618
FEDERAL ·
vol. 52.
the ,t() potiee. Acts :of: wit);lout actual occupancy, lJrenot'llllfficientto put in'ppera:tionthestatutory provision in regard to 'notice. ,The bill is with costs I and 6 decree accord' ) ;l' , ingly wiWbe'entered. I ' .'(
TILLEY
tJ·
BLDG.
& LoAN Asa'N.
cOurt, lV. D. Arkansas. 1. ,':',' _-',i:: ":, ,,::
October 81, 1892l '
t",fi":::
T. subscribed for 600 shares of stock in the American Building &: Loan Association, havIng its business headCJ.uarters at Minneapolis, Minn. By his contract and bythe,by,laws of, the'alllQciatlon,he waa"topaY$B6Qpel", month'ills dues on the 600 shareS o,f .,stock. qJ;' or years.' U\e,Dt 0,1i On .!;liS,'S, ma"d,e atl,on, the twn to, advance 411n $80,000 Qn his'stddk', wtifch was done.'JjY tl'le contract he was tq pay 6 per cent. interesll:per"ll.htull,oll tbe'same. In, considering the question as to whether the \V$lI, a:usjU·iou. Qlneluuloier the laws·of ArkaDsM, payxoents to be·made by T. bEloonl!idered as intElf8st on tbe$30,OOO borrowed l anll not to computell smos sucb payments are Dot ma<}e for, the use 01 'thil money bOrr6w-ed. blltl'iiiorder to acquire an interest in the'nature of a partner,(, ship.'lnte:rest.iti"tlie proplft't;V of' theasllociatlon. ', "
,BUILDING A.ND LOAN
.' .' i )IBMBERS ON
2,'EQUITYT'-RELIBIl' AG:UNBTI UNOONSOIONA:M.B BTIPULATION....PBN..u.T1' oBLIQUIDATED : .,' I'" " ' " " " . '" , '
,. · .I.f &QO. raC.t.., eil:.1I,e, r:fD¥*d ad in. f,ra,ria,,: im.PQsit.ion, m. .. e,' orw.hen it WOrk.S a hardsb.1p,. ,01' Is harsh',upbll'Uparty to it: because it gives .the other 'party to it an un.due BdmtaK6, in a 8ull1 1;0 1 enfbrce.i't,1II7himadefendant comes into court and asks telief; .suob. reuef, a!!!· eli! in harmony with equity. and good conscience be hiP'l, wheut,be ,oontrsctls in the nat\lre of, 'apartnership, because defe!:llla:l,1t e:lreotpraYI!,11 disBolutloi,\ ,91, the the court will ascertall1tlietrue irltete!/ts)of the parties; and will make sue a ,decree as is just and.rigbtj.uponthe''gt!OUIld,that 8 couttof'eqnityWlIltltkeevery,one's act aocord. ing tp oQl1l\llIience;, lIJlQiwill"Jlot suJJ,e;r· undue advantag,e,tli> . be tall.:en al,the strict terU\$ qf orof,pos!:tive lind, will refuse ,to enforce thecdntract.. Or, it the e61i.'rt Clln consider the amount' named lnthe COntract as a penalty, rather than liquidated damages. wben tbel<paymlmt of money' iii the principal object of thecontractl and the amount named is only accessory thereto, lt will afford such relief as is Just and proper, when full oompensation can be readily ascertained. '. ' ,
8. SUIE.
: When the Bum named' in lJII agreement is to secure the pllrformance of a collateral ,Object,.. t.,.o wit,ther p aYIA ent. 9fJ:llQney., all-!l is.the . andth,esl1m " . named1s only ana the real' dl;'mages 'Would btl dlsprop6rtlOnate to the Bum real damage81 canlle· readilY8scertained. then a,court of equity will cOnsider named as 8,peQ.alty. and:will afford such relief as . in equity and godd conscience is appropriate, considering the real injury sustained. 4·. B.&148. . ;,' . Conrtl\ of will not perw-it ;filt a sum, in a cllntract as by naming it as ,ucb,·.and prl;lv:ent court. fr0Ijl;cclDsidenng lt as a penalty. . . . .' (Syllabus by the Court.)
