Daily capital journal. (Salem, Oregon) 1903-1919, 1911-10-25
OREGON SUPREME
COURT DECISIONS
Continued from page four.

Continued from page four.
to the contention that parties may no
/ bona tide, in a case where the dam
ages are of an uncertain nature, esti
mate and agree upon the measure o
damages which may be sustained from
the breach Of an agreement. On thu
/ contrary, this court has consistently
maintained the principle that the in
tention OF the parties is to be arrived
at by a proper construction OF the
agreement made between them, ant
that whether a particular stipulation
TO pay sum of money is to be treat
ed as penalty, or as an agreed ascer.
tainment Of damages, is to be deter
mined by the contract, fairly con-
strued, it being the duty of the court
always, where the damages are un-
certain and have been liquidated by
an agreement, to enforce the con-
tract The principle seems TO be-
from a consideration of all the au-
thorities, that where the parties are
competent to contract. are equally
masters of the situation and deal at
arms length. the court of equity will
not disturb the measure of damages
established by the parties themselves
unless it is so grossly uncomfortable
and oppressive as to shock the con-
sicence of the court and lead it to
believe that although so nominated in
the bond, in the letter, it is not in
cluded within the spirit OF the contract
or within the contemplation of the
parties. With this principle in mind
and as if this were purely a question
Of liquidated damages or penalty, let
us examine the transaction more par
ucularly and determine whether the
alternative is so unconscionable as to
render it inequitable to enforce the
agreement as made by the parties.
In the beginning, the plaintiffs
paid cash in the sum of $1,000, gave
their first mortgage, now undisputed,
for S1,SOO and the second note and
mortgage, the instruments in ques-
ton, for $500 making "a total of
$4,000 If the defendant, Angus,
had performed his contract in repur-
chasing the property, by the terms of
their agreement, the plaintiff would
have received cash S16,500 and the
return of their note and mortgage
for $500, making a total of $4,000.
This arrangement would have can
celled their note and mortgage for
$500; reimbursed them for the
$1,000 cash and extinguished their
first mortgage of $500 which would
have left them a net balance of ST.
100 in cash, over and above all their
expenditures for the purchase price
of the property. True, it is, that they
placed $1,000 in the hands of the de-
fendant to be expended at his discre-
tion in improving the property, but
this was not part of the purchase
price and was as much for his bene-
fit as for the benefit of the plaintiff
because it improved the property in
question. There is enough of the
element of uncertainty on both sides
OF the contract to make the damages
incapable of accurate ascertainment
at the outset. On behalf of the
plaintiff they could not estimate how
much, If any, the expenditure of
$500 at the discretion of the defen-
dant would enhance the value of the
property. In the absence of obser-
vation on the part of the defendant
he could not foretell in advance
whether the plaintiff could so man.
age the property as to pay the in
debtedness attaching as a lien there
on. The whole transaction was more
or less speculative and the parties
could not with any degree of accur-
acy foretell the measure of damages
accruing to either by reason of a
breach of thier agreement. Hence IL
was competent for them to provide a
rule of action in that respect by
which their rights should be deter.
mined; and it is clearly within the
proprieties of equity for them tc
agree in the alternative that the de.
fendant should as a solution of the
dilema repurchase the property al
$4,000 or cancel the $500 note anC
mortgage. The option in favor of the
plaintiff to call for the repurchase oil
the property or the cancellation oi
the note was open from the begin.
ming of the transaction until one
year thereafter. AS we have shown
if the option had been declared on the
following day after the beginning Of
the transaction, the plaintiff would
have received net balance of ST..
700 in cash. AS time ran on and in.
terest accrued, this might be percep.
tiblY diminished, but this would moi
be sufficient to render the cancella.
tion OF the note and mortgage un-
considerable as a measure of dam.
ages for the failure of the defendant
to comply with either of the alterna.
tives of his contract The following
precedents are illustrative of the
questions involved. Dwinell V. Brown
54 Me. 46S; Calbeck v Ford 14O Mich
4S; Moore " Durham 63 n. j. Eq. SO
Witherspoon V. Duncan 131 S. w
$50; Ahlers V. Harrison 10S n. w
331; United States V. Bethlehem
Steel Com. 205 U. S. 1O5, 118. The
equity side of the court is the forum
in which to determine the questions
involved in this controversy for the
mortgage remaining unsatisfed Of
record, when of right 1t ought to be
cancelled, constitutes a cloud upon
plaintiffs title to the land, the reason
being that as against anyone seeking
to enforce it, the plaintiffs would be
put to their allegation and proof Of
its invalidity 10 Withstand the claim
Cancellation of instruments void IL
fact but apparently valid is a pecul
lar province of equity Jurisdiction
Breathwit v Rogers 80 Ark. 1853