Guerin v. Stacey

• Citation: 56 N.E. 892,175 Mass. 595
• Parties: GUERIN v. STACEY et al.
• Decision Date: 28 March 1900
• Court: United States State Supreme Judicial Court of Massachusetts

175 Mass. 595

56 N.E. 892

GUERIN v. STACEY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

March 28, 1900

COUNSEL

George F. Manson, for plaintiff.

J. W Spaulding and R. W. Hunter, for defendants.

OPINION

HOLMES C.J.

This is an action upon a bond given by a lessee to his sublessee, and conditioned that if, through the acts of the former, his lease should be terminated, or the sublessee ousted before the expiration of the term, the obligation should remain in force, and the obligors should pay the obligee the sum of $2,500 as liquidated damages. The sum named is also the penalty of the bond. It is not expressed, but it is implied that if the sublessee should enjoy his term undisturbed, the obligation should be void. The bond was dated August 17, 1894. The lease would have expired in July, 1898. It was terminated in July, 1897, and the plaintiff, finding that he would be recognized by the owner only as a monthly tenant, gave notice, and left the premises on October 22, 1897. The case is before us on a single exception taken by the plaintiff to a ruling by the judge who tried the case that the sum named in this condition was a penalty, and not liquidated damages.

There is no doubt that a sum which is to be paid upon the breach of a primary undertaking may be treated as a penalty in some cases, notwithstanding the fact that it is called 'liquidated damages' in the contract. The typical case is where it secures several promises of varying importance, one or more of which is for the payment of a much smaller sum of money. Fisk v. Gray, 11 Allen, 132; Wallis v. Smith, 21 Ch. Div. 243, 257, 268, 275. But we heartily agree with the court of appeals in England that so far as precedent permits, the proper course is to enforce contract according to their plain meaning, and not to undertake to be wiser than the parties, and therefore that in general, when parties say that a sum is payable as liquidated damages, they will be taken to mean what they say, and will be held to their word. Wallis v. Smith, 21 Ch. Div. 243; Atkyns v. Kinnier, 4 Exch. 776, 783. In the language of Baron Parke in the case last cited: 'If there be a contract consisting of one or more stipulations, the breach of which cannot be measured [as in theory of law the damage caused by a failure to pay money can be], then the parties must be taken to have meant that the sum agreed on was to be liquidated damages, and not a...