Pearson v. Williams' Administrators

After advisement, the following opinions were delivered: By the Chancellor. I think there is no room to doubt the correctness of the decision of the supreme court in this case. The object of the parties to the agreement is very evident. The one wanted to purchase the lots upon a speculation, for the lowest price for which they could be obtained.. The other not only wanted to sell his lots at the price agreed to be paid) but also to secure the improvement of the lote within a certain specified time, for the benefit of the véhders of other property, or to enhance the [632] value of what he had left, or that the purchaser should pay him a further sum, in addition to the $21,000: which supa oniy pe was to receive if the two lots should be built upon, in the manner specified within the two years. The agreement was this: the purchaser first stipulated to dig down or grade the lots within a reasonable time: both parties evidently understanding that such reasonable time would be much less than the two years; and the purchaser was then to build the houses within the two years, or to pay $4,000 more for the lots, at his own election; for, if this was not a matter of election on the part of the purchaser, but a positive agreement to build the houses within that time at all events, then the vendor could have recovered all damage which might happen in consequence of his neglect to build, even if it amounted to $10,000. The improvement was not made in time to enable the vendor to take advantage of the high prices of 1836 and 1837, in disposing of the adjacent property. The vendor, therefore, was clearly entitled to the additional $4,000 which the purchaser had agreed to pay for the lots in the event which happened. And unless this court feels itself authorized to make a new bargain for the parties, which neither of them ever thought of making for themselves, we cannot reverse the decision of the court below. For these reasons I shall vote to affirm the judgment. By Senator Ely. The doctrine of liquidated damages, which denies all abatement of the sum specified in the contract, is rigorous in the extreme, and should never be extended or applied to cases in which the terms of the instrument, construed in the most popular sense, will admit of a doubtful construction. The tenor of the instrument taken together, should clearly declare the stipulation to be to liquidate all damages, or a rule which operates with so much severity should not be held to apply; for, in an action for damages, the plaintiff below would have found a remedy for all that he had lost by reason of the neglect of [633] the party, or the non-performance of the covenants. The doctrine should never be applied to a class of contracts which admits of partial performance, as in a case like this, where the houses may have been partly built, and the surplus earth partly removed—or the surplus earth removed, and the houses partly built but not finished—but to that class only where the contract must be either wholly performed, or in which there must be a total failure. It is unreasonable to believe, in -the case under consideration, that the parties intended to stipulate that the amount of damages should be the same, when nine-tenths of the work and expense under the contract should have been performed and incurred, as when nothing at all had been done or expended. This distinction has not always been taken? but is, I believe, supported by authority. Again: the defendant below contracted to perform two distinct acts: first, to clear off all the surplus earth from the lots, and secondly, to build two houses; and this, according to the decision of the court below, u divides the covenant into two parts, giving liquidated damages for the neglect to build, and unliquidated or open damages for the neglect to remove the surplus earth.” By the terms of the contract the forfeiture was expressly provided for, and confined to the failure to build the houses. Now, if the $4,000 are liquidated damages, the defendant might with impunity, have omitted to clear off the lots, except so far as was necessary to enable him to build the two houses, or else the same covenant gives two actions—one for liquidated damages, and another on the covenant to remove the surplus earth—an absurdity that cannot be supposed or allowed. I am therefore of opinion that the sum of $4,000 in the contract, should be considered as a penalty, and not as liquidated damages, and that the amount of damages which the plaintiffs suffered should have been submitted to a jury. I shall accordingly vote for a reversal of the judgment. [634] On the question being put, Shall this judgment le reversed ? six senators voted in the affirmative, and the Pre¿dent 0f the senate, the Chancellor and ten senators voted jn the negative. Whereupon the judgment of the supreme court was Affirmed.