#### HENRY S. LLOYD *against*JOHN B. WHITLEY.

Where A sued B, on a contract about the getting of shingles, and a compromr ise was made in writing, to the effect that B should confess judgment for $500, to be discharged within twelve months by the delivery of so many shingles at given prices, and a judgment was entered accordingly, it being admitted that the shingles were to be paid for when delivered, at the prices agreed on, it was *held*that the writing and the judgment were but an obligation to pay a penal sum, and the court directed that the judgment should stand as a security for the damages actually sustained.

Cause removed from the Court of Equity of Martin county.

The plaintiff and defendant having had a controversy at law about the getting of shingles, the following covenant was entered into between them, viz:

“State of Noeth Caeolina, Edgecombe county :

“ Whereas, there is a suit pending in the Superior Court of law of said county, wherein Henry S. Lloyd is plaintiff, and John B. Whitley and Newsom Allsbrook are defendants, and the said parties are anxious to compromise the said suit; now these articles witness, that the said M hitley, for and in consideration of the obligation hereinafter undertaken by the said' Lloyd will, at the next term of the superior court of law of said county, to be held on 2nd Monday of this month, suffer the said Lloyd to enter a judgment against the said Whitley, for the sum of $500, and the costs of the suit, and will, within *317twelve months from the date of these presents, obtain and manufacture upon the lands of the said Lloyd, situated in the county of Martin, 250,000 cypress shingles, (two feet, and thirty inch shingles,) at the price of three dollars per thousand for the thirty inch shingles, and two dollars per thousand for the twenty-four inch shingles.

“And the said Lloyd, in consideration of the above obligations does bind himself not to sue out execution upon the said judgment within the term of twelve months, and that when the said "Whitley shall obtain and manufacture the shingles which he has contracted to do, the said judgment shall be considered as satisfied, and an entry to that effect shall be made upon the records of the said court.” Signed and sealed by the parties, 8th of March, 1856. Allsbrook having become insolvent-was left out.

In pursance of' this covenant and compromise, Whitley on the 2nd Monday in March 1856, in the superior court of Edge-combe, allowed the following entry to be made, viz: judgment confessed by the defendant, J. B. Whitley for $500 and .costs of suit, Execution in this case to be stayed for twelve months, and it is agreed between the parties, that the judgment is to be discharged upon the performance of the condition set forth in the written agreement between them.

The plaintiff alleges that he faithfully endeavored to make the shingles he agreed to make, biit on account of the high water in the swamp pointed out to him by Lloyd and his obstinate refusal to let him work in drier swamps which he (Lloyd) owned in Martin county, he (Whitley,) only procured about 40,620 thirty inch shingles, and 13,070 two feet shingles which were accepted by one Ray, the agent of defendant Lloyd. The defendant took out execution on this judgment returnable to March term 1857, but directed the sheriff not to make the money. After that term, he took out an alias execution, and gave orders for its enforcement. The bill is for an injunction, insisting that the said judgment is only a,-penalty, and that no execution can issue upon it. He states as a reason for not having applied for an injunction in proper time, that *318that the defendant assured him that he did not.intend to collect the money within two years, and that he meant to give him every opportunity to make the shingles in pursuance of the condition. The plaintiff alleges that besides the price of the shingles, he did twenty day’s work with one hand, in boating shingles, for which he received no pay. The plaintiff also prays that the defendant shall pay him for the shingles he obtained- and delivered to the defendant, and for payment for boating; asks for an account for the purpose of ascertaining what is due’to him and also what damages are due the defendant for his failure to perform the contract, which he is willing to pay, and for general relief.

The defendant in his- answer insists that this entry of $500 is not a penalty, but was agreed upon and entered as liquidated damages in case the contract should not be performed by Whitley. He denies that he made any-promise, or otherwise, deluded the plaintiff as to the issuing of the execution, but he admits that he is bound to pay the prices agreed upon, for the shingles delivered, and as to that, he says that the plaintiff is largely indebted to him on other accounts, and proposes to set off the amount thus due, with such, his counter claims.

The bill was filed at spring term 1858. Was continued at fall term 1858. Was set for hearing on bill and answer at spring term 1859, and by consent, sent it to this court. Motion below to dissolve the injunction. The transcript says, “ sent by consent to the Supreme Court.”

*Wmston, Jr.,*for the plaintiff.

*B. F. Moore,*for the defendant.

PuARSON, C. J.

The jurisdiction of the Court of Equity to prevent the enforcement of penalties on payment of the damages sustained by reason of a breach of the condition, was so obviously necessary to the ends of justice, that, in most cases, ■ relief is now given at law, by statutes, which require the plaintiff to suggest breaches, and provides for the ascertain*319ment of the damages, whereupon judgment is to be entered for the penalty, but the execution, which may issue thereon, is to be satisfied by the payment of the damages assessed, together with the costs.

