Beale v. Hayes — 7 N.Y. Super. Ct. 640

Majority

p. 640

T. F. Beale v. Catharine Hayes.

Headnote

It is not a ground of demurrer to a complaint that the plaintiff claims judgment for a larger amount than by his own showing he can be entitled to recover.

Liquidated damages, in the proper sense of the term, are a positive debt excluding evidence of -actual damage, wherever a breach is proved to which they apply.

But damages are not always to be considered as liquidated because the parties have declared them to be so.

Whatever may be the expressions used, they will be construed as a mere penalty: 1st, when the agreement contains various stipulations, differing in importance; and 2d, when they would compel the payment of a larger sum, for a default in the payment of a smaller.

When construed as a penalty, the damages proved, and- not the amount of the penalty, are the measure of the plaintiff’s recovery.

Held, to be a penalty in the case before the court.

Demurrer overruled with costs.

The complaint alleged that the defendant, on the 30th day of April, 1851, made and entered into a contract with the plaintiff, as follows:

Mr. Beale agrees to pay Miss Catharine Hayes, for a period of five months, commencing in the month of September next, or so soon after as circumstances will admit, to play in America and Ireland, in the following operas, namely : La Sonnambula, Lucia de Lammermoor, Linda, Lucrezia, Don Pasquale, L’Elisir d’Amore, I Puritani, and Norma, and such other operas as may be agreed on, and to sing at concerts.

Mr. Beale agrees to pay Miss Catharine Hayes the sum of three thousand two hundred and fifty pounds, by monthly instalments, for her services during such period of five months, and one-sixth part of any profit that may result from this engagement after payment of all expenses, direct or incidental.

Mr. Beale further agrees to pay all the expenses of living

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and travelling for Miss Hayes, Mrs. Hayes (her mother) and her attendant, and appropriate dresses for the different characters in which Miss Hayes will appear during the engagement.

Miss Hayes is never to be called upon to perform in more than four operas or concerts, and a fifth concert during each week, such fifth concert to be at the option of Miss Hayes, but Miss Hayes is not to take any other engagement, or to appear, sing or perform in public otherwise than under this engagement, without the written consent of Mr. Beale or his representative.

Mr. Beale is to have the option of continuing this agreement for any period beyond the five months, not exceeding twelve months in the whole, on giving to Miss Hayes a written notice of such his intention, one month previous to the expiration of such term of five months.

The engagement is to be considered as commencing from the date of the first performance, either in Ireland or America, and the time occupied in crossing and recrossing the Atlantic ocean is not to be calculated as part of the engagement.

In the event of Miss Hayes being at any time incapacitated from performing her part of the engagement in consequence of illness, any loss which may be sustained by such disappointment shall be made good by Miss Hayes in the following manner :— Such loss shall be calculated, and the amount ascertained, and Miss Hayes shall continue her engagement for a period equivalent to make up for the loss, at the rate of six hundred and fifty pounds a month.

And for the due and punctual performance of every article, clause, and thing, covenanted, stipulated and agreed in this agreement, each of the said parties for himself and herself doth hereby bind himself and herself, and his and her heirs, executors and administrators, to the other his or their heirs, executors and administrators, in the sum of three thousand pounds, to be recovered from the party making default, as and for liquidated damages, and in such case it shall not be necessary in any trial at law or suit in equity to prove the amount of actual damages sustained by any breach of this agreement, but

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such sum of three thousand pounds shall be deemed and admitted to be the amount of such damages.

As witness the hands of the parties.

T. F. Beale,

Catharine Hayes.

Witness, John Jay.

That the said agreement was duly executed by the plaintiff and defendant, and that in accordance with the same, on the 23rd day of September, one thousand eight hundred and fifty-one, the first performance in America took place, and the defendant sung thereat, as by said agreement she was bound to do.

That the plaintiff has duly performed his part of the said agreement.

That the defendant, on the 30th day of November, one thousand eight hundred and fifty-one, without the consent of the plaintiff or his representative, or any reasonable cause alleged, refused to sing at a concert which was to have been given in the city of Albany, in this state, although required by the plaintiff so to do, but absented herself from the same.

That since that day she has persisted-in her refusal to give her professional services for the benefit of the plaintiff, and to perform her part of her said contract with him. That she has since then sung and performed in public, contrary to the terms of her said agreement, and continues so to do, contrary to the desire of the plaintiff, and in violation of her said agreement with him.

And the plaintiff says that by the non-fulfilment by defendant of her part of the said agreement with the plaintiff, and by her continued refusal to fulfil the same, he is injured, and has sustained damage to the amount of forty thousand dollars.

The plaintiff therefore prays that the defendant be adjudged to pay to the plaintiff said sum of forty thousand dollars, with the costs of this action.

DEMURRER TO THE COMPLAINT.

That the contract set forth’ in said complaint liquidates the

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damages for the breach thereof at a certain fixed sum, but the complaint, without any sufficient cause shown, claims unliquidated damages for the alleged breach, in a much larger amount.

