Court Opinion

ID: 4931604
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:08:32.657254+00
Date Added: 2024-06-11T08:14:30.143927
License: Public Domain

Appleton, C. J.,
dissenting. — The plaintiff, on 10th Oct., 1860, gave the defendant a permit to cut timber on land owned by him, on certain conditions and stipulations therein expressed. The concluding clause of the permit is in these words: — "And the said grantee hereby agrees with the said grantor to go upon premises with the said three or more teams well manned and furnished, in due and proper season, and cut and remove timber as aforesaid, and truly and faithfully do and perform each and every condition and stipulation expressed in this license and agreement, hereby binding himself in the full and liquidated sum of one thousand dollars, well and truly to be paid to the grantor on 'demand, over and above the actual damage which said grant- <or may sustain by the non-performance of any agreement (hereinbefore contained.”
The plaintiff claims one thousand dollars as liquidated 'damages. What are liquidated damages ?
In case of a contract, damages are. the pecuniary satisfaction to which the injured party is entitled by way of compensation for its breach. Liquidated damages are damages agreed upon by the parties, as and for a compensation for ■and in lieu of the actual damages arising from such breach. *475They may exceed or fall short of the actual damages, —but the sum thus fixed and determined binds th e parties to such agreement. When this sum is paid, all damages are paid.
In the case at bar, the sum of one thousand dollars was not liquidated damages. It was not for damages at all. The contract so expressly and unqualifiedly states it. It was a sum " over and above the actual damages.” The plaintiff, by its terms, was further entitled to recover "the actual damage” which he might sustain by " the non-performance of any agreement hereinafter contained.” Suppose the actual damages were five thousand dollars, would not the plaintiff be entitled to recover that sum ? Most assuredly. The actual damages are therefore excluded from the sum of one thousand dollars, and yet remain to be assessed.
It is difficult to conceive of a clearer case of a penalty, than that where a party is required to pay one thousand dollars over and above what he owes. If that is not a penalty, what is or what can be ?
The intent of the parties is to be ascertained from the agreement. The mere use of the words "penalty,” "forfeiture,” or " liquidated damages,” is not at all decisive of the question. In Kemble v. Farrar, 6 Bing., 141, the sum of £1000 was " declared by the parties to be liquidated and ascertained damages, and not a penalty, or penal sum, or in the nature thereof,” yet, notwithstanding these sweeping words, the Court, upon an examination of the contract, decided that the sum must be taken to be á penalty, and that it was for the jury to assess the real damages sustained by reason of the breach of the agreement in suit.
Liquidated damages are fixed, settled and agreed upon in advance, to avoid all litigation as to those actually sustained. They are a compensation for and in lieu of actual damages, never in addition thereto. The language of the agreement leaves no room for any other conclusion than that the sum fixed is a penalty. It is not for damages, by the terms of the contract. It is not, therefore, a sum agreed upon in *476liquidation of damages, — but is a penalty and so must be regarded.
Walton and Barrows, JJ., concurred,