Spear v. Smith

1 Denio 464

Opinion

By the Court, Bronson, Ch. J.

Where there is an agreement to pay a gross sum in the event of the non-performance of a contract, and the case is such that a jury can ascertain with reasonable certainty how much damages the injured party has •actually sustained by the non-performance, there the courts are strongly inclined to regard the gross sum as a penalty, and not as liquidated damages. (Hoag v. McGinnis, 22 Wend. 163; Kemble v. Farren, 6 Bing. 141; Dakin v. Williams, 17 Wend. 447.) Here the arbitrators were to do nothing but determine how much damages should be paid by one party to the other. In an action on the submission there could be no difficulty in saying how much