Stillwell v. Temple

RichaRdsoN, Judge, delivered the opinion of the court. The parties to this action entered into a written contract by which the plaintiff agreed to lease to the defendant for the term of one year a dwelling-house in the city of St. Louis, and the defendant agreed to pay therefor, in monthly instalments, seven hundred and thirty-five dollars. By the same instrument, which was under seal, the plaintiff stipulated that he would at any time during the year sell and convey the premises to the defendant at the price and on the terms therein particularly set forth, and the defendant covenanted that he would during the term demand a conveyance and comply with the conditions of the sale. It was further agreed “ that upon the completion of said sale and purchase as and in the manner aforesaid, said lease and rent shall cease ; and, to secure the faithful payment of said rent and making of said purchase as and in the manner aforesaid, the said Temple has assigned unto said Stillwell his right and title to three hundred shares of the capital stock of the St. [160] Louis & Birmingham Mining Company now owned by him, which shall become the absolute property of said Stillwell without redemption, and as and for liquidated damages and not as penalty, in case said Temple should fail faithfully to pay said rent and make said purchase when and in the manner aforesaid; but upon such faithful performance the stock shall revert and be reassigned to him.” At the end of the year, the contract in all its provisions was renewed and extended for another year. The defendant paid the rent for the first year, but paid nothing for the second year, and did not complete the purchase of the property, though the plaintiff was ready and willing and offered to perform the agreement on his part. Without offering to return the stock mentioned in the contract or to give credit for its value, the plaintiff brought an action on the defendant’s broken covenants, in which he sought to recover one year’s rent and damages for the failure of the defendant to purchase the premises. After the commencement of the suit, but before the trial, the plaintiff sold the property, and it will be observed that the petition does not ask to have the contract of purchase specifically enforced, which the plaintiff had rendered impossible, but the action sounds entirely in damages. The defendant contends that the parties to the contract mutually agreed that in the event of a breach of its provisions, the stock assigned and delivered to the plaintiff should cover the damages, which might be incurred, as liquidated or settled damages, without reference to the actual injury sustained. The plaintiff, on the other hand, insists that the stock or its value should be considered only as penalty, which was intended as a security for the actual damages that might accrue by the failure of the defendant to perform his contract. The courts have indicated a strong inclination towards that construction which excludes the idea of liquidated damages and which limits a recovery to compensation for the real injury ; but the rule is almost invariably invoked in favor of the party who is bound for the penalty, and it is seldom that [161] a party who has exacted a penalty is heard to ask to be relieved from it. If the defendant was here seeking to be relieved of a forfeiture, and to redeem the stock on condition of paying tlie damages which the plaintiff had suffered by a breach of his covenants, it would become material to determine whether the stock should be treated as liquidated damages or as a penalty. But that question, in our opinion, is immaterial to the decision of this case, for, no matter how it might be determined, the plaintiff is not entitled to recover. If the parties at the time of making their agreement, in order to avoid any future dispute as to the amount of damages which might result from a violation of the contract, agreed upon a definite sum represented by the stock, the plaintiff must look to the stock, as he had agreed to do, as a complete and adjusted indemnity; and if, on the contrary, the construction contended for by the plaintiff is maintained, and it is held that the stipulated amount is to be regarded, as a penalty, then it is not perceived on what principle he can ask to be relieved from a penalty he exacted himself, and be permitted to recover beyond the amount of it. Suppose that, instead of the stock of the mining company, bank stock worth a premium had been deposited to cover the breaches in advance, or rather that fifteen hundred dollars in money had been given to the plaintiff, with the express agreement that he should keep it as his own and as a full compensation for any damage he might suffer by the failure of the defendant to comply with the agreement; would it be contended that he had a right to hold on to the money and recover what he could besides ? Could he be heard to complain that he was not fully compensated? In the case supposed the deposit would be regarded as the maximum of the defendant’s liability, and though he might be relieved from a forfeiture of the whole sum on paying the actual damages occasioned by his default, the plaintiff would demand nothing beyond it. The defendant might insist that he should not lose all without reference to the extent of the injury the party had sustained; but as a penalty is generally fixed at a sum large enough to [162] cover any probable liability that may be incurred, the plaintiff would not be allowed to recover beyond it. There can be no reason, if a person proposes to make a purchase at a future day, why he can not deposit stock, or any other property, with the stipulation that in the event of being disappointed in procuring means to complete a purchase, he shall only forfeit the deposit. He may be willing to lose that much for the chance of making a bargain, but unwilling or afraid to run the risk of being ruined if he should fail to comply with the terms of a sale. The plaintiff insists that the clause of the contract under consideration relates only to the damages that might be incurred by the failure of the defendant to purchase the property. As any arrears of-rent could easily be computed, there was little reason for securing it by a penalty, or liquidating -the damages that might result from the nonpayment of it; but the parties chose to contract otherwise, and on turning to' the clause, it will be seen that the obligation to pay rent is indissolubly connected with the agreement to purchase ; and the plaintiff’s construction can not be maintained without doing violence to his language and wresting words from their context. Judge Scott concurring, the judgment will 'be reversed.