March v. Allabough

• Decision Date: 01 October 1883
• Citation: March v. Allabough, 103 Pa. 335, 1883 WL 13402 (Pa. 1883)
• Parties: March <I>versus</I> Allabough.
• Court: Pennsylvania Supreme Court

103 Pa. 335

MarchversusAllabough.

Supreme Court of Pennsylvania.

April 16, 1883.

October 1, 1883.

April 16th 1883.

Before MERCUR, C. J., GORDON, TRUNKEY, STERRETT, GREEN and CLARK, JJ.PAXSON, J., absent

ERROR to the Court of Common Pleas of Montgomery county:Of July Term 1881, No. 77.

COPYRIGHT MATERIAL OMITTED

H. C. Boyer(B. M. Boyer with him), for the plaintiff in error.

Charles Hunsicker, for the defendant in error.

Mr. Justice CLARKdelivered the opinion of the court, October 1st 1883.

By the terms of the agreement dated June 20th 1877, George W. March sold to Benjamin V. Allabough, his store in Norristown, consisting of groceries, notions, &c., with all the fixtures and good will, at a valuation to be put thereon as provided in the contract, payments to be made as follows, viz.: $1,000 on the 4th July 1877, $1,000 in thirty days after possession given, and the balance in sixty days.The terms of sale, the manner of making a proper valuation, and the delivering of possession having first been fully provided for, the agreement contains the following clause:

"And the said March hereby binds himself not to engage in or open a store doing the same kind of business in that part of Norristown, lying northwest of Stony Creek, or any where above, said Stony Creek being the line, under a penalty of one thousand dollars, and in case either party fail to comply with the terms and conditions of this agreement, he shall forfeit and pay to the other the sum of one thousand dollars.And the said March also further binds himself hereby not to let or lease the new store building which he is now about erecting on the opposite side of Marshall street, to any person or persons to carry on the same kind of business, viz.: that of groceries, notions, &c., &c., as are now kept at the store stand hereinbefore named at the west corner of said Marshall and Chain streets, under the same penalty of one thousand dollars, as above stated."

Are the several sums of $1,000 in which the parties bound themselves, each to the other, in this clause of their contract, to be treated as penalties or as liquidated damages, respectively?To avoid confusion of expression, we will first determine the inquiry as to the "penalty" of $1,000, first mentioned in the agreement.This is a question of construction, and is to be determined by the intention of the parties, as that may be found in the language of the agreement itself, and in the subject matter out of which the agreement came.There has been some inconsistency or conflict in the decisions, on the question raised here, but the later cases in this court, when properly understood, we think, have to a great extent, reconciled these differences.It is true, that every such contract, as indeed almost any other contract, must stand for its construction upon its own peculiar facts, and the conflict in principle is often times more in appearance merely than in reality.

It is competent for persons entering into an agreement, to avoid all future questions as to the amount of damages which may result from its violation, and to agree upon a definite sum, as that which shall be paid to the party who alleges and establishes the violation, but such an agreement should either be plainly expressed in the writing, or exist by necessary implication from the true nature of the transaction.Forfeitures are not favored in the law, and the intention of the parties should therefore somehow plainly appear in the contract, its subject-matter or its surroundings.

As stated by Chief Justice MARSHALL in the case of Tayloe v. Sandiford, 7 Wheaton 13, "In general a sum of money, in gross, to be paid for the non-performance of an agreement, is considered as a penalty.It will not, of course, be considered as liquidated damages.Much stronger is the inference in favor of its being a penalty, when it is expressly reserved as one.The parties themselves denonimated it a penalty, and it would require very strong evidence to authorize the court to say that their own words do not express their own intention."

In the case of Robeson v. Whitesides, 16 S. &R. 320, it was held that "stipulated damages can only be, when there is a clear unequivocal agreement which stipulates for the payment of a certain sum as a liquidated satisfaction fixed and agreed upon between the parties for the doing or not doing certain acts particularly expressed in the agreement.The contract should be expressed, or it should be a necessary implication from the nature of the transaction itself.When, however, the non-performance can be compensated with money, of which a jury may judge it is most consonant to reason, and best comports with the understanding of the parties, that the damages should be commensurate with the loss actually sustained."

In Burr v. Todd, 5 Wright 212, where the bond in suit was a penal bond, conditioned for conveyance of certain titles, the court, WOODWARD, J., say: "It is impossible to regard it as a liquidation of damages for breach of condition.There is not a word to import an agreement of the parties to that effect.The reasons assigned in Robeson v. Whitesides, 16 S. &R. 320, for not treating a similar bond as an agreement for liquidation of damages, apply with all their force to this bond.The distinction between a penal bond and stipulated damages cannot be better stated than in that case."

In Streeper v. Williams, 12 Wright 450, the court, AGNEW, J., say: "Upon the whole the only general observation we can make is, that in each case we must look at the language of the contract, the intention of the parties as gathered from all its provisions, the subject of the contract and its surroundings, the ease or...