The plaintiff insists, that by a proper construction of the judgment, and the covenant referred to, the sum of $500 is a penalty to be discharged upon the performance of the condition set forth in the covenant, to wit: that the plaintiff shall, in twelve months make for the defendant 250,000 shingles two feet and thirty inch shingles at the price of $2 per thousand, for the two feet, $3 per thousand for the thirty inch shingles, alleges a part performance of the condition, and submits to pay the damages sustained by the defendant, by reason of his failure,, in respect to the number of the shingles which he has failed to make, and prays that the defendant may be enjoined from enforcing the collection of the $500.

The defendant insists that the $500 is not a penalty, but liquidated damages and claims the right (the plaintiff having failed to discharge the judgment in the manner by which he was allowed to do it, under the covenant) to enforce its collection, subject to a credit for the shingles got by the plaintiff, which the defendant admits he is bound to pay for at the agreed prices, and on his part claims a deduction for certain credits;

The question is one of construction, and it seems to us a Very plain one. The judgment, on its face, is to be discharged upon the *‘performance of the condition*set forth in the written agreement between them. That is, the judgment is to be void, provided the plaintiff makes for the defendant 250,000 shingles at the prices agreed on. So it is neither more nor less than a penalty, by which to enforce the performance of an' agreement, on the part of the plaintiff, to make for the defendant a certain number of shingles at certain prices for the several descriptions. Had the $500, for which the judgment is entered, been liquidated damages, that is, an amount which it was agreed the plaintiff, *owed*the defendant, but which he was Willing to allow the plaintiff to pay in shingles, it *320would have been set out in the covenant and judgment, that the $500 was to be paid in shingles, to be got on the defendant’s land, for which the plaintiff was to be allowed certain prices per thousand. This is not the language used, and itis perfectly certain that the shingles were to be *paid for*by the defendant, and were not to be *accepted,*by him in payment of the judgment. Indeed, the defendant admits by his answer, that he “ is bound to pay the plaintiff forthe shingles got, at the agreed prices.” The fact of his being bound to pay for 'the shingles got, is wholly inconsistent with the suggestion, that the plaintiff was indebted to him to the amount of $500 ; for if so, of course the shingles ought to be applied in payment of the debt, whereas, from the face of the judgment and of the covenant, and by the admission of the defendant, he was to pay for the shingles, and they were not to go in payment of the judgment j in other words, the judgment was to be held *in terroremyra*order to force the plaintiff to make for the defendant 250,000 shingles, for which, when made, the defendant was to pay the plaintiff the prices agreed on.

The mode of argument *redwatio ad,*absurdwm,, will demonstrate, by figures, that the $500 was not a debt to be paid by 250,000 shingles, of the two descriptions, at the prices .fixed on:

> 250,000 at $2 per thousand, is- $500

> 250,000 at $3 per thousand, is 750

> 125,000 at $2 per thousand, is $250'

> 125,000 at $8 per thousand, is 375-625

> 166,000 at $3 per thousand, is 500

So the matter cannot be worked out by figures, unless all the shingles are of one description, that is, two feet, leaving no room for a single thirty inch shingle.

We are satisfied that the $500 was a penalty, and the judgment was taken as a security for the making of an agreed number of shingles at the prices agreed on for the several descriptions.

The plaintiff having failed to perform the conditions, be- • came liable, at law, for the penalty, but is entitled in equity *3216o be relieved of the penalty by making satisfaction for the damages, which the defendant has sustained, by reason of the breach of the condition.

There will be a decree acccordingly, and a reference to ascertain the amount of damages, allowing the plaintiff for the number of shingles got, and for his labor in 11 boating the shingles,” if that allegation is proved, and allowing the defendant for the payments alleged to have been made to the hands of the plaintiff for the work done by them upon, and in respect to the shingles, but no item of charge or discharge, which did not grow out of, and concern the making of the shingles, will be taken into the account.

The motion to dissolve the injunction, on the ground, that it was improvidently granted, not having been appealed from within the time prescribed by the statute, is not allowed, for the case is now before us on the final hearing, being set for hearing on the “ bill and answer” in the Court below, and removed to this Court for hearing, no disposition having been, made of the motion to dissolve the injunction, the reasoning <ff the Court in *Smith*v. McLeod, 3 Ire. Eq. 400, applies with full force; for, although that case had reference to the provisions of the Eevised Statutes, and this depends upon the Eev. Code, yet, here is the fact, we decree for the plaintiff “ on the equity, confessed by the answer,” and make the injunction perpetual, except as to the damages. So, of course, the motion to dissolve, on the ground, that the injunction was. improvidently granted, in the first instance, is out of time.

This view makes it unnecessary to express an opinion on the point as to whether the fiat, made by the Judge below on the averments of the bill, was not a matter of discretion, and, £>f course, not the subject of review.

Pee OueiaM, Eeference ordered.