Tayloe v. Sandiford
| Decision Date | 12 February 1822 |
| Citation | 20 U.S. 13,7 Wheat. 13,5 L.Ed. 384 |
| Parties | TAYLOE v. T. & S. SANDIFORD |
| Court | U.S. Supreme Court |
This is a writ of error to a judgment of the Circuit Court of the county of Alexandria, rendered in an action of assumpsit, brought by T. & S. Sandiford against John Tayloe. It appeared on the trial of the cause, that on the 13th of May, 1816, the parties entered into a written contract, by
a They cited 2 Comyn on Contracts, 528-539, and the cases there collected. Fletcher v. Dycke, 2 T. R. 32.
b He cited 4 Cranch, 317. 6 Cranch, 9. Dennis v. Cummins, 3 Johns. Cas. 297. Smith v. Dickenson, 3 Bos. & Pul. 630. Bank of Columbia v. Patterson, 7 Cranch, 299 which the defendants in error undertook to build for the plaintiff three houses on the Pennsylvania avenue in the city of Washington. On the 18th day of the same month, the parties entered into a contract, under seal, for the building of three additional houses, at a stipulated price. This contract contains the following covenant: 'The said houses to be completely finished on or before the 24th day of December next, under a penalty of one thousand dollars, in case of failure.'
The parties entered into a third verbal contract for some additional work, to be measured, and paid for according to measurement.
These three houses were not completed by the day, and the plaintiff in error claimed the sum of 1,000 dollars, as stipulated damages, and retained it out of the money due to the defendants in error. This suit was, thereupon, brought; and, on the trial of the cause, the defendant in the Circuit Court claimed to set off in this action 1,000 dollars, as in the nature of stipulated damages; but the Court overruled this claim, and decided that the said sum of 1,000 dollars had been received in the nature of a penalty, and could not be set off in this action.
The defendant then moved the Court to instruct the jury, that 'upon the evidence offered, if believed, the plaintiffs were not entitled to recover in this action the said sum of 1,000 dollars, inasmuch as the same, if due at all, was due under a contract under seal, and that the declarations of the defendant, and the understanding between the parties as to the reservation of the said 1,000 dollars, given in evidence as aforesaid, was competent and sufficient evidence of the defendants' intention to apply his payment to the extinguishment, in the first instance, of such parts of the said moneys as were due by simple contract, and to reserve the 1,000 dollars out of the money due under the said original contract.' This instruction the Court refused to give; and did instruct the jury 'that it was competent to the plaintiffs to recover the said 1,000 dollars in this action, unless they should be satisfied by the evidence that the defendant, at the time of paying the money, had expressly directed the same, or a sufficient part thereof, to the payment of the 1,500 dollars due on the simple contract.'
To both these opinions the defendant excepted; and the jury having given a verdict for the plaintiff in the Circuit Court, this writ of error was brought to the judgment rendered thereon.
It is contended, by the plaintiff in error, that the Circuit Court erred.
1st. In overruling the claim to off-set the 1,000 dollars mentioned in the agreement.
2d. In declaring that the plaintiff in that Court might so apply the payments made, as to discharge the contract under seal, and leave the sum retained by the defendant in that Court, to be demanded under the simple contract.
1. Is the sum of 1,000 dollars mentioned in the agreement of the 13th of May, to be considered as a penalty, or as stipulated damages?
The words of the reservation are, 'The said house to be completely finished on or before the 24th day of December next, under the penalty of 1,000 dollars, in case of failure.'
In general, a sum of money in gross, to be paid for the non-performance of an agreement, is considered as a penalty, the legal operation of which is, to cover the damages which the party, in whose favour the stipulation is made, may have sustained from the breach of contract by the opposite party. It will not of course be considered as liquidated damages; and it will be incumbent on the party who claims them as such, to show that they were so considered by the contracting parties. Much stronger is the inference in favour of it's being a penalty, when it is expressly reserved as one. The parties themselves denominate 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. These writings appear to have been drawn on great deliberation; and no slight conjecture would justify the Court in saying that the parties were mistaken in the import of the terms they have employed.
The counsel for the plaintiff in error supposes, that the contract furnishes clear evidence that the parties intended this sum as liquidated damages. The circumstance, that it is annexed to the single covenant, stipulating the time when the work shall be completed, is considered as showing that it was intended to fix the damages, for the breach of that covenant.
Without deciding on the weight to which this argument would be entitled, if supported by the fact, the court cannot admit that it is so supported. The engagement, that the said houses shall be completely finished on or before the 24th day of December next, is as much an engagement for the manner, as for the time of finishing the work, and covers, we think, all the covenants made by the defendants in error in that agreement. The case, therefore, presents the single question, whether an agreement to perform certain work by a limited time, under a certain penalty, is to be construed as liquidating the damages which the party is to pay for a breach of his covenant. This question seems to have been decided in the case of Smith v. Dickenson, reported in 3 Bos. & Pull. 630.
The plaintiff in error relies on the case of Fletcher v. Dycke, reported in 2 T. R. 32., in which an agreement was entered into to do certain work within a certain time, and if the work should not be done within the time specified, 'to forfeit and pay the sum of 10l. for every week,' until it should be completed.
But the words 'to forfeit and pay,' are not so strongly indicative of a stipulation in the nature of a penalty, as the word 'penalty' itself; and the agreement to pay a specified sum weekly during the failure of the party to perform the work, partakes...
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