In Equity. Suit. by J. L.Tilley and Vesta Tilley, his wife,against the, American Building'& Loan Assooiation, to cancel a bond and mortgage executedbyplaiutiffs I to defendant. Defendant filed an answer and a cross. bill askin,ga decree for the amount claimed to be due to it, and foreclosure of the mortgage. Decree for defendant for the amount advanced by it:i:m,the,:bolllibmd mortgage and foreclosure of the mortof the remaining'part of the contract. gage ,therefor"anw
TILLEY 11. AMEltIcAN' , BLDG. & LOAN ABS'N.
619
Tabor, Hwmphriesc!c Silverman and Roger8 c!c Read, for plaintiffs. ,Sandel8 c!c Hill and 0luuJ. M. Cooley, for defendant. PARKER, District Judge. Thia:is a suit in equity to cancel a bond containing a contract between plaintiffs and defendant. The plaintiffs, by the terms of said bond, acknowledged themselves to be indebted to the defendant in the sum of$60,OOO, for the payment of which they bound themselves. It was stipulated in said bond that if the said plaintiffs should payor cause to be paid unto the defendant association, as its home office in the city of Minneapolis, state of Minnesota, on or before 9 years from the date thereof, the sum of $60,000, being the amount of the said advancement and premium bid, with interest on $30,000, being the amount actually advanced, at the rate of 6 percent. per annum from October 7, 1889, payable monthly; or if they should payor cauSe to be paid to the defendant association at its home office as aforesaid the sum of $360 on the 21st day of each and every month thereafter, as and for the monthly dues on the said J. L. Tilley's 600 shares of the capital stock of said defendant assooiation, and should pay all the installments of interest as aforesaid, and all fines which should beoomedue on said stook, until said stock should have become fully paid in and of the value of $100 per share, and should then surrender said stook to said association,-the obligation should then become null and void. It was further expressly agreed that, if at any time default should be made in the payment of said interest dr of the said monthly dues on said stock for the space of six months after the same or any part thereof should become due, then the whole principal sum aforesaid should, at the election of said defendant association, immediately beoome due and payable, and that the sum of $38,880, less whiltever sum had been paid to said assooiation, ,as and for the monthly dues on said 600 shares of said capital stock at the time of said default, might be entorced and recovered at once asliquidated damages, together with, and in addition to, all interest and fines then due. The enforcement of the contraot was secured bya mortgage of even date with the above-named bond, given by plaintiffs upon a large amount of their real estate situated in Sebastian county, Ark., and fully described in the mortgage. It is claimed by plaintiffs that both the bond amI mortgage are null, for the contract in the bond was void,because it is a contract for a greater amount of interest than 10 per centum per annum, and that the same, under the laws of the state of Arkansas, is usurious and vl:>id, and should be held for naught, and canceled; that the mortgage should also be cnnceled because given to secure the enforcement of a void contract; and that the same casts a oloud upon the title of the plaintiffs' real estate. The defend ant claims that the contract is not usurious under the laws of the state of Arkansas, for the reason that the plaintiff J. L. Tilley became a member of the defendant association before the loan was made to him. The defendant associationf'rles its answer and cross bill. It therein asks for affirmative relief, to wit,a decree against the plaintiffs for the sum of $34,56,0, being the sum of $38 ,880, the total amount of nille
620,
FEDERAL REP()RTlilR.,· vot, 52.
