Clements v. Schuyl. R.

CLEMENTS V. RAILROAD CO. Opinion, Mr. Chief Justice Paxson: The question whether a sum named in a contract, as a compensation for its breach, is to be regarded as a penalty or as liquidated damages, has been so recently considered and discussed that it is not deemed necessary to review the authorities: Streeper v. Williams, 48 Pa. 450; Mathews v. Sharp, 99 Pa. 560; Moore v. Colt, 127 Pa. 289. The intention of the parties has much to do with it. Yet even that will be controlled where equity demands it. A sum expressly stipulated as liquidated damages will be relieved from if it is obviously to secure a sum capable of being compensated by interest. It is difficult [453] to lay down a general rule applicable to such cases, for the reason that each case as it arises is to be determined by its own peculiar facts, more than by a rule of general application. The nearest approach to a rule upon this subject is to be found in Streeper v. Williams, supra, where it was said by Mr. Justice Agstev : “ Upon the whole, the only general observation we can make is, that in each case we must look at the language of the contract, the intention of the parties as gathered from all its provisions, the subject of the contract, and its surroundings, the ease or difficulty of measuring the breach in damages, and the sum stipulated, and from the whole gather the view which good conscience and equity ought to take of the case.” And I will supplement these well-considered remarks by saying that where the damages are unconscionable, and grossly disproportioned to the injury sustained, equity will generally relieve therefrom by treating the sum as a penalty, for the reason that the parties to the contract probably regarded it as such when the contract was made. It remains to apply these principles to the facts of this case. In the contract between the plaintiffs and Ellis, by which the latter agreed to raise the house No. 2503 Hamilton street, the damages for the delay are not designated either as a penalty or as liquidated damages, but the said Ellis is to pay $150 per' week “ for each and every week after the expiration of thirty days from the date of the delivery of the property to the party of the first part,” (Ellis.) The work was not completed within the thirty days. The evidence is not clear as to the exact extent of the delay, but the jury returned a verdict for the plaintiffs for $4,400. The learned judge below was requested by the defendants’ second point to instruct the jury as follows: “ The weekly amounts named in the contract in case of delay in the completion of the work, upon Avhich the plaintiffs rely for a verdict, are to be considered as a penalty, and not liquidated damages. The jury, therefore, cannot in any event allow any larger sum as damages for delay than that sum which will repay for actual losses proved by the plaintiffs due to such delaju” The learned judge refused this point, and instructed the jury that the sum named Avas to be treated as liquidated damages. The jury allowed $150 per week for the delay. When it is considered that the house and lot in question [454] was worth about §3,000, and its rental value about §25 per month, and that for a delay of less than a year the plaintiffs recovered a verdict for §4,400, the unconscionable character of this transaction becomes clear. It would be an insult to the intelligence of the parties to suppose they ever contemplated such a result when they entered into the contract. The damages for the delay were easily ascertainable. They could be fixed approximately by the rental value of the property. When it is difficult or impossible to ascertain the damages by any fixed rule, for the breach of a contract, there is a reason why the parties should liquidate them in advance, and why the courts should hold them to such liquidation. But when the damages can be assessed almost as easily and as accurately as in the case of a bond for the payment of money, and they are fixed by the contract itself at an unconscionable sum, it is the plain duty of a court exercising equity powers to relieve against such injustice, and treat the sum named as a penalty merely. This does the plaintiffs no injustice. Upon another trial they will be entitled to recover for any loss they can show they have sustained. But it is not likely they will recover §1,000 in excess of the full value of their house. This disposes of the controlling point in the case. As it must go back for re-trial, however, it is proper to say that the change of grade referred to in the twelfth assignment possesses little significance. The contract was to raise the house to the grade of the city, as provided by the ordinance approved July 3, 1885, and the contract would have been fulfilled by conforming to that grade, notwithstanding a subsequent change of the grade by the city. There are some other matters which might be referred to as error, but they result from the theory upon which the case was tried. They will doubtless be corrected upon another trial. The judgment is reversed, and a venire facias de novo awarded. THOMPSON V. RAILROAD CO. Opinion, Mr. Chief Justice Paxson : This case is ruled by Clements v. same defendants, just decided. The judgment is reversed, and a venire facias de novo awarded.