Citation Numbers: 179 Wis. 129, 190 N.W. 836, 1922 Wisc. LEXIS 93
Judges: Vinje
Filed Date: 12/5/1922
Status: Precedential
Modified Date: 10/19/2024
The substance of the argument of the plaintiff is to the effect that parties have a right to make their own contracts and to enforce the stipulations therein provided for a breach thereof; that in this case the promise
That the trial court correctly construed the contract in case of a default, to provide for a penalty and not for liquidated damages, is clear. The law is well settled that where the contract provides that a larger sum shall be paid upon default to pay a lesser sum in the manner prescribed; or where the agreement is as to a matter certain in Value, ancl the sum fixed upon in case of a default is greater than the defaulted sum or the whole amount of the total debt paid according to the tenor of the instrument, it is a penalty and not liquidated damages. Seeman v. Biemann, 108 Wis. 365, 84 N. W. 490; J. G. Wagner Co. v. Cawker, 112 Wis. 532, 88 N. W. 599; Madison v. American S. E. Co. 118 Wis. 480, 95 N. W. 1097; Bagley v. Peddie, 5 Sandf. (N. Y.) 192; Beale v. Hayes, 5 Sandf. (N.Y.) 640; Peine v. Weber, 47 Ill. 41; Haldeman v. Jennings & Co. 14 Ark. 329; Krutz v. Robbins, 12 Wash. 7, 40 Pac. 415, and cases cited; Tiernan v. Hinman, 16 Ill. 400. The rule is the same in England. Astley v. Weldon, 2 Bos. & Pul. 346. In Kemble v. Farren, 6 Bing. 141, 148, Tindal, C. J., said:
“That a very large sum should become immediately pajrable in consequence of the nonpayment of a very small sum, and that the former should not be considered as a penalty, appears to be a contradiction in terms; the case being precisely that in which courts of equity have always relieved, and against which courts of law have, in modern times, endeavored to relieve by directing juries to assess the real damages sustained by the breach of the agreement.”
A large number of cases are cited by appellant where options to declare the whole amount due in case of default have been enforced where instalments are to be paid with interest. Such cases are not in point. If I pay my present créditor interest I can just as well pay another creditor interest. But if I do not pay my present creditor interest and have to pay the whole debt presently by reason of a default, I lose the value of the use of my money for the remainder of the credit period. Here such value was found by the trial court to be $6,064.80. Counsel for respondents states that he has found only three reported cases of a like kind where the debt has been without interest until maturity. These are Krutz v. Robbins, 12 Wash. 7, 40 Pac. 415; Tiernan v. Hinman, 16 Ill. 400; and Russell v. Wright, 23 S. Dak. 338, 121 N. W. 842. In the first two cases the court found the default created a penalty and relieved against it. In the latter case, by a divided court, no relief was granted the party in 'default. In Krutz v. Robbins notes bore interest at the rate of seven per cent., and it was provided that if a default in payment occurred they should bear twelve per cent, interest from their date. Held, that the added five per cent, was a penalty and could not be enforced in equity. In Tiernan v. Hinman the debt was payable in instalments without interest, and it was held that to enforce a default by declaring the whole amount presently due constituted a penalty not enforceable in equity. In Russell v. Wright two notes of $100 each, payable in five equal annual instalments without interest till due, and thereafter, or in case of default as to any payment, the whole amount could be declared due with twelve per cent, interest,
In the present case the default as to payment of taxes was promptly made good before suit was brought, so we have not set out the evidence of the defendant showing quite satisfactorily that it was incurred through a misunderstanding. Even if knowingly made, equity would relieve against the penalty in the present case under the circumstances as they exist, and it is quite probable that under several other well recognized equitable principles defendants would be entitled to relief; but we préfer to place it upon the single ground that an unconscionable penalty is sought to be enforced, to which enforcement a court ■ of equity will not lend its aid. He who seeks equity must do equity.
By the Court. — Judgment affirmed.