however extravagant it may be, for a violation of their covenant, (they surely may after it has accrued,) without the intervention of a court or jury. Can it be an exception to their power to bind themselves by lawful contract? We suppose not; and regarding the intent of the parties, it is not to be doubted but that the sum of $3000 was fixed upon by them "mutually and express. ly," as they say, "as the measure of damages for a violation of the covenant, or any of its terms or conditions." If it be said that the measure is a hard one, it may be replied, that the defendants should not have stipulated for it; or having been thus indiscreet, they should have sought the only exemption, which was still within their power, namely, the faithful fulfilment of their agreement. In the case of Astley v. Weldon, Lord Eldon repudiates the idea that had been thrown out in some of the previous cases, that if the sum would be enormous and excessive, considered as liquidated damages, it should then be taken as a penalty; and maintains the ability of the party to make a contract for himself in fixing the amount of damages as well as in respect to any other matter. All the judges adopt the position that the question must be determined upon the meaning and intent of the parties. A principle is stated in that case which has since been frequently applied, and upon which the case was finally disposed of, namely, that where a doubt appears whether the sum inserted be intended as a penalty or not, if a certain damage less than this sum be made payable upon the face of the instrument, in case the breach occurs, then the same shall be construed to be a penalty. It then partakes of the character of a common money bond, where the payment of a small sum is secured by the forfeiture of a large one in case of default. In that case there were several stipulations in the articles of agreement, and then on either neglecting to perform on his part, the "sum of £200, to be recovered in any of his majesty's courts of record," was to be paid. Some of the breaches were in their nature uncertain, while others were certain, and as the £200 were given to secure the fulfilment of all of them, upon the principle above stated, the court concluded it was to be deemed in the light of a penalty. Chambre, J., (p. 345,) observed," that there was one case in which the sum agreed for must always be considered a penalty; and that is, where the payment of a smaller sum is secured by a larger." And he held that the court could not garble the covenants, and hold that in respect to those certain the large sum was to be deemed a penalty, but damages liquidated as to those uncertain, as the concluding clause applied equally to all of them. The decision of the case of Kemble v. Farren, the strongest one in the books for the defendants, was put upon this principle by Chief Justice Tindall. There some of the stipulations were certain, such as the one in which the plaintiff Dennis v. Cummins. had agreed to pay the defendant £3 6s. 8d. every night in which the theatre would be open during the season; others were uncertain. The language of the parties in fixing the sum in case of neglect to fulfil the agreement, or any of the stipulations, was as particular and specific as in the case under consideration, using affirmative and negative terms, to exclude the idea of a penalty; but as it extended equally to the breach of every stipulation, those certain as well as those uncertain, the case was supposed to be brought directly within the principle of Astley v. Welden. The chief justice concedes that it was difficult to suppose words more precise or explicit, and admitted that if the clause had been limited to breaches which were of an uncertain nature and amount, the court would have considered it as having the effect of ascertaining the damages of any such breach at the £1000; and he adds, "for we see nothing illegal or unreasonable in the parties, by their mutual agreement, settling the amount of damages, uncertain in their nature, at any sum upon which they may agree." The case under consideration falls directly within the above distinction; for the concluding clause here, securing the fulfilment of the preceding covenant, applies to stipulations wholly uncertain; and it may be added, that from the nature of the case, it would be impossible for a court and jury to ascertain, with any degree of accuracy, the amount of damages actually arising out of the breach of them to the prejudiced party; and was, therefore, a very fit and proper case for the liquidation of the amount by the parties themselves. They have adopted the precise sum which the plaintiffs were to receive for the good will and patronage of the press, the very benefit which this clause was intended more effectually to secure to the purchasers." In the same case in the court of errors, (22 Wendell, 201, 211,) Chancellor Walworth observes, "There is undoubtedly a class of cases in which courts have been in the habit of considering a certain specified sum as a penalty, whatever may be the language of the agreement. Such is the case wherever such specified sum is evidently intended as a mere collateral security for the payment of a different sum which is the real debt, or where it was evidently intended to be in the nature of a mere penalty; and there is another class, where, from the language of the agreement, it was difficult to ascertain what the parties really intended, in which the courts have taken the reasonableness of the provision as liquidated damages into consideration, for the purpose of determining whether it was intended as such or only as a comminatory sum. Where the specified sum is declared by the parties to be a penalty, or wherever it appears to have been only intended to secure the payment of the real debt which is specified and ascertained, so that the court is legally bound to consider it as comminatory merely, the plaintiff must assign breaches, and have his damages assessed under the statute, except where the condition of the obligation is for the payment of a specific sum which is capable of being ascertained by mere computation." In Hoag v. M'Ginness, (22 Wendell, 163, 164,) Mr. Justice Cowen states the doctrine very clearly in opposition to the opinion of Mr. Evans, that the penalty ought to be regarded as stated damages, unless there is some |