Leary v. Laflin

Colt, J. It is the duty of courts to enforce the lawful contracts of competent parties, fairly made upon good consideration ; and when in such contracts the parties have agreed to liquidate the damages resulting from a breach, the jury are bound to find the amount agreed. Whether in any particular instance the sum named is to be regarded as a penalty, or as liquidated damages, will depend upon the intent of the parties, as gathered from the terms of the whole contract, applied to the subject matter. The mere use of the words “ liquidated damages ” is not decisive. In applying the rules of interpretation, forfeitures are not favored, and if possible the sum named is treated as a penalty, because then the defendant is permitted to show the actual damage. The rules of construction which govern in these cases are fully and well stated in Lynde v. Thompson, 2 Allen, 456, and need not be. here repeated. The condition of this bond was substantially for the performance of one thing, namely, the carrying on of the .livery business, during the term of the lease, faithfully and as it had been before conducted by the lessor, so as not to impair its good repute and run of custom. From the nature of the case, the actual dam [336] ages resulting from a breach of this agreement are not capable of being ascertained by any satisfactory and known rule, and it was manifestly the intention, as it was clearly within the power, of the parties, not to leave them to the uncertain estimate of the jury, but to fix them by express agreement. In the opinion of the court, there was error in holding the sum here named to be in the nature of a penalty, instead of liquidated damages. Cushing v. Drew, 97 Mass. 445. Fisk v. Gray, 11 Allen, 132. Green v. Price, 13 M. & W. 695; S. C. 16 M. & W. 346. Other questions raised by the exceptions were waived at the hearing. Exceptions sustained.