Hoag v. McGinnis

[165] By the Court, Cowen, J. The plaintiff’s pleader supposes that the liquidated damages were intended, among other things, as a compensation for not giving notice of the hearing. I think not. The language of the parties is shortly this: “ The award is to be final between the parties, under penalty of $100, to be paid by the defaulting party to the one abiding thereto,” (i. e. the award.) The parties, not being lawyers, supposed that even after the award, one might, as the vulgar phrase is, “ fly” or “ back out,” and the penalty was bung up in terrorem to prevent such a consequence. It is, after all, but the usual penalty for not performing an award. Suppose that had been for the payment of money, only six cents, to the plaintiff, ought he to have the “due and forfet of his bond?” So, if the defendant had revoked the authority to award, on being convinced that his judges were not indifferent. After all the substantial provisions and this penalty for not abiding the award, comes the collateral provisions regulating the practice between the parties. To this the penalty cannot be made applicable without straining and forcing the apparent meaning of the parties beyond all precedent. It is supposed that the defendant, by omitting the notice, defeated the arbitration. Not so. It is of the nature of such a proceeding, that either party may give notice, and convene the arbitrators. Watson on Arb. and Awards, 73. A stipulation by one party to give so many days’ notice, does not curtail the power of the other to proceed in the usual way. The agreement might fail by reason of sickness, or in various ways, beside ommitting the notice. But it would be a sufficient argument for withholding the penalty, if the question were equal whether the parties intended the payment of $100 for not giving the notice, or did not so intend. I do not think that penalties like this (for they are seldom any thing other than penalties,) should be favored. I yielded my assent to the opinion in Dakin v. Williams, 17 Wendell, 447, for the reason which there governed the chief justice, viz: because, on the whole contract, we could not doubt the parties intended that the damages should be paid for violating the stipulation in question, [166] and because it was difficult, not to say impossible, from its nature, that the damages for a breach could be ascertained by a jury. The latter may be said of failing to give the five days’ notice; but we want the clear intent of the parties, that such an omission was tobe punished by such a disproportionate fine. It is evidently upon that clear intent that Dakin v. Williams went; and that could the chief justice have brought himself to doubt, he would never have consented to apply the penalty. It is commonly hard enough in such cases that we should be bound by the letter ; though such is the result of the cases, where liquidation is impossible. The creditor is a very apt apprentice in the art of enlarging any opening which the law leaves him for encroachment; while the debtor, especially if he be poor or embarrassed, is most complying; and could he have his way, would prove his own worst enemy. Hence our usuary laws, and the system of equitable relief against penalties. To allow of the use of penalties as damages, at the unlimited discretion of the parties, would lead to the most terrible oppression in pecuniary dealings. The fair and just rights of the creditor are worthy of all protection; but no more than the debtor’s right to exemption, from what is beyond an honfest compensation to his creditor. On this declaration, I am clear there should be judgment against the plaintiff. Judgment for defendant; with leave to the plaintiff to amend.