5 Mich. 123 | Mich. | 1858
The first point upon which the Court below was requested to charge, and for the refusal of which the first exception is taken, assumed that, by the arrangement between the parties, the contract was not to - become operative, or to have any force or effect, until the duplicates should be delivered, by Captain Edwards, to both parties, at the same time.
Whether such was the effect of the arrangement, or, whether the agreements were placed in the hands of Captain Edwards solely to await the execution and delivery of the bond and note mentioned in the contract, and thereupon to become operative, was a question which depended upon the intention of the parties, to be gathered from the whole transaction, their acts and declarations, and, in some -measure, upon the nature and provisions of the contract itself. It was a question of fact, involved in the issue. The Court had no right to assume the truth or falsehood of either side of the question. The evidence bearing ujion the point was conflicting. It was as clearly a question of fact for the jury as any other fact in issue in the cause. To have charged the jury as requested, would have been an encroachment by the Court upon the province of the jury. The question was, therefore, properly submitted to the jury. The charge of the Court in this particular was in all respects fair and correct, and the verdict of the jury is conclusive upon this point. The first exception, therefore, is not well taken.
The second exception raises the single question, Whether the sum of one thousand dollars, mentioned in the covenant of Jaquith not to go into business in Trenton, is to be construed as a penalty, or as stipulated damages — the plaintiff in error insisting it should be construed as the former, the defendant as the latter.
We shall not attempt here to analyze all the decided cases
First. The law, following the dictates of equity and natural justice, in cases of this kind, adopts the principle of just compensation for the loss or injury actually sustained/ considering it no greater violation of this principle to confine the injured party to the recovery of less, than to enable him, by the aid of the court, to extort more. It is the application, in a court of law, of that principle long recognized in courts of equity, which, disregarding the penalty of the bond, gives only the damages actually sustained. This principle may be stated, in other words, to be, That courts of justice will not recognize or enforce a contract, or any stipulation of a contract, clearly unjust and unconscionable; — a principle of common sense and common honesty so obviously in accordance with the dictates of justice and sound policy, as to make it rather matter of surprise that courts of law had not always, and in all cases, adopted it to the same extent as courts of equity. And, happily for the purposes of justice, the tendency of corn-ts of law seems- now to be towards the full recognition of the principle, in all eases.
This principle of natural justice, the courts of law, fol-owing courts of equity, have, in this class of cases, adopted
But the Court will apply this principle, and disregard the express stipulation of parties, only in those cases where it is obvious from the contract before them, and the whole subject-matter, that the principle of compensation has been disregarded, and that to carry out the express stipulation of the parties, would violate this principle, which alone the Court recognizes as the law of the contract.
The violation, or disregard, of this principle of compensation, may appear to the Court in various ways, — from the contract, the sum mentioned, and the subject-matter. Thus, where a large sum (say one thousand dollars), is made payable solely .in consequence of the non-payment of a much smaller sum (say one hundred dollars), at a certain day; or where the contract is for the performance of several stipulations of very different degrees of importance, and one large sum is made payable on the breach of any one of them, even the most trivial, the damages for which can, in no reasonable probability, amount to that sum: — in the first case, the Court must see that the real damage is readily computed, and that the principle of compensation has been overlooked, or purposely disregarded: in the second case, though there may be more difficulty in ascertaining the precise amount of damage, yet, as the contract exacts the same large sum for the breach of a trivial or comparatively unimportant stipulation, as for that of the most important, or of all of them together, it is equally clear that the parties have wholly departed from the idea of just compensation, and attempted to fix a rule of damages which the law will not recognize or enforce.
We do not mean to say that the principle above stated as deducible from' the cases, is to bo found generally announced in express terms, in the language of the courts; but it will be found, we think, to be necessarily implied in, and
It is true, the courts in nearly all these cases profess to be construing the contract with reference to the intention of the parties, as if for the purpose of ascertaining and giving effect to that intention; yet it is obvious, from these cases, that wherever it has appeared to the Court, from the face of the contract and the subject-matter, that the sum was clearly too large for just compensation, here, while they will allow any form of words, even those expressing the direct contrary, to indicate the intent to make if a penalty, yet no form of words, no force of language, is competent to the expression of the opposite intent. Here, then, is an intention incapable of expression in words; and as all written contracts must be expressed in words, it would seem to be a mere waste of time and effort to look for such an intention in such a contract. And as the question is between two opposite intents only, and the negation of the one necessarily implies the existence of the other, there would seem to be no room left for construction with reference to the intent. It must, then, be manifest that the intention of the parties in such cases is not the governing consideration.
