Robinson v. Centenary Fund & Preachers' Aid Soc. of N.J. Annual Conference of M. E. Church

• Decision Date: 02 March 1903
• Parties: ROBINSON v. CENTENARY FUND & PREACHERS' AID SOC. OF NEW JERSEY ANNUAL CONFERENCE OF M. E. CHURCH.
• Court: New Jersey Supreme Court

54 A. 416

68 N.J.L. 723

ROBINSON

v. CENTENARY FUND & PREACHERS' AID SOC. OF NEW JERSEY ANNUAL CONFERENCE OF M. E. CHURCH.

Court of Errors and Appeals of New Jersey.

March 2, 1903.

(Syllabus by the Court.)

Error to Supreme Court.

Action by R. Curtis Robinson against the Ceutenary Fund & Preachers' Aid Society of the New Jersey Annual Conference of the Methodist Episcopal Church, executor of Ezra B. Lake. Judgment for plaintiff for $1,200. Defendant brings error. Affirmed.

Thompson & Cole, for plaintiff in error.

S. Stanger Iszard, for defendant in error.

VROOM, J. In the year 1885 the plaintiff, R. Curtis Robinson, and his assignor, purchased from one Ezra B. Lake a newspaper known as the "Ocean City Sentinel," published at Ocean City, in the county of Cape May. In part consideration of the purchase the said Lake entered into the following agreement with the defendant in error and his assignor: "Ocean City, August 6, 1885. Having disposed of the Ocean City Sentinel to Fenton & Robinson, I hereby agree not to start, directly or indirectly, or cause to be started or interested in any manner a newspaper or printing office within Ocean City for the term of twenty-five years (25 years) under a penalty of twelve hundred ($1,200) dollars. [Signed] E. B. Lake." In 1899 Lake purchased the capital stock of the Ocean City Ledger Publishing Company, the publisher of the Ocean City Ledger, a weekly paper in said city, then and still published, and also the plant, presses, and other equipment of said newspaper. No proof of damages was offered at the trial, and the trial judge, in his charge, said that the question turned upon the proper construction of the agreement in question—as to whether the plaintiff shall recover the amount of $1,200, to be regarded as the amount of damages fixed by the parties to the contract in case of a breach, or whether the amount named is to be treated as a penalty, merely; the amount of damages to be proved, and to be assessed by a Jury. The conclusion reached by the learned trial judge was that upon the whole case the sum named should be regarded as the amount fixed by the parties to be paid in case of a breach.

In Monmouth Park Ass'n v. Wallis Ironworks, 55 N.J.Law, 132, 140, 20 Atl. 140, 19 L. R. A. 456, 39 Am. St. Rep. 625, Mr. Justice Dixon held that, "in determining whether a sum which contracting parties have declared payable on default in performance of their contract is to be deemed a penalty or liquidated damages, the general rule is that the agreement of the parties will be effectuated. Their agreement will, however, be ascertained by considering, not only particular words in a contract, but the whole scope of their bargain, including the subject to which it refers." It is well settled that whether the entire sum specified in the agreement can be recovered does not depend entirely upon whether in the agreement it is termed "penalty" or "liquidated damages." As was said in Whitefield v. Levy, 35 N.J.Law, 149: "Calling the sum named a 'penalty' or 'liquidated damages' is not conclusive, if the intention appears otherwise, from the consideration of the whole agreement. If it be doubtful, from the whole agreement, whether it is intended to be a penalty or stipulated damages, it will be construed as a penalty; and, if it is called a 'penalty,' it will be held to be such, unless that construction is overcome by a very clear intention to the contrary, derived from the other parts of the agreement." And in 19 Am. & Eng. Ency. of Law, p. 400: "No rule as to distinguishing between liquidated damages and penalties is better settled than that the language of the parties to the contract, and the terms employed, descriptive of the amount to be paid, are not conclusive of the interpretation and legal effect. Thus a sum denominated 'liquidated damages' by the parties may nevertheless be held to be a penalty, and, though the word 'penalty' be used, the sum so termed may be deemed liquidated...