Bryton v. Marston

Moran, J. The question presented is whether the clause of the contract which provides that “in case of failure to perform any of the agreements of said sale, the parties bind each unto the other in the sum of $5,000, as fixed and settled damages, tobe paid by the failing party or parties,” is to be treated as creating a penalty or as an agreement liquidating the damages to be recovered in case of breach. It is well settled that the language used by the parties in framing such a clause in a contract is not controlling; that if a strict construction of the terms used would result in oppression, or in contravening the intention of the parties as gathered from the whole instrument, then the use of such words as “liquidated,” or “fixed and settled” damages will not prevent the courts from inquiring into the actual damages sustained, and making compensation for such actual injury, the measure of damages for the breach. When we examine the contract in this case, we find that there is an agreement by the appellants to pay $10 for every night performance and $5 for every afternoon performance of the play, till the sum of $3,000 should be paid, and that said payments should be made each week by post-office order or in some other way to be agreed upon. Now the settled damage clause secures the performance of this agreement to pay these small sums of money each and every week, for the $5,000 is to be paid “ in case of failure to perform any of the agreements of said sale.” There can be no doubt that the sum to be paid and the time and manner of payment are essential and material “ agreements of said sale.” So far as the damage «clause applies to the breach of such parts of the contract, it is to be construed as a penalty; for it is settled by a substantial concurrence of the authorities that 11 where, by the terms of a contract, a greater sum of money is to be paid, upon default in the payment of a lesser sum, at a given time, both courts of law and equity will hold the provisions for the payment of the greater sum to be a penalty. And even where the parties stipulate for the payment of a sum certain on default of performance of an agreement, such stipulation will be treated as a penalty if the damages are not difficult of ascertainment.” Tiernan v. Hinman, 16 Ill. 400; 1 Sutherland on Dam., 497; Scofield v. Tompkins, 95 Ill. 190. There is in the contract, however, a stipulation for the breach of which damages would be uncertain and difficult to fix; that is the agreement to use the name of the party of the second part as the author of the play, and print the same upon their play bills and advertisements. This seems to be ■an unimportant and merely incidental stipulation, and it is difficult to.conclude that it was the true meaning and intent of the parties to make $5,000 the measure of its breach. But the fact that the breach of it as well as the breach of the money agreements in the contract, is covered by the damage clause, does not compel the construction of said clause as liquidating the damages. The rule is that “ where a party agrees to do several things, one of which is to pay a sum of money, and in case of a failure to perform any or either of the stipulations agrees to pay a larger sum as liquidated damages, the larger sum is to be regarded in the nature of a penalty; and being a penalty in regard to one of the stipulations to be performed, is a penalty as to all.” Cotheal v. Talmadge, 9 N. Y. 551; 1 Sutherland on Dam., 521. It follows that under the terms of the contract the agreement to pay $5,000 must be treated as a penalty and that appellee, having introduced no evidence on the trial as to actual damages, was entitled to recover only nominal damages for breach of contract. As the case must be remanded for another trial, we will notice the clause of the agreement requiring the production of the play before the public, on or before October 1, 1885. On a failure to so produce, the parties provided that the agreement of sale should become null and void, and the play should be returned. The play not having been produced, the terms of the agreement left none of the stipulations of it operative between the parties on which to maintain an action, except that for the return of the play. For the failure to so return, appellee can recover what the manuscript shall be shown to be reasonably worth. The judgment of the Superior Court will be reversed and the case remanded. Reversed a/nd remanded.