But some of the cases attempt to justify this mode of construing the contract with reference to the intent, by declaring, in substance, that though the language is the strongest which could be used to evince the intention in favor of stipulated damages, still, if it appear clearly, by reference to the subject-matter, that the parties have made the stipulation without reference to the principle of just compensation, and ' so excessive as to be out of all proportion to the actual damage, the Court must hold that they could not have intended it as stipulated damages, though they have so expressly declared.' — See, as an example of this class of cases, Kemble vs. Farren, 6 Bing. 141.
Again the attempt to place this question upon the intention of the parties, and to make this the governing consideration, necessarily implies that, if the intention to make the sum stipulated damages should clearly appear, the Court would enforce the contract according to that intention. To test this, let it be asked, Whether', in such a cáse, if it were admitted that the parties actually intended the Arm to be. considered as stipulated damages, and not as a penalty, would a court of law enforce it for the amount stipulated? Clearly, they could not, without going back to the technical and long exploded doctrine which gave the whole penalty of the' bond, without reference to the damages actually sustained. They would thus be simply changing the names of things, and enforcing, under the name of stipulated damages, what in its own nature is but a penalty.
The real question in this class of cases will be found to be, not what the parties intended, but whether the sum is, in fact, in the nature of a penalty; and this is to be determined by the magnitude of the sum, in connection with the subject-matter, and not at all by the words or the understanding
The foregoing remarks are all to be confined to that class of cases where it was clear, from the sum mentioned and the subject-matter, that the principle of compensation had been disregarded.
But, Secondly, there are great numbers of cases, where, from the nature of the contract and the subject-matter of the stipulation, for the breach of which the sum is provided, it is apparent to the Court that the actual damages for a breach are uncertain in their nature, difficult to be ascertained, or impossible to be estimated with certainty, by reference to any pecuniary standard, and where the parties themselves are more intimately acquainted with all the peculiar circumstances, and therefore better able to compute the actual or probable damages, than courts or juries, from any evidence which can be brought before them. In all such cases, the law permits the parties to ascertain for "themselves, and to. provide in the contract itself, the amount of the damages which shall be paid for the breach. In permitting this, the law does not lose sight of the principle of compensation, which is the law of
In this class of cases, where the law permits the parties-to ascertain and fix the amount of damages in the contract, the first inquiry obviously is, Whether they have done so in fact? And here, the intention of the parties is the governing consideration; and in ascertaining this intention, no merely technical effect will be given to the particular words relating to the sum, but the entire contract, the subject-matter, and often the situation of the parties with respect to each other and to the subject-matter, will be considered. Thus, though the word “penalty” be used (Sainter vs. Fergason, 7 M. G. & 8S. 716; Jones vs. Green, 3 Y. & Jer. 299; Fierce vs. Fuller, 8 Mass. 223), or “forfeit” (Noble vs. Noble et al. 7 Cow. 307), or “forfeit and pay” (Fletcher vs. Dycke, 2 T. R. 32), it will still be held to be stipulated damages, if, from the whole contract, the subject-matter, and situation of the-parties, it can be gathered that such was their intention. And in proportion as the difficulty of ascertaining the actual damage by proof is greater or less, where this difficulty grows out of the nature of such damages, in the like proportion is the presumption more or less strong tíiat the parties intended to fix the amount.
It remains only to apply these principles to the case before us. It is contended by the plaintiff in error, that the payment of the one thousand dollars mentioned in the covenant, of Jaquith is not made dependent solely upon the breach of the stipulation not to go into business in Trenton, but that it applies equally — first, to the agreement to sell to Hudson hi&
It is, therefore, very clear, from every view we have been able to take of this case, that it was competent and proper
The second exception, therefore, is not well taken; the Court properly refused to charge as requested, and no error appearing in the record, the judgment of the Circuit Court for the county of Wayne must be affirmed.