Giles v. Spaulding

Headnote

Lease — breach of covena/nts — liquidated damages —penalty.

Appeal from a judgment in favor of plaintiff, entered on the report of a referee.

A lease, under which the defendants occupied the Bowery theater in the city of New York, contained covenants that the premises should not be let or underlet without the written consent of the lessor, and should not be used or occupied for any other purpose than theatrical or equestrian, operatic and magical performances, and, in reference thereto, it provided as follows: “Nor shall the said premises be underlet in any way without the written consent of the party of the first part had and obtained, under penalty (which is hereby mutually agreed upon) of immediate forfeiture of this lease; and the sum of $5,000 is hei’eby fixed as the liquidated damages against the said party of the second part for a violation of the above written covenants, and using the said premises for any purpose other than equestrian or theatrical, operatic and magical performances.”

The court say: “ If it were necessary to consider whether this provision was in the nature of a penalty and not otherwise, it would not be difficult, on the authorities, to show that it was so designed; and if not, then that, under the established rules of construction, a forfeiture of the lease and a penalty of $5,000 in addition, for a violation of either of the covenants mentioned, might be regarded

as grossly disproportioned to the actual damage, and rejected. (Demies v. Penton, 6 Barn. & Ores., 216; Ootheal v. Talmage, 5 Seld., 551.; Bagley v. Peddle, 16 N. Y., 469 ; Clement v. Cash, 21 id., 256; Colwell v. Lawrence, 38 id., 74.1 The other questions in the case related to matters of fact.