130 Misc. 725 | N.Y. App. Term. | 1927
Judgment affirmed, without costs, on the opinion of the court below; present, Delehanty, Lydon and Crain, JJ.
The following is the opinion of the Municipal Court:
This is an action to recover the sum of $500 upon a promissory note dated July 29, 1925, made by the defendant to the order of the Amalgamated Clothing Workers of America (meaning the plaintiff herein), which was given under the following circumstances: The plaintiff is an unincorporated association representing the children’s clothing workers, and the defendant is a manufacturer of children’s clothing. On July 29, 1925, the parties entered into an agreement whereby the defendant agreed to comply with numerous rules laid down by the plaintiff, and as security for the compliance on his part of the conditions imposed upon him, gave the note in question. It was agreed that the note should be payable “ as liquidated damages to secure the union and its members for the full and faithful performance by the employer [meaning the defendant] of all the covenants, agreements and undertakings to be performed by the employer under this agreement, and for the full and faithful observance of all the restrictions assented to by him. Upon any default by the employer of any
I am also of the opinion that the plaintiff cannot succeed for the reason that the agreement provides for a penalty. As stated in City of New York v. Brooklyn & Manhattan Ferry Co. (238 N. Y. 52, 56): “ The tendency of the courts in doubtful cases is to favor the construction which makes the sum payable for breach of contract a penalty rather than liquidated damages, even where the parties have styled it liquidated damages rather than a penalty.”
The agreement contains numerous obligations to be performed by the defendant, in addition to the one referred to under paragraph 4, such as that the defendant agrees to pay his employees their wages promptly every week; that he will abide by a minimum scale of wages; that there shall be an unemployment insurance
The defendant sets up a counterclaim for the sum of $500 which he paid upon the signing of an agreement in July, 1924. That agreement, with the exception of the date and the terms of payment, was identical with the 1925 agreement. It appears that prior to the expiration of the 1924 agreement the plaintiff called a strike against the defendant upon the alleged ground that he had violated the terms of the agreement. After the strike had lasted for some time, negotiations between the parties took place which resulted in the making of another agreement, being the one of July 29, 1925. The defendant claims that he is entitled to recover back the $500 which he paid in July, 1924, upon the contention that such payment was a penalty. I am persuaded, however, from the evidence in this case that the defendant waived any claim that he may have had and consented to the forfeiture of the amount paid by him in 1924. The consideration for such forfeiture consisted in the making of the new agreement of July 29, 1925. I do not believe, as claimed by the defendant, that at the time of
In the view that I have taken of this case, the plaintiff’s complaint must be dismissed on the merits, and the defendant’s counterclaim must be dismissed on the merits.