Court Opinion

ID: 6408264
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:38.706493+00
Date Added: 2024-06-11T15:51:16.838905
License: Public Domain

Hubbard, J.
The only question in this case is, whether the sum of money which the defendant promised to pay, if he did not procure an assignment of the mortgage, is to be considered merely as a penalty, or whether it is the sum agreed upon to be paid, in case he fails in his engagement. This, as has been determined in Perkins v. Lyman, 11 Mass. 81, is a question of construction; therefore the subject matter of the contract may be inquired into, so far as respects the situation of the parties and the facts relating to the agreement; not however for the purpose of controlling the language, where that is clear and explicit, but to ascertain the circumstances out of which the contract originated, and especially in regard to the consideration Clapp v. Tirrell, 20 Pick. 247.
If this agreement had not been expressed in the form of a bond with condition, it would then, we think, be very clear that the actual sum to be paid by the defendant was adjusted and settled at the time of making the contract.
Agreeably to what we have observed before, the deposition of Penniman, though not competent to control the construction of the instrument declared on, is admissible to explain the circumstances under which the bond originated ; to show that the indorsement on the instrument was made at the same time, and is to be taken as part of it; and to give the facts in relation to the consideration.
From this it appears that the sum of $ 580 had been actually advanced by Drury in his notes to King, one for $500 and another for $80, for which he received no other consideration *587than the note of Otis Hodge, on which was due about $500, and an execution against Hodge for $80. The note of Hodge was originally secured by mortgage; but the mortgage had been assigned without the note, and at that time was not in the possession of King. By the instrument in suit, King agreed to procure the assignment of the mortgage to Drury within a year, and if not, to pay back the sum of $ 580 with interest: And upon these facts, we are of opinion that this instrument is not to be considered as in the nature of a penalty, and the damage sustained to be ascertained by the value of the mortgaged property, but as an agreement to payback the $580 with interest, if the assignment of the mortgage could not be procured, upon Drury’s giving back the note of Hodge.
The only doubt as to this arises from the sum of $80, said to be paid for an execution ; and it has been suggested that thiii was a mere cover for usury. But this suggestion is not brought forward in such a manner as to authorize the court to take notice of it; and in relation to the execution, very little information is given, and no evidence of its value. And we cannot, on the whole, consider it as affecting the agreement of the parties as to the actual amount to be paid, in case the mortgage should not be assigned, and to convert the instrument into a mere penal engagement.
It is often a doubtful question whether the sum stipulated to be paid on the non-performance of a condition is in the nature of a penalty, or is the amount settled by the parties for the purpose of making that certain which would be otherwise uncertain In a case like the present, but little light can be derived from authorities. It must rest on the construction to be given to the language used, aided by the facts proved, which gave birth to the instrument. And here it appears that the defendant, having received $ 580 from Drury, did agree to procure for him the as signment of a certain mortgage, and in default of it, to pay him back the $580 and interest, without reference to the execution. And we think this was settling the actual sum to be paid, and that it was not intended to leave the amount in uncertainty and to depend upon unforeseen contingencies.
*588The bond has indeed a condition ; but that is matter of form, and cannot turn that into a penalty which, but for the form, is an agreement to pay a precise sum under certain circumstances. And the agreement to pay interest on the sum is a strong cor roboration of this construction of the instrument; as in penal bonds such a provision is not made, but the party relies on the penalty as the means of furnishing full indemnity for all that may be payable for a breach of the condition.
On the whole, we are of opinion that the damages were liquidated by the parties. The exceptions are therefore sustained, and as no payment is shown to have been made, judgment will be entered for the sum of §5580, with interest from the time it was payable.