Streeper v. Williams

• Decision Date: 16 January 1865
• Citation: 48 Pa. 450
• Parties: Streeper <I>versus</I> Williams.
• Court: Pennsylvania Supreme Court

Page 450

48 Pa. 450

Streeper versus Williams.

Supreme Court of Pennsylvania.

January 16, 1865.

CERTIFICATE from the Supreme Court at Nisi Prius.

Edward M. Paxson, for plaintiff in error.—The $500, named in the article of agreement, is in terms a penalty. The words used are, "The parties to the above agreement doth severally agree to forfeit the sum of $500, in case either party fail to comply," &c.

If they intended to stipulate for liquidated damages, they have used singularly inappropriate words to express their meaning.

There are many cases in the books where the courts have held that the words "stipulated damages," were in fact but a mere penalty; but I know of no case in which the court have construed what the party themselves call a forfeiture as liquidated damages.

The rule, as laid down in the text-books, is this: when articles contain covenants for the performance of several things, and then

one large sum is stated at the end to be paid upon breach of performance, this must be considered as a penalty; but that when it is agreed that if a party do a particular thing, such a sum shall be paid by him, then this sum may be treated as liquidated damages: Chitty on Contracts 894.

The law makes a wide distinction between contracts relating to real, and those relating to personal estate. In the latter, each case must, to a certain extent, depend upon its own peculiar circumstances. There may be instances, in personal contracts, where it would be difficult to ascertain the actual damage. But the same cannot be truly said in regard to real contracts. There is no difficulty in ascertaining the amount of actual damage in such cases. There was no difficulty of doing so in this case. The jury say the actual damages amounted to only $50. Then why should the plaintiff recover more? What superior equity has this plaintiff over every other plaintiff who comes into court seeking to recover damages for breach of contract, that he should be permitted to recover ten times more than the sum the jury have fixed as the amount of his actual loss? This case differs but little from Burr v. Todd, 5 Wright 206.

Dennis v. Cummins, 3 Johns. Cases 297, was an agreement to convey lands; and it was stipulated that, on the failure of either party to perform, he "should forfeit and pay to the other party the sum of $2000 as damages," and the sum named was held to be a mere penalty. Perkins v. Lyman, 11 Mass. 76, Merrill v. Merrill, 15 Id. 488, were contracts relating to personal property, but they are to the same point.

It is confidently submitted that no case can be found in this, or in any of our sister states, where, in a contract concerning the sale of real estate, the courts have held that to be liquidated damages which the parties themselves, in their contract, say is a penalty or forfeiture.

R. C. McMurtrie, for defendant in error.—Wherever parties have for themselves determined what shall be the measure of damages for a breach of contract, if there is no law prohibiting them doing so, they may, and the contract is as much binding as in any other case.

It is a mere question of intention to be collected from the contract itself.

It is not necessary that there should be any particular form of words, nor is it material what is the subject-matter of the contract.

Even the word penalty is construed to mean liquidated damages where the whole contract shows this was the intention; and the authorities all agree it is as applicable to a contract for the sale of land as to a contract for any other property. It is much more so than in any ordinary case of a contract to deliver goods, for the difficulty of proving the real damage is much greater.

So the word forfeit is held to be equivalent to pay.

The present case illustrates the propriety of the rule. It was an executory contract to convey and to accept the conveyance and pay the price.

It is impossible to ascertain, as in the case of goods, what was the loss by the failure, for land has no certain marked price, and a sale cannot be made at the day to fix that, as in the case of goods.

The uncertainty whether the party will adhere — the incapacity to sell in the mean time — the incapacity to improve or to make other arrangements, show this precisely one of those cases in which the parties must fix the measure of damages, or be content with a mere nominal amount. The contract was a single one, and entirely broken.

It is precisely within the rule of Lampman v. Cochran, 19 Barb. 388.

There is no better reason for holding a man bound by the agreed price for labour or materials, than for the disadvantage resulting from his refusing to abide by his solemn contract. A price for an option is well understood. This fixes the extent of liability if he does not choose to perform his undertaking. See Samler v. Ferguson, 7 C. B. 716; Barlow v. Glover, 1 Holt 43; Pollitt v. Forrest, 11 Q. B. 949; Legge v. Harlock, 12 Id. 1015; Chamberlain v. Bagley, 11 N. Hamp. 234; Peasson v. Williams, 24 Wend. 244; 26 Id. 630; Brigler v. Rowland, 3 How. Miss. 308; Sammon v. Howe, 2 Shep. 250; Meade v. Wheeler, 13 N. Hamp. 351; Cheddick v. Marsh, 1 N. Jer. 483; Worrell v. McClingham, 5 Strob. 115; Main v. King, 10 Barb. S. C. 59; Mott v. Mott, Id. 127; Westman v. Means, 2 Jones 97; Holmes v. Holmes, 12 Barb. 137; Nevin v. Rossman, 18 Id. 50; Chase v. Allen, 13 Gray 42; Munday v. Culver, 18 Barb. 336; Hossman v. True, 19 Id. 106; S. P. Foley v. McKeegan, 4 Iowa 1; Lampman v. Cochran, 19 Id. 388; Williams v. Green, 14 Ark. 315; Corheal v. Talmage, 5 Seld. 551; Jaquuh v. Hudson, 5 Mich. 123; Duffy v. Sharkey, 11 Ind. 70; Townsend v. Fisher, 2 Hilton (N. Y.) 47; Fisk v. Fowler, 10 Cal. 212; Mercer v. Irving, 1 E. B. & E. 563.

Dennis v. Cummins, 3 Johns. Cases, cited by plaintiff in error, is put on the ground that the parties did not intend to liquidate the damages, and the decision is doubted. See note of reporter.

Perkins v. Lyman, 11 Mass. The party bound himself in the penal sum of $8000 for the faithful performance of the contract. A clear case of penalty.

Merrell v. Merrell, 15 Mass., was a note to be void on permitting certain acts.

Burr v. Todd, 5 Wright, was a bond conditioned for conveyance, and it was held the agreed price was the measure. There the real damages were capable of being precisely estimated.

The opinion of the court was delivered, January 16th 1865, by AGNEW, J.

This case is very defectively stated. We find, in our paper-book, no copy of the bill of exceptions, and no statement of facts. We understand, from the argument, that it was a case of total failure on the part of the defendant, and we infer, from the verdict against the defendant, that the plaintiff must have tendered performance on his part.

Upon these facts, and the terms of the agreement, we must determine whether the stipulated sum is a penalty or liquidated damages. Upon no question have courts doubted and differed more. It is unnecessary to examine the numerous authorities in detail, for they are neither uniform nor consistent. No definite rule to determine the question is furnished by them, each being determined more in direct reference to its own facts than to any general rule. In the earlier cases, the courts gave more weight to the language of the clause designating the sum as a penalty or as liquidated damages. The modern authorities attach greater importance to the meaning and intention of the parties. Yet the intention is not all-controlling, for in some cases the subject-matter and surroundings of the contract will control the intention where equity absolutely demands it. A sum expressly...