Hosmer v. True , 1854 N.Y. App. Div. LEXIS 151 ( 1854 )

By the Court,

Johnson, J.

Whether a sum agreed to be paid as damages for the violation of an agreement, shall be considered as liquidated damages or only a penalty, depends upon the meaning and intent of the parties as gathered from a full view of the provisions of the contract, the terms used to express such intent, and the peculiar circumstances of the subject matter of the agreement. (Dakin v. Williams, 17 Wend. 447. S. C. 22 Id. 201.) The contract in such cases, as in every other, is to govern, and the true inquiry is, what was the undertaking. Whether it was folly or wisdom for the contracting parties thus tc bind themselves, is of no consequence, if the intention is clear.

It is alleged'in the complaint that, at the time the agreement upon which this action is brought was entered into, Hiram True was justly indebted to his former partners, C. A. and E. T. Hosmer, in the sum of ten thousand dollars, could a fair settlement have been had. If this is a material allegation, it is admitted by the demurrer. The agreement itself recites that the two Hosmers claimed to have a large unliquidated demand against the said Hiram True, which they were desirous to have settled and adjusted. And that said True had agreed to meet one of the Hosmers, on or before a certain day, at a certain place, for the purpose of endeavoring to settle the said claim.

Then follows the undertaking, that in consideration of the premises and of one dollar in hand paid, the said Hiram should appear at the day and place specified, and submit a propositioú for the settlement of said demand. And in default thereof, that the defendants would pay ten thousand dollars to the said Hosmers, to be applied on any existing demand to that amount. In case either of the defendants appeared with the said Hiram, as specified, and submitted a proposition, the agreement was to be void, otherwise of force.

The consideration is sufficient, independent of the nominal sum acknowledged to have been paid. The assertion of a valid claim by one party against another has always been held to be a sufficient consideration to uphold a promise made by such other to pay it or any portion of it, or to arbitrate, or to do any other act in reference to its settlement or payment. It is an undertaking in writing, and expresses the consideration on its face, and it makes no difference that the claim was not against one of the parties signing the instrument. It is a promise in behalf of the person against whom the claim was made, and relates to the settlement of the claim.

That portion of the agreement relating to the application of the ten thousand dollars, determines its character as to the nature of the damages, and leaves no room for doubt as to the intention of the parties. It was not the damages which the Hosmers should or might sustain, by reason of the non-appear-once, which were agreed to be paid, but a certain liquidated amount to be applied in satisfaction, to that extent, of the sum claimed to be due. It was, in short, a promise to pay that amount upon the claim made, in case the alleged debtor failed to appear and perform according to his agreement. It has none of the features of a mere penal obligation. Nor is it an agreement to pay any less amount which might be found due on settlement. But the amount is fixed and certain, and its aplication, when paid, expressly provided for. It was to extinguish the claim to that extent, when paid, irrespective of the actual state of the indebtedness upon an accounting. The claim is in effect recognized and admitted to that extent, and agreed to be paid upon the event of a failure of the alleged debtor to appear and attempt to settle. The defendants are sureties for the performance of the principal debtor, and the agreement operates as the settlement of a disputed claim to that amount, the moment the condition is broken.

[Monroe General Term, December 4, 1854.

Johnson, Welles and T. R. Strong, Justices.]

It was not necessary for the plaintiff to allege in his complaint the assignment to himself of the original claim. The assignment of this obligation draws the original claim after it, to that extent, at all events. And a payment upon this obligation would operate necessarily to extinguish so much of the original claim of indebtedness.

The action is well brought for the recovery of a sum certain, upon the promise, and the judgment of the special term must be reversed, with leave to the defendants to answer on payment of costs.