Dillon and O’Gorman, for plaintiff.

Taylor and Booth, for defendant.

The only ground of this demurrer is, that although the agreement set forth in the complaint liquidates the damages to be recovered for a breach, at a fixed sum, yet the plaintiff demands judgment for a much larger amount, and it was insisted, that whether the sum mentioned in the agreement be considered as liquidated damages, or as a penalty, the objection is equally fatal.

I am, however, clearly of opinion, that this objection to the plaintiff’s claim, if admitted to be valid, cannot be raised by a demurrer. The only grounds of demurrer to a complaint are those which are enumerated in § 144 of the code, and it is admitted that it is only to the last subdivision in that section that the cause which is here assigned, by any possible construction can be referred. But this construction, if possible, is faiteo refined and strained to be adopted. I cannot say that the complaint does not “ state facts sufficient to constitute a cause of action.” The complaint sets forth a valid agreement and assigns a positive breach, and these are all the facts that are necessary to be proved to entitle the plaintiff to recover. Whether he can be allowed to prove damagés exceeding the sum stipulated in the agreement, it may be admitted is a question of law, but as it is á question which respects the event, and not the cause of the action, it can be raised only upon the trial.

In compliance, however, with the wishes of the counsel I have examined the question, and shall briefly state the conclusions to which I have been led. If the sum mentioned in the agreement must be regarded as liquidated damages, in the proper sense of the term, as distinguished from a .penalty, the plaintiff will be entitled to recover the whole sum, without any other proof than

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that of the breach which he has assigned, but to that sum- his recovery will be limited. He will not be allowed to give evidence of an actual loss to a larger amount. Liquidated damages, when a breach is proved to which they apply, are a positive debt, and as such, they exclude, on both sides, the consideration and the proof of actual damage. It is not always, however, that damages are to be construed as liquidated, because the parties have declared them to be so. The language of the parties to this agreement is clear and emphatic, that the sum of £3,000 shall be recoverable from the party making default as and for liquidated damages, yet no court of justice, wi thout an entire disregard of prior decisions, can give effect to the apparent intention of the parties, by adopting that construction of their agreement, which the terms they have used so forcibly suggest. The law is settled, that however strong may be the expressions used, liquidated damages must be construed, not as a debt, but as a mere penalty, in all cases where the agreement contains various stipulations, differing in importance, and it is to each an-d all of them that the damages apply ; and in all cases when, if construed as a debt, they would compel the payment of a larger sum for a default in the payment of a smaller. Each of these rules of construction is applicable to the present agreement; construing the sum of £3,000 as a debt necessarily accruing upon a breach, the plaintiff would have been bound to pay that sum for his refusal or neglect to purchase a single dress that the defendant might properly have required, and the defendant would have been liable to the same extent for her refusal to sing at a single concert. When consequences so unreasonable would follow, the law presumes that they must have been overlooked by the parties, and therefore mercifully gives to their'language an interpretation, which excludes them. When it would be plainly unconscientious to exact a large sum for a trivial breach, even a court of law, acting upon a principle of equity, will release the parties from the literal obligation which their language imports. The leading cases are : Astley v. Wel don, 2 Bos. & Pul. 346; Kemble v. Farren, 6 Bing. 141, and Boys v. Ancell, 5 Bing. N. C. 390. Kemble v. Farren was an action by the manager of Drury Lane Theatre, against a celebrated

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actor, for a breach of his articles of engagement, and the case in all its material circumstances, is not distinguishable from the present.

When liquidated damages must be construed, as a penalty, the consequences are the same as when a penalty is in terms expressed. Before the code, the plaintiff, in these cases, had an election to bring an action of debt for the penalty, or an action of covenant, or, where the agreement was not under seal, of assumpsit, for his damages. In the first case, he could recover no more than the penalty with interest, but in the second, the damages proved, however largely they might exceed the penalty, were those to which he was entitled. In entering judgment the penalty was wholly disregarded (Bird v. Randall, 1 Burr, 373; Wassler v. Trimmer, 1 Black, 395 ; Harrison v. Wright, 13 East. 343).

As all distinctions resulting merely from the form of the action are now abolished, it appears to be a necessary consequence that, as a general rule, every action for the breach of an executory contract, whether the agreement contains a penalty or not, must be considered as an action for damages, in which the amount of the recovery will be limited only by the proof, and by the sum for which judgment is demanded in the complaint. The only exception will be, when from the nature of the contract, and the terms in which it is expressed, damages, as liquidated by the parties, may be justly treated, not as a penalty, but as a contingent debt, for this is- a distinction in law which the code has not abolished nor affected. It is true, that upon this construction the insertion of a penalty in an agreement is a useless form, but this is no alteration of the law, since, for more than a century past, such has been its real character.

The demurrer is overruled with costs, but the defendant upon payment of costs may withdraw it within twenty days and answer.