years' U,320,tb;eamount of one year'sdues"paiiI by plaintiff J. L. Tilley in adV/1.1loe, Defendant 81110 asks for interest 011 the $30,000 from October 7, 1890, at the rate of 6 per centum per annum, 11\tthe rate of $60 :per month from and including July 21, that the mortgage be foreclosed; that the plaintiffs be any equity of redemption; and that the premises so mortgaged .besold J or so muchthere,Of as may be necessary, and the proceeds to the payment of defendant's.debt. From evidence it appears that on June 17, 1889, J. L. Tilley, one, A! plaintiffs, made his written application for membership in the defen,dantassociation, and subscribed ,for 600 shares of the capital assopiation.Thl1t said application wason the 21st day 0(, duly approved and accepted by the board of directors Qf pefendan$,. ' 'l;hat it, by its .proper officers, on the 21st ofJune, 1889, certificaooQf stock for 600 shares of the capital ,ofs!l-id the same, was duly delivered and acby the I$aid J. That by such Retsof the, defendant asand J.,;L.. TWeyhe became, on June 21, 1889, a member of saidassociaijQUt.· By thE:!.tennsof said certificate of stock, and the rules, Qf,said corporatiou, the said "plaintiff J. L. Tile.nd 'agreed to pay as dues'to the defendant associaon 21st ,day of-every month from the dilte of said certificate" of 60 celltson each share of stock subscribed and held by. him, until s\lchstock sbould be fuUymatured and of the value of _lOOper share", ,or be withdrawn. Sixty cents dues on each share of stock is $131)0 perrnonthon" 600 shares, which would be $4,320 for oneyel;tf on t}:lat amount of stock, and $38,880 for nine years. That on June 27, 18$9,. the plll,.intiffJ. L. Tilley made to the defendant associahis for an advancernenHlf$30,000 on his 600 shares of the capital stock in the association. That he. bid as a premium for the of obtaining said advancement the sum of $50 per share. That was done in accordance with the by-laws, rules, and regulations of That the same was accepted by the defendant's board of ,directors, and the adv!\ncement applied for was duly made to Mr. rnu!'lY, and that amount of money was paid him. He agreed to pay as said. advancement the sum of 6 per centum per annum. He this loan, as an a.dmission fee, which went to the promoter oftpis com pany,. Mr. Hurd, the. sum of $600. He paid also out of this IpAn:tJ;1e sum .of _4,320 as one year's dues on the GOO shares paid in ad,\l,\l1ce, and he paid out of the loan the' sum. of $1,800, the first year's at.Gper.centum on tbe advanoement of $30,000·. The defendtheadva.ncedpayment oidues andiriterest. There is that thelltdV4ncement of '$30,(;)00 was made by defendant to J. qnthElfaHh'tbat he would, in accordance with his contract, as &l;1own by his baUd, continue the payl'nent of dues on his 600 until such stock should have fully matured,-that is, shares. of worth 100 cents 011 the. dollar·..,.-which" by estimate, would occur in nine years. It Illig}:lt occur sooner, although nine years seems by the
TILLEY V. AMERICAN
'BLDG. &:
'LOAN ASS'N.
621
contracting parties to be considered as the time when the stock should fully ripen. There can be no question in my mind that Mr. Tilley at the time of securing the advancement of $30,000 was a member of the defendant association. That, in order to secure said loan, he bid $50 per share on his stock subscribed. This was, in effect, a sale of his stock back to the defendant for $50 per share, Tilley agreeing to pay 6 per cent. interest on the amount advanced to him. In addition to the payment of this 6 per cent. interest, which on the $30,000 would be $1,800 per year, he agreed to pay $360 per month dues on his stock, which would be $4,320 per year, or $38,880 for nine years. He agreed to pay all fines assessed against him by the company for the nonpayment of dues. He was promptly to pay each month the 6 per cent. interest on the $30,000 advanced. The defendant, in effect, when Tilley executed his contract with it, already owned his stock, for he conveyed it to the defendant, as expressed in the bonds, to secure the faithful performance of the obligations of the contract. And then he agreed to surrender the stock to the defendant for cancellation, when the same is fully paid up,and is of the value of $100 per share. Mr; Tilley further agreed by his bond, if default was made in the payment of·his monthly dues on bia 600 shares of stock for the period of six months, that the whole ·of the dues, to wit, $38,880, that by the terms of the contract were to be paid only so much per month and so much per year during the period of nine years, it might be, and the interest on the $30,000· advanced, which was to be paid so much per month and so much per year, should at once become due and payable at the election of