Basye v. Ambrose

• Citation: 28 Mo. 39
• Parties: BASYE, Plaintiff in Error, v. AMBROSE, Defendant in Error.
• Decision Date: 31 January 1859
• Court: United States State Supreme Court of Missouri

28 Mo. 39

BASYE, Plaintiff in Error,

v.AMBROSE, Defendant in Error.

Supreme Court of Missouri.

January Term, 1859.

1. Whether a sum stipulated to be paid in case of the breach of the provisions of a contract is to be regarded as a penalty or as liquidated damages must be determined by the nature of the contract and its provisions; if the whole scope of the instrument shows that it is stipulated for as a penalty the parties cannot constitute it liquidated damages by designating and stipulating for it as such.

2. Where the agreement secures the performance or omission of various acts which are not measurable by any exact pecuniary standard, together with one or more acts in respect of which the damages on a breach of covenant are readily ascertainable by a jury, and there is a sum stipulated for as damages for a breach of any one of the covenants, such sum is a penalty merely.

3. In every answer, amendatory or supplemental, the defendant must set forth, in one entire pleading, all matters which by the rules of pleading may be set forth therein, and which may be necessary to the proper determination of the defense. (R. C. 1855, p. --, § 13.) The courts cannot permit parties to dispense by agreement with the statutory provision bearing on this subject; as by agreeing that the original and amended answers shall be considered as one.

Error to Callaway Circuit Court.

This was a suit instituted by Basye on a certain bond executed by the defendant Ambrose, in favor of said Basye and one Bachman. The latter had assigned his interest in the contract to the plaintiff. The bond is sufficiently set forth below in the opinion of the court. Evidence was given bearing upon the question of the breach of the bond by the defendant. The court, among other instructions given and refused, gave the following at the instance of the defendant: “The amount specified in the bond read in evidence is not liquidated damages, but a penalty; and if the jury find the facts necessary to enable the plaintiff to recover, it can only be for such damages as he may have actually sustained by the default of the defendant, which it would, in such case, be incumbent on him to find.”

The plaintiff took a voluntary nonsuit, with leave, &c.

Parsons and White, for plaintiff in error.

I. The court erred in giving the second instruction. The court had no right to interfere with the measure of damages fixed by the parties. (2 Pars. on Contr. 434-5; 2 Sto. Eq. § 1313, 1318; 1 Mo. 149; Hemplen v. Snider, 17 Mo. 258; 4 Bun. 2228; 17 Wend. 447; Story on Contr. § 1021; 2 Greenl. Ev. § 257.) The defendant should, at least, have laid some foundation for the instruction, either by alleging that the amount claimed was wholly disproportionate to the injury, or by alleging fraud, imposition, accident or mistake, or something of that sort. (2 Sto. Eq. § 1316; 17 Mo. 260; 2 Sto. Eq. § 1223; Gower v. Saltmarsh, 11 Mo. 271 7 Whea. 17; 2 Greenl. on Ev. § 258.)

Lay and Gardenhire, for defendant in error.

I. The law is well settled that the action of the court shall be defined or determined by the terms which the parties have seen fit to apply to the sum named in the contract. (2 Pars. on Contr. 435.) The sum agreed upon will be treated as a penalty, unless it is payable for an injury of uncertain amount and extent, or unless it be payable for one breach of contract, or if for many, then unless the damages to arise from each of them are of uncertain amount. (See 2 Pars. on Contr. 433 et seq.; Moore & Hart v. Platte Co. 8 Mo. 467; Gower v. Saltmarsh, 11 Mo. 271; Chiddich v. Marsh, 1 New Jer. 463; Bayley v. Peddit, 5 Sandf. 172; Crisdee v. Bolton, 3 Car. & Payne, 240.)

SCOTT, Judge, delivered the opinion of the court.

As none of the evidence is preserved in the bill of exceptions but that which related to the breaches of the condition of the bond, the instructions given and refused concerning other matters can not be reviewed in this court, as, for any thing that appears, they have been rejected as irrelevant, not being warranted by the testimony. The main point presented for our consideration is whether the sums stipulated to be paid by the defendant for a violation of the condition of the bond was a penalty or liquidated damages.

They mistake the object and temper of our system of jurisprudence who, while maintaining that men in making all contracts have a right to stipulate for liquidated damages regardless of the disproportion to the sum resulting from a breach of the contract, insists that it would be hard if men were not permitted to make their own bargains. No system of laws would command our respect or secure our willing obedience which did not to some extent provide against the mischiefs resulting from improvidence, carelessness, inexperience and undue expectations on one side, and skill, avarice and a gross violation of the principles of honesty and fair dealing on the other. The folly of one in making a wild and reckless stipulation will not justify gross oppression in another. A just man when he sees one in a situation in which he is prepared to make a contract which must grind and oppress him, will not take advantage of his state of mind and enrich himself by his folly and want of experience. It has been remarked that in reason, in conscience, in natural equity, there is no ground to say, because a man has stipulated for a penalty in case of his omission to do a particular act (the real object of the parties being the performance of the act), that if he omits to do the act he shall suffer an enormous loss, wholly disproportionate to the injury to the other party.

By the common law, if one bound himself in a penalty of a greater sum for the payment of a less one--as if he bound himself in a penalty of two hundred pounds to pay at a given date one hundred pounds--if the less sum was not punctually paid at or before the day, the penalty was forfeited, and in an action at law upon the bond the whole of it was recovered. But courts of equity, seeing the hardship and oppression of this, interfered and granted relief on the payment of the sum really due with interest. This principle was so conformable to the dictates of natural equity, that Parliament, in the fourth year of Anne, incorporated it into the statute law and enabled courts of law to give the relief before only attainable in courts of equity; so, with regard to bonds by which the performance of other acts than the payment of money was secured by a penalty, at common law the failure to do the act, or any one of the acts whose performance was thus secured, caused a forfeiture of the penalty, and the whole of it was recovered in an action at law on the bond. Against these forfeitures courts of equity relieved the defendant upon his compensating for the damages he had actually sustained by reason of the breach of the condition of the bond. Here, as in case of bonds conditioned to pay money, Parliament, by statute, enabled a party to obtain in a court of law the relief which was afforded by courts of equity. The statute of 8 and 9 of William III. required, that in all actions upon any bond, or on any penal sum for nonperformance of any covenants or agreements contained in any deed or writing, breaches should be assigned, and that damages should be assessed for those breaches; and although judgment as formerly was entered for the penalty, yet if the defendant, after such judgment and before execution, paid into court the damages assessed, a...