Williams v. Dakin & Bacon , 22 Wend. 201 ( 1839 )

After advisement, the following opinions were delivered:

By the Chancellor.

The alleged breaches of this covenant, upon the facts found by the special verdict, are 1st. That Williams assisted Merrell is establishing a political paper in Utica called the Utica Intelligencer, by hiring him his printing press for the avowed object of printing that paper, and by selling him types for that purpose-—which types Williams had for sale on commission for a house in Philadelphia ; and that a part of the first number of that paper was set up by Merrell in the office of Williams; and 2d. That Williams actually printed for Wilson 1000 copies of the first number of a miscellaneous paper established by the latter in the village of Utica, called the American Citizen.

I think from the facts stated in the special verdict, that the supreme court correctly held that there had been a breach of covenant on the part of Williams. No one who reads this special verdict can doubt for a moment that there was a palpable violation of good faith on the part of Williams, in endeavoring to have a rival paper established in Utica contrary to the spirit of the agreement under which he had received $3000 for the good will of the Utica Sentinel ; and if he has violated the letter as well as the spirit of his covenant, the court ought not to be very anxious to find an excuse which will relieve him from the consequences of such violation. I am not prepared to say that the selling to Merrell of the types which were left with him for sale on commission, was aiding or being accessary to the establishment or printing of the paper, within the intent and meaning of the covenant; as a refusal to sell the types, although he knew they were to be used for that purpose, might have been a violation of his duty to his employers in Philadelphia. Neither is it necessary to say that he was not authorized to hire his own printing press to Merrill to enable him to publish the paper sooner than it could otherwise have been done. But as Williams had expressly covenanted that he would not be accessary to the establishing or printing of the paper, I think it was a breach of the covenant to suffer it to be set up in his own office. If he was to be excused on the ground that it was done without his knowledge or contrary to his will, I think the burden of proving that fact was thrown upon him ; and that to excuse him, it should have been found by the special verdict that st was without his knowledge and contrary to his will. Finding the fact that it was done in his office, where, by the covenant, he had agreed it should not be done, and without showing that he or his agent took any means to prevent it, must, upon this special verdict, be considered a breach of his covenant. Independent of his breach, however, the printing of the first number of The Amei'ican Citizen by Williams himself was not only an aiding, assisting and being accessary to the establishment and publication of that paper, but was also a breach of that part of the covenant which restricted him from suffering a miscellaneous, literary or political paper to be printed in a building owned by him. Although the first number was issued as a specimen number, and sent gratis to those who might not afterwards think proper to continue it, yet it was one of the papers which were to be paid for by those who should become the patrons of the publication ; and the printing of that specimen number was a more powerful aid to the establishment of the paper, than the publication of any one of the subsequent numbers would have been.

B’ut it is said the whole covenant Was released', by releasing it so far as related to the right to publish the Elucidator, and Dumport’s case, 4 Coke’s Rep. 119, is relied upon by the counsel for.the plaintiff in error as establishing that position. That case, as Sir James Mansfield said, in Doe v. Bliss, 4 Taunt. Rep. 736, the profession have always wondered at; and I presume for the reason, that the decision carried a technical principle beyond the" bounds of common sense. But although that decision has been so long acquiesced in as a settled rule of law, in relation to the title to real property which was liable to be forfeited by the breach of a condition subsequent, that it should not now be disturbed, it ought not to be extended to any other class of cases. That decision proceeded upon the principle that where an estate is granted upon a condition subsequent,- if the condition is once dispensed with, the estate becomes" absolute in the grantee, and cannot be divested by any future breach. But such a principle is wholly inapplicable to a mere covenant, which is in its nature divisible. In a case nearly as old as Dumport’s case, Smith v. Barnee, Trin. Term, 11th James 1st. 1 Rolle’s Abr. 472, pl. 8, it was held that the discharge of a purt of a covenant Was not a discharge of the residue thereof. In Twynam v. Packard, 2 Barn. Ald. Rep. 105, the distinction between conditions and covenants, as to their divisibility, is also clearly established. And in the very recent case of Reed v. Norris, 2 Myl. & Craig’s Rep. 361, where a son gave to his father a bond for the payment of £1000, with interest thereon at five per cent., and an agreement was afterwards made and endorsed upon the bond by which the father stipulated that he would not call upon the son for the principal sum of £1000, until he the father should have paid the principal and interest of a bond for £500, in which the son had joined with him as surety to a third person, Lord Cottenham decided that the agreement did not affect the accruing interest upon the £1000 bond; and that the executors of the father were entitled to recover the same, although the principal and interest of the bond which the son signed as surety for the father, remained unpaid, Í conclude, therefore, that the release of the covenant, so far as to authorize the printing and publishing of the Elucidator so long as it continued to be an anti-masonic paper, did not release the covenant generally, so as to authorize Williams to aid in the establishment of any other paper he pleased. Giving such a construction to the release would unquestionably be contrary to the understanding of both parties at the time the release was obtained.