defendant as liquidated damages. Much has been said in the argument and brief of counsel filed in this case about whether it is a contract governed by the laws of this state or by the laws of theatate of Minnesota. I am inclined to the opinion from the facts in the case that it is a contract governed by the laws of Arkansas. But, with my view of Mr. Tilley's relations to this association, and of the effect of this contract, I do not consider that the contract is usurious under the laws of this state, for the reason that at the time that he secured the advance or loan of $30,000 the same was an advancement made to him on the 600 shares of stock as a member of the association. The $30,000 loaned to him, with 6 per cent. interest thereon, was considered as the present value of his stock, and the defendant loaned him this much on the stock, he agreeing to pay 60 cents on each share of stock each month to keep the same alive. Upon this agreement alone there could'be no taint of usury. So far it could not be considered usurious. But if we are to consider what Tilley was to pay on account of his stock, called "dues" in the contract, as a payment made by him for the use of the $30,000, then there is usury in the contract. But Ido not think the true rule of interpretation will authorize us to interpret the contract in that way, but that its true meaning is that Tilley was to pay the stipulated dues to acquire an iuterest in the property of the association. When Mr. Tilley became a borrower he occupied a double relation to the association,""--"that ofa
($22
52.
borrower Ii ",as It sha,reholderalone,.he would pay for his stock on the same terms as though he had become a borrower as well as ltt shareb.qlde;r;. i ;rhe tW>Q. relations are ·. :.. If pe had not become a b011'oW!ll,"liwhen hisstoek matured he would withdraw from the .association'its fuU Butwhen he becomes a borrower he uses hill stock to pa,yhisdebtwith. pIn & contract of thiskiod, whether or not the usury will upon theam.ount agreed in good faith to he paidl as interest 'sum made as a .loan or advancement ',Reeve YI Associqftion, (Sup. Ot. Ark.) 19 S. W. R¢p. 917; Taylor v. rd. 918jA8sociation v. Abbott, (Tex. Sup.) 20 S. W. Rep. 118. If aso-calleq "fpll-YQ1ent of dues" on stock is a 1liIElre device to coyerJqe payrpent,/{Qrthe use of mon.ey,of more than tlaQ lawrecognizesa!l inierest,Qf course the contra,ot is, a usurious one. It is claimed tha:t the payment o( dues on 8tock i.n this con.tract, It mere devioe to cover usury.,! do; not think the interpretation ,01 the contract will conclusion. It maybe a hard contract lQr Tilley and wife. ,It may be unfair to them. It may be one-sided, unjust, unconscionable, or atrectedby other inequitllble feature, and still not beusurious./lr reach the Qonclusion that the advancement mttdeto Tilley by the4,¢fcmdant associati,on isa dealiQ.g in partnership [llnqs., This by high authorities, both English and American. Silver E. O. L. 571; Burbidge v. Cotton, 8 ,Eng. Law &;Eq· .57j Shannonv.D'l.Imn, 4aN. H. 194; Pattisonv. A88ociation, 63 v. 46 Ga..'166; Delano v. Wild, 6 Allen, 1. Thislo l1n or advancement made to Tilley on the pledge of the 'shares of the association. In suoh II- cal'le:tbE! statutory rule foq:omputing interest on partial payments no application .to the monthly dues paid on the shares 50 pledged,>an!lsuQhImyI'ijents do not Pear interest, or in any way reduce the amount ·on w4ichinterest is to be paid. Reeve v. A88ociation, swpra. The cQntract rtlll,y be considered valid, because it W/lsa dealing in partnersll.ip fUDQS in such a way that the transaction wasonew:here there was a shares in anticipation of their ultimate v$lue,or an advllncementbythe,association to the member thereof of the matured value of his shares. This view of the ,nature of this conwill preveotthe conclusionthllt it w/lsta,inted with usury. It re,Uy, therefore, becomel!u:mnecessary to pass on the question whether ,it was a contract governed by the usury laws of Arkansas,. Mr. Tilley, for the saJre '9f gettinga.loan of $30,000 for nine years, Qg1!eed to pay interest at the rate, 0[6 per cent. for. that time, making 816;200 ht;l was to pay as interestjaI;J.d in shape Qf dues on his s.tock .$UPtWribed he was to pay i,n-the course ,Qf nine years $38,880 in monthly at the rate of peMllQnth,-:-making a total sum he was to pay the at ,;the end, oCnine years of $55,080; aside from fines that ,might be 'hilll for nQt promptly paying his qp,es; .and for these largJ:l,$PIllS 9fmQuey,he gets'$3Q,000 advanced to him at the time of Theli,(}be $38,880 to be paid in. dues IS not pl:j.i(l at the elld QfJhe nilleYears,but Hs paymentis monthly from the exeClltiQn of the,<;olltract. may, derive large bene-
TILLEY V.-AMERICAN Bl.DG. ,& LOAN ASS'N.
