Leggett v. Mutual Life Insurance

By the Court, Geo. G. Barnard, P. J. The parties made the contract under which this claim arises. They agreed mutually to do certain acts, and in case of a default by either they “ fixed and agreed upon as the liquidated amount of damages,” to be paid by the defaulting party, the sum of five thousand dollars. With this covenant in evidence, the court decided to make a new agreement for the parties, and to determine that the sum of $5000 was intended by the parties as a penalty, and, in the- absence of any other proof of .damage, that the plaintiff was only entitled to recover a nominal sum of six cents. If a court may determine that a sum agreed upon by the parties be excessive and therefore a penalty, there should be some principle to determine at what sum short of the fixed amount the court would have upheld the agreement of the parties, . To reduce damages established by covenant, as in this case, by findings after a trial, when it is impossible to give any other proof, does not seem to me to be just, even if the principle under which it was done, was unquestioned. Under the case of Clement v. Cash, (21 N. Y. Rep. 253,) it seems to me the binding force of this covenant is settled. The words are clear, and the language used permits no question of construction. The parties agreed to fix the damage, and did so, and in cases ■like this they may do so, and the amount so fixed is to be treated by courts as the true damage. The judgment should be reversed and a new trial granted, costs to abide the event. Geo. G. Barnard, Ingraham and Sutherland, Justices.]