The remaining question is whether the $3,000 is to be considered as a stipulated sum which both parties intended should be paid as liquidated damages in case the covenant was broken; and if so, whether there is any rule of law which can authorize this court, or any other court, to say the plaintiff in error shall be excused from performing his agreement: in other words, whether this court can make a new agreement for- the-parties which they never intended to make for themselves. I think no one who reads the covenant, can doubt for a moment that it was the intention of both parties that if it was broken the whole $3,000 should be paid as the liquidated damages for such breach. The object of the covenant was- to protect Dakin and Bacon and their assigns in the full enjoyment of the good will of a public newspaper, and of its patronage, for which good will and patronage they were paying the sum of $3000 : and as the value of the good will or patronage of the paper, as well as the amount of injury which the purchasers might sustain by any interference with it, were wholly uncertain and incapable of estimation otherwise than by mere conjecture, the amount to be paid upon the breach of that covenant was not only a proper subject for stipuk. ted damages, but the precise sum paid for such good will ojpatronage, appears to be that which the parties would naturally fix upon as the amount to be refunded to the purchasers upon any breach of the covenant. The proposilion on the part of Dakin and Bacon, and which the other parties agreed to, was substantially this: “ We will pay the $13000 which you demand for the good will and patronage of your paper, in addition to the actual value of the press and types and printing apparatus, if you will agreee to refund to us the $)3000 as stipulated damages in case you interfere in any way with that good will and patronage, or aid or assist others in the establishment or publication of any paper which may interfere with it.”

There is undoubtedly a class of cases in which courts have been in the habit of considering a certain specified sum as a penally, whatever may be the language of the agreement. Such is the case wherever such specified sum is evidently intended as a mere collateral security for the payment of a different sum which is the real debt, or where it was evidently intended to be in the nature of a mere penalty ; and there is another class, where, from the language of the agreement, it was difficult to ascertain what the parties really intended, in which the courts have taken the reasonableness of the provision as liquidated damages into consideration, for the purpose of determining whether it was intended as such or only as a comminatory sum. Where the specified sum is declared by the parties to be a penalty, or wherever it appears to have been only intended to secure the payment of the real debt which is specified and ascertained, so that the court is legally bound to consider it as comminatory merely, the plaintiff must assign breaches, and have his damages assessed under the statute, except wifere the condition of the obligation is for the payment of a specific sum which is capable of being ascertained by mere computation.