623
fits during the. iline years from these dues so paid in advance in the shape of interest. But Mr. Tilley is to have none of this benefit,' ashe, by the contract, is to deliver up liis stock to be canceled, and is to'bave nothing but the $30,000. It is equity and justice that Tilley should pay back the $30;000 advan<:ed to hini, with interest on the same at 6 per cent., because he received this 'amount of money from defendant, and used the same. His mortgage should be foreclosed to enforce the payment of the above amount; but in view of the nature of this contract in reference to the amount of dues to be paid, and the time of their payment, and of the further fact that the contract puts it in the power of the defendant to declare the whole of the $38,880 of dues to be due at once on the failure of Tilley for six months to pay dues, should Tilley be ,required to .do more than this? Should he be required to pay the $38,880, which he agreed to pa;yto secure an advancement of 830,000, and agreed to pay in such a'way as that defendant should makea:lat'ge profit out of it,' in which 'filley was to have no share, for he was to have no interest whatever in any gains arising from the monthly payment of his dues? I consider that the. mere statement of the ,contraet{8S affecting Tilley, shows it to be'a hard one, and one which eonfetred on the association large benefitEf. Can the eourt afford him any relief' in the face of his cohtract? If we the contract, as we one dealing in shipfunds,.....when the defendant comes mto a court of equity and asks for the relief it prays for in this suit, does not this conduct of dlifendant in effect work a·dissolution of the partnership relation? . Is it· not tobetak",Ilby the court as a determination by defendant to have that relation. up? If so, may not a. court of such a cree touching the funds of the partnership, as affecting Tilley and this. d(jfelldant, as justice and good conscience should This is a groulld qpon which a court of equity n1ay stanu, ltnd do the very right in the premises. Again, if this contract is grossly unreasonable and_ rdief be had by the court refusing to enforce thatpart of it whIch is grossly unl'easonable and harsh? It seems to me, Jor the, reasons above named, that contract providing for the payment-it may be, in six months after its execution-:-of the $38,880,. and 6 per cent. in,terest on the $30,000, aud $60 per month as fines upon 600 shares of stock for nonpayment of dues, is unfair to the plainti±rTilley; ihat it to the above-named extent largely one-sided as tohiro, and therefore unjust and unconscionable. It thus hecomes inequitable to tqe extent of the part providing for the payment of $38,880 as dues, it may be; shortly after the making of the contract; that its enforcement to the extent of collecting that sum from him would be oppressive and };lard 01) him, and would work an injustice against him. If this was a suit· for the specific performance of the contract, and such facts existed, the courtwouldcertainlyexel'cise a sound discretion, and aspeeific performance would be refused. When the suit is to recover on a contract that. ,is of the above nature, to enforce the paymentofa stipulated amount, gr:owing out of an inequitabhHlhd harshly unjust contract, in I,
is
624
nJDERAL REPORTER,
V9L52.
justiee and equity, why should not the same rule prervail? The oppre&and hardship in this case results from the contract itself. I think the this was a suit to enforce specifio performance of this cont1'il.ct-'apply when the defendant comes into a court of equity, and by cross bill asks affirmative relief on the contraot. The court may exercise a sqund discretion,and refuse to give such relief as to such part of the contraot as shall appear 'to be harsh,oppressive, and unjust. The principles announced; in, the cases where specific performanceis asked sht:mld,be applicable where the contract is sought to be enforced :by the l301lection of that; which results from its oppressive and unjust provisions., '!;A:sremarked ,by Mr. Justice BRADLEY in Railroad Co.
v.
lil:. 643: "
", ' , ; ;
, ,
'
. ," The court is n6t ,bound to '.shut its'Gyes,to the evident 'cl!aracter of the tl'ansacqon." ItWm ne'ojerlend" tts ito cal'ry out an unconsoionable gain. This has Octel\. 1:)elli on ,bills, for specific performance and in other analogous C$ses to spend argument on the subject/' " ' , ' ", , " ',', ' ' ,, ,lithis.was in a court ofll:\:w" to give for 'the whole oft!;:le ,$38,880 and the 6 PE\l'cent. interest on the $30,000, ami the amount dtle in the shape of bec,ause it is, so denominated inthe Butit is,a court of can do what conscie9ce, equity, an<!, demand shall.be done, and give such reliehs thl)se guardof 1'igl"!t demand sh1l11 be given. III Willard v. Taylpe, 8Wall. 557 l Mr. Justice FIELD said: ' ! "'J'rl' general.it f1l\id tl)e relief will be granted when it is apparent from a of all the circumstances of the particular case that it will sUbserve the, ends ofju,stice; 811d that It.will be from a like view, it IiPpears that' it 'will produce hardship or injustice to either of . the pal'ties... ' " The!English referred to in the above case fully sustain the principles'therein declared. Mr. Story, in section 750 of his Equity Jurisprudence, says: , "Indeed. the proposition may be more generally stated. that courts of equitywiIl notil1terfere t,o dectee a speCific performance except in cases where it would be 'strictly equitable ,to makes IIch s' decree." Again, at'section 7l50a, he says: , "Upon grounds still ,stronger, of Will, not to a specific performance when'the J3 founded in fraud, impOSJtion. mistake. undue advantage; or groBs' niisapprehension. II< II< *" Again, at section 331, he says: , "'And here we may apply the remark that the proper jurisdiction of courts of' equity is to take every one'f1 act according to conscience; and not to suffer undue advantage to be taken 'of the strict forms of law or of positive rules. Hence it 'is that, even jf there,'be no proof of fraud or imposition. yet if, whole circumstances, tb..econbract to be gl'ossly against conscience. or unreasonable and oppressive. courts of eqUity will somet,ilnes interfere. and grant relief." Mr. Pomeroy., ill his Equity Jurisprudence, (section 1404,) when ra-, ferring to classes of contracts named, in a previous section,says:
TILLEY'll· .<\:MERICAN BLDG. &: LOAN ASS'N.
625
"Theobje<r1i of the foregoing paragraph is to formulate the general rule which determines the classes of contracts in which the equitable jurisdiction may be exer,cised.. But even when a particular contract belongs to sllch a class, the right to its specific performance is not absolute, like the right to recover a legal judgment. The granting the equitable remedy is, in the language ordinarily used, matter of discretion,. '" '" '" controUell byestablished principles of equity, and exercised upon a consideration of all,the circumstaqcl'lli' ,ofeach particnlar case." v. Delancey, 6 The above principles are fully sustained by Johns. Ch. 222, and the many Englif\h authorities referred to in the as, well as the American authorities referred to in the notes to the same. Mr. Pomeroy , in his Equity Jurisprudence, in his note to section1405, says: "If, then, the contract itself is unfair, one-sided, unjust, unconscionable, or affectell byanjY otb!!r inequitable feature, or if its enforcement would be oppressive or bard on We defendant. or would prevent the enjoyment of his or w9u1d work any injustice, . '" '" ... its specific performance own will be refused." , . In note 1, on mge 449, he says: operates in favor of defendants, but may be invoked "This rule by a plaintiff}Vhen a defendant demands the remedy by,a counterclaim or cross con'lplaint'. Tile oppression or hardship may result from' the uncon, scionable provisions of the contract itself. " There is still another method which may be adopted by the court to enable it to grant just such relief as equity and justice may require. It is to consider named in the bond a penalty to secure the performance of a colllj.teral object, to wit, the payment of money advanced, and o,ot as liquidated damages, although DalIled as. 'such in the bond. The payment of money is the principal intent of the contract, and the amount named, to wit, $38,880, is only accessory thereto', and therefore only:intended largely to secure the payment of the amount advanced. If the amount prayed for is given, the damages would be disproportionate to the nature of the injury sustained. Full compensation can be readily ascertained and made in equity. When the above conditionsexist, the amount named in the bond, although designated as "liquidated damages," may be considered by a conrt of equity as a penalty, and the court may afford such relief as equity and good conscience demand. Courts of equity will not permit their jurisdiction to be evaded merely by the fact that the parties have called a sum "liquidated damages," which in fact may be considered as a penalty. Here, then, the sum named is in excess of the probable injury. The real injury may be ascertained, and full compensation can. readily be made, and therefore full and adequate relief can be afforded in equity. When such conditions .exist, courts of equity will consider the sum lJamed a penalty, rather than liquidated damages, and give the proper relief. The above rule is sustained by sections 381,433, Porn. Eq. Jur. Judge Story, in section 1314 of his Equity Jurisprudence, says: "The general principle now adopted is that, whenever a penalty is inserted merely to secure tile performance of the enjoyment of'a collateral object, the v.52F.no.7-40
626
DDER.A:L REPORTER\
v61: 52. I:
and thEl'p¢nalty is deemed only and i thereft>re, 8S' In'tended'otilyto secure tbe'due performance really incll'l'red' hy 'the nonperformance. In every true'test,. not ul1iversally,) by.Which toa8certain b&badtn iato consider ,whether compensation fun' be made or'not." 'If it cannot be nrade, then cQurtsof eq u ity will not interi'ere't 'if 'it''Can be made, then,if·tnepeIla1.ty is to secure the mere payment of money, courts of eqUity will relieve the party on paying the principal and SedgwickQn' Damages" § 407, says: "In every case where a fixed 8um is stipulated as damages the court will iSiareasonable one; and, if look not, they will require damages' to be assessed, as if no stipulate4. Sum was named 'Speakingof the waycotrrtllihll.ve regarded this question, he continued: ,"All seem to. agree. upo);l' t\e p,flnbij{le that the stipulated, sum will not be allowed as liqUidated damages unless it may fairly be allowed as, compensation for the breach. " The supreme courtof Michigan, in iIdrt,'!4(j Mich. 517-523, says: ·. '.' '. .· "Just' is ,principle at which the to set law aims, llDd the partieswHI lDottle permitLed pyexpresli this principle aside." , i .,' " .' " " ' , ' . : .' " , ' ,i
sars: , ", ' , ' ¢?n ifil; jtb3tthe sum named, !be. considered as thecontr,act IS tobe enforced aqcordmg to Its terms, unless qualifredby some otherm'rcuni'stance; as, whell'()t1e agi'ees to pay a larger sumbpon'tbefailure'to 1>311a 'SlnllUeriOne, or when, the'damagesresulting from tbe failiJre to petformll:oontract are'certain, or can bel'easonably USClerI}Y'jll,jllry. But whenever.thecontract is for, the doing,or not doihgof practs, certain pecuniary stafl !ard by, ,which to damages a breach thereof, an agreement, to pay a stipillated sum as dllni'ages fJt such breach will be enforced literally." , , , , . · . '. , '; .' . ,.. ',;. -· " ' . . . I .' , .' -: · ,I
In
v. Millet,
118, Judge
l
'.
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v..13arnard,
436, 2 Sup. Ct. Rep. 878,theabove
.
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is fuljyrl:lcogni,2Je4:.,p,nd l\fr. Justice M:ATTHEWS qqotes the ing of Lord Chan,cellol' inPeachyv. Duke of Sl1"flWreet j J "It that gives this court a handle to grant'relief." In determiping .. the qharacter ·ofthe boud in this case there l\r\ltwo views taken of it. We may withoutqueation consider the $60,000 in it as a penalty,and .the naming by, the parties ofthe$q8,8,80 the amount of injury or.damor we .may: consider the ages, upQn the $38,8&0 as a penalty., jn mi.nd that parties cannot.' deprive a court of equity of therig1:ltt.o£lQpsider the bond a penal :one when the $60,000 is by ,uaming;.tQe arriountpf injury sustained,provided the cqnditiopsex1st w:hJchgive ,a court of equity the right togo behind the designation 'of the,pQ.rty.Nor can:tbeyprevent the court from,considering the ,$,q8,;$80 as.a penaitywhen the oonditionsexist which give the court the right to disregard the designation of the parties.
627 And I think, inthis1,ealle we may may go hehind:Jts ,designation, and See wbat the actual damages are, iindawardthetm " Then, either on ,the that this is a partnership transaction; the coUrt 11laygi've such rebef is right andjust, or on the ground that' when the-court. hasjurisdictiori-hasthe case-it may refuse to sorouch o'fthe contract as is inequitable or harsh, or will work a hardship on the plaintiff J. p.Tilley; or" because may eonstrue'the:sum named in the bond asa penalty, it may give such relief as may be responsive to the demands of equity and good conscience. The relief thllt would rneeHhisdemandwould be to decree the amount of the $30,000 advanced,with 6 per cent. interest on the same, less tbe year's interest already paid in advance, and to decree the foreclosure of the mortgage given to secure the payment of the debt, and tb cancel the remaining part of the contract; and such will therefore be the decree in this 'case.
as
ST.
LOUIS
& S. F. R. Co. v.
FOl-TZ.
(otrcuit Court, W. D. Arkansas. Oct. 81,189'J.) .. HARRIED WOMAN'S SEPARATE ESTATB-CONVEYANCES.
Under the constitution and laws of Arkansas, a married womanmay'own real and personal property separate and apart from her husband, anel she may devise, bequeath, andcotlvey the same as if she were a feme sole. As to such property she is suiiurls. ' ' ' ' ' .RAILROAD COMPANY.
A nonre'sident railroad comJ.lany, which has not, become domesticated unqer the constitution of Arkansas, cannot condemn or appropriate la.nds for a right of way, for depot grounds, car yards, or machine shops. . If such a railroad company acquires a right to come into the state to do business, but still remains a corporlltiou, and it undertakes to acquire a right of way, etc.lby condemnation proceedings against a married woman, who owns real estate as ner separate property, and such married woman takes part in such condemnation proceedings, and accepts the award, she from recovering by a suit of ejectment the lands condemned after she has: retained the money for a number Of years, and stillretaius it, although the lands wete oondemned illegally.
SAME-AcQUIIUNG LANDS BY AGREEMENT.
Although a constitutional provision of a state may prohibit a nonresident railroad company from acquiring lands for'the use of its road by condemnation or appropriatioI), still it may acquire such lands by an agreement with any citizen having a right to contract.
SAME-CONSTITUTIONAL PROVISION FOR CONDEMNATION.
The words "condemn or appropriate, .. used in the constitution of the state, mean a taking of private property under the right of eminent dQmain, and not bY con· tract. A woman may. under the laws of the state,. make a contract with a nonresident-railroad company haVing a right to do business in tile state, by which she may con"ey to it a right of way for its roadbed. car yards, machiue shops, etc. If she takes, part in condemnation proceedings whicb may be illegal, and accepts the damages awarded. and retains the same for over six years, when she brings suit t(} recover the land, still retaining its value found by the jury in the condemnation proclilEJdingsc1 her c011duct w,ill be con,strued, as amountill g, to It,D imPlied,COtltfract, with the railroaacompany for's right or way. etc., out of her separate property. It q,!.<l:&8an aequiesoence btY her,'and'in equity she wWbe'estopped. . CONTRAOT-EsTOPPEL BY AOQUIESCENOE.