| N.Y. Sup. Ct. | Jul 15, 1840
By the Court,
The defendant, in consideration that the intestate sold him fourteen lots of land for the sum of twenty-one thousand dollars only, covenanted to do two things—first, to remove from the lots the surplus earth and stone above the corporation level, within a reasonable time ; and second, to erect two brick houses upon the lots by a specified day ; or, in default of erecting such houses, to pay the intestate four thousand dolíais, when afterwards demanded. So far as this action is concerned, we may lay the first branch of the covenant, which relates to the surplus earth and stone, entirely out of view. It is a distinct stipulation, which cannot affect the remaining branch of the covenant.
The case then comes to this: The defendant, for a specified consideration, agreed that he would erect two brick houses on the lots by a certain day, or in default of doing so, would afterwards pay the intestate four thousand dollars on demand. This was an optional agreement. The defendant had the choice of erecting the houses by the day; or of omitting to do so, and then paying the specified sum of money. He made his election by omitting to build within the time. The obligation to pay the four thousand dollars, thereupon became absolute; and the plaintiffs were, I think, entitled to recover that sum, with interest from the time of the demand.
This does not belong to the class of cases in which the question of liquidated damages has usually arisen. It will be found in most, if not all, of those cases, that there was an absolute agreement to do, or not to do, a particular act, followed by a stipulation in relation to the amount of damages in case of a breach; and in declaring upon the contract, the breach has been well assigned by alleging that the party did, or omitted to do, the particular act. But here, there is no absolute engagement to build the houses. It was optional with the defendant whether he would build them or not; ‘and there would have been no sufficient breach, if the plaintiffs [ *247 ] had stopped with alleging that the houses were not built. This is not a covenant to build, with a liquidation of the damages in case of nonperformance ; but it is a covenant to build within a specified time, or after-wards to pay a sum of money. The money is not to be paid by way of damages for not building the houses; but is to be paid, if the houses are not built, as part of the contract price for the lots conveyed by the intestate.
Again: this is not simply an alternative covenant; to build, or pay a sum of money, within a specified period. If it were so, the question of damages would, perhaps, be open. But it is an agreement to build by a certain day, or afterwards pay a sum of money. When the day for building had gone
Let us reverse the order of these stipulations, and suppose that the defendant had agreed to pay the intestate four thousand dollars by a particular day, or in default of so doing that he would afterwards build the houses. The defendant might then have discharged himself by the payment of the money by the day ; or he might, at his election, suffer the day to pass, and then build the houses. If he did neither, the intestate would have an action; but the question of damages would turn wholly on the agreement to build. The enquiry would be, either how much was it worth to build, or how much has the intestate lost by the neglect. The day for paying the four thousand dollars having gone by, that clause of the covenant could have no possible influence upon the question of damages. The recovery might be either more or less than that sum. In short, the intestate *would [ *248 J recover damages for not building, whatever those damages might appear to be. So here taking the stipulations in the order in which they stand in the contract, the question of damages turns wholly on the agreement to pay the four thousand dollars in a certain event. The event having happened, the plaintiffs are entitled to that sum, without any reference to the fact that the defendant might at one time have discharged himself by . building the houses.
We have no right to call this sum of four thousand dollars a penalty, or say that it' was inserted in the contract for the purpose of ensuring the erection of the houses. There is nothing in the covenant which will warrant such an inference. We are to read the covenant as the parties have made it; and then it appears that this sum of four thousand dollars was not inserted for the benefit of the intestate, but as a privilege to the defendant. The intestate had no option, but the defendant had. He was at liberty to discharge himself from the covenant by building the houses, if he deemed that course most for his interest or convenience; or he might elect, as he has done, to omit building and pay the money. So far as we can judge from his acts, he deems that course most beneficial to himself.
Whether the plaintiffs, or the persons whom they represent, will be better off if they get the money, than they would have been had the houses been pub up, must, from the nature of the case, be a difficult question to decide ; and that is one reason why the parties should be left to settle the matter for themselves, as they have done by the contract. But if we could see clearly,,
Although I have said something on that subject, we are not, I think, at liberty to speculate upon the probable consequences of holding parties to their agreements. • So long as they keep within the boundaries of the law, and practice no fraud, our business is to see that their contracts are enforced. We have no dispensing power.
Judgment affirmed.