10 N.J. Eq. 577 | N.J. | 1856
Daniel A. Baldwin, one of the defendants, purchased of the complainant a tract of land, lying
The jurisdiction of a court of equity to grant relief in cases of forfeitures and penalties for breaches of covenants and conditions is well established. At the common law there is no remedy, and therefore it is that, in cases of penalties annexed to bonds and other instruments to secure merely the payment of a certain debt, the statute has stepped in, and provided adequate relief against the penalty.
Nor does a court of equity, in affording relief, confine itself to cases of fraud, mistake, or accident, however probable it may be that in the origin of this exercise of its jurisdiction, it confined itself within such limits. Rut it is not imperative in the court to grant relief, although the party in default is willing to render all the compensation in his power to make restoration to the injured party.
There is a discretion in the court, regulated, it is true, by well recognized yrincijfies, but exercised in its application of those principles to each particular case by its peculiar circumstances.
In the case of Sunders v. Pope (12 Ves. Jr. 289), Lord Erskine says, “ there is no branch of the jurisdiction of this court'more delicate than that which goes to restrain the exercise of a legal right. That jurisdiction rests only upon this principle, that one party is taking advantage of a forfeiture, and as a rigid exercise of the legal right would produce a hardship, a great loss, and injury, on the one hand, arising from going to the full extent of the right, while on the other, the party may have the full benefit of the contract, as originally framed, the court will interfere where a clear mode of compensation may be discovered.” This principle is everywhere recognized, and runs through all the cases. The injured party must be compensated, and must have the full benefit of his contract. If he cannot be adequately redressed for the
What are the legal rights of the complainant against the enforcement of which the defendant, Baldwin, asks to be relieved 3
Baldwin, for a debt of forty thousand, which he owed complainant, gave him his bond in the penal sum of eighty thousand dollars. The condition of the bond was the common one, that if the obligor paid the debt really due of forty thousand dollars in ten years from the date of the bond, and the interest on the debt semi-annually, then the bond was to be void.
The penalty was double the amount of the debt due, and the object of the penalty was to secure the due fulfilment of the obligation. If this was all the contract, there could be no difficulty as to the legal and equitable rights of the parties. But there was a further condition, in the nature of an agreement, that if the interest money should remain unpaid for thirty days after it was due and payable, then the principal money should be due and payable. The object of this was to secure the prompt payment of the interest on the debt. The first interest money that became due was unpaid, and the thirty days were permitted to expire. The complainant was compelled to file this bill to enforce the payment of his debt. He is entitled, by the terms of his agreement, to have a decree for the full amount of his debt. He has forfeited the credit of ten years, which he was to have on condition of prompt payment. If the court relieves the defendant, it destroys the
If the court grant this relief, the very object of the agreement will be defeated, and this court virtually declare that parties shall not make an agreement by which the length of credit shall depend upon the prompt payment of the interest, as it becomes due. The agreement is a reasonable one. A. says to B., you may have my money for ten years, if you will pay the interest promptly ; if yon make default in this respect, yon must pay me the principal. It cannot be said to be a rigid exercise of a legal right for A. to refuse to extend the credit when he finds he is defeated in his just expectation of receiving his interest money promptly. In 2 Story’s Eq. it is said, “ the true foundation of the relief in equity in all these cases is, that as the penalty is designed as a mere security, if the party obtains his money he gets all that he expected, and all that in justice he is entitled to.” In this case the penalty is not designed as a mere security, but its very object is to secure prompt payment. If the party does not get this he does not get what he expects, or all that in justice he is entitled to. If this court could give such relief as would secure the faithful performance of the agreement imfutwe there might be a propriety in its interference. If the court could make a decree that the complainant should be relieved in the present instance upon
I think the remarks of the Chancellor, in Benedict v. Lynch (1 J. C. R. 376), very applicable to a ease like this. The notion that seems too much to prevail (and of which the facts in the present case furnished an example), that a party may be utterly regardless of his stipulated payments, and that a court of Chancery will almost at any time relieve him from the penalty of his gross negligence, is very injurious, to good morals, to a lively sense of obligation, to the sanctity of contracts, and to the character of this court. It would be against all my impressions of the principles of equity to help those who show no equitable title to relief.
As a general rule, courts of equity will not regard time in the performance of a contract. But the parties may make time the essence of the contract, so that the court will not interfere to aid the party who is in default, unless he can offer some good excuse, as mistake or accident, for such default. Benedict v. Lynch (1 J. C. R. 370), and cases there referred to; or where the character of the contract is such that by the payment of money, or otherwise, it has been partly fulfilled, and the default is made under such circumstances as to render it unconscionable to insist upon the forfeiture. Wills v. Smith, 7 Paige 22.
Edgerton v. Peckham (11 Paige 352), was a case where there was an agreement for the sale of a lot of land for $300, one-third to be paid down, and the residue in one and two years, with interest. There was a provision in the agreement, that if the purchaser should make default in either of the payments, the vendor should be discharged from the agreement, and the purchaser forfeit all the previous payments. The first two instalments were paid at
There is a class of eases in reference to leases where the court has interposed to prevent a forfeiture where a right of entry is stipulated in the lease in case of the nonpayment of the rent at the regular days of payment. But in those cases the court interferes on the ground, that the right of entry is intended as a mere security for the payment of rent, and that when the rent is paid the end is obtained. Story’s Eq. N. S. 1315; Wadman v. Calcraft (10 Ves. Jr. 69); Sanders v. Pope, (12 Ves. 281); Bracebridge v. Buckley (2 Prior’s Ex. R. 216).
As I have before remarked in this case, the penalty of $80,000 was intended to secure the payment of the principal money. But this additional agreement was intended for another purpose, to secure the prompt payment of the interest to grow due on the debt. If it fails to accomplish this, its only aim and object are frustrated; the intention of the parties is defeated.
I can see no principle of equity to justify the court’s interference to give the defendant relief against the forfeiture. The complainant is entitled to a decree for his principal money and interest.
The decision of the Chancellor was affirmed by the following vote:
For reversal — None.
Cited in Martin v. Melville, 3 Stock. 233; De Groot v. McCotter, 4 C. E. Gr. 533; Spring v. Fisk, 6 C. E. Gr. 179; Griggs v. Landis, 6 C. E. Gr. 515