In the case of Astley v. Weldon, 2 Bos. & Pull. 346, the £200 specified in the agreement was evidently intended to secure the payment of the smaller sums, and therefore, upon the settled rules of construction, it was considered as a penalty. Lord Eldon put his decision upon that ground alone, as he distinctly recognized the right of parties to contract for stipulated damages for the non-performance of agreements, like the present, where the damages were m their nature uncertain, or a mere matter of fancy. The case of Randall v. Everest, 2 Carr. & Payne, 577; was an action of assumpsit upon an agreement not under seal, and Lord Tenterden said that he wished his observations in that case not to be understood as applying to agreements under seal. Whether his lordship was right in supposing that parties were not authorized to make a valid agreement for stipulated damages, without the formality of affixing a seal to it, is a question which it is not necessary for us now to consider. Kemble v. Farren, 6 Bing. R. 144, which was also an action upon an agreement without a seal, was like Astley v. Weldon, in many respects, as the £1000, which was stated to be stipulated damages, was intended to ser cure the smaller sums which the plaintiff had agreed to pay as wages to the defendant, as well as to insure to him the services of the defendant for the four seasons. And it could not be considered as a penal sum as to one part of the agreement without construing it to be such as to the whole. But, even in that case, Tindall, C. J. admits, that if the £1000 had been limited to those breaches of the agreement which were uncertain in their nature and amount, the whole sum would have been recoverable as liquidated darmages. The same difficulty existed in the case of Davies v. Penton, 6 Barn. & Cress. 216; as the £500 was intended to secure the payment of £574 by the plaintiff, as well as the covenant not to prosecute, on the part of the defendant; and it could not be considered as an agreement for liquidar ted damages as to one party, without considering it so as to the other. In addition to this, the parties in their agrees ment had called the £500 a penal sum, as well as liquidated damages. Looking to the whole agreement, therefore, the court came to the conclusion that the parties did not intend to contract for stipulated damages. The case of Reilly v. Jones, 1 Bing. R. 302, was like the case urnder consideration .in one respect, as the sum which was agreed upon as stipulated damages was payable upon the non-performance of any part of the agreement; and as it was evidently the intention of the parties that the whole sum should be payable upon any breach of the agreement, the plaintiff was permitted to recover the whole amount as liquidated damages. In Hubbard v. Grattan and wife, Alcock & Nap. R. 389, in which an action was brought to recover the stipulated damages which the defendant had agreed to pay if he did not remove a lime kiln adjacent to the plan tiff’s premises, Bushe, Ch. J. says : “ The stipulation consists of two parts, one affirmative that the lime kiln should be prostrated before a particular day; the other negative that the assignee shall not at any future time erect another lime kiln; and, upon those .the breaches ar.e assigned. Both bear on one object, to be -relieved from the lime kiln altogether, and both ;are essential to that object being accomplished; and both parties agree in measuring beforehand the damages consequent upon a breach ,of either agreement. Such stipulations as to damages are upheld by courts of law upon two grounds;: 1st. Because a man may set a value not only upon matters connected with his property, which’ value is capable of being estimated, but also upon matters of taste or fancy, such .as prospect or ornament, which he alone can .appreciate; and 3d. Because even in matters capable of ascertainment, great difficulties might occur in some cases ; .and, in all cases, it is prudent in both parties to provide .against the trouble and expense of a future investigation. The cases which seem to have interfered with such compacts, are those in which the subject matter .of the stipulation shows that, whatever the form of it may be, .the parties could not have contemplated any thing more than a penalty to secure .against actual damage.-

The case under consideration .was one of uncertain damages which the parties evidently foresaw could not be ascertained -by proof, with any degree of certainty, as the amount of injury to the plaintiffs by the establishment of a rival paper even for .a few weeks might destroy the value of the good will and patronage of the paper they were about to purchase; and as they contracted with -each other upon the faith of that liquidated sum, as the utmost that the one party was to pay, and the least that the other was to receive, in case of a breach of the agreement, it would be manifestly unjust for us to attempt to make a better or a (different agreement for them than that which they intended to make for themselves ; by compelling them to abandon the amount of damages which they had agreed upon in anticipation of the breach of the contract which has occurred, for the purpose of submitting the question of amount to the chance of what a jury might suppose was proper from hearing the conflicting opinions and vague conjectures of ignorant or prejudiced witnesses.

The cases in our own courts, which were referred to on the argument, are all in accordance with this view of the subject; and it is, therefore, unnecessary that I should attempt to analyze them particularly. It is perfectly clear, therefore, if the plaintiffs in the court below were entitled to recover any thing for the breach of this agreement, they were entitled to the whole $>3000 which had been agreed upon by the parties as stipulated damages for any' breach of the covenant.

For these reasons I think the judgment of the supreme court ought to be affirmed.

On the question being put, Shall this judgment be reversed!! the members of the court divided as follows:

In the affirmative—Senator's Furman, Hawkins, Hull, Maynard, Peck—5.

In the negative—The President of the Senate, The Chancellor, and Senators Beardsley, Clark, Hunt, Huntington, Johnson, Jones, Lee, H. A. Livingston, Nicholas, Paige, Powers, Skinner, Spraker, Sterling, Van Dyck, Verplanck—18.

Whereupon the judgment of the supreme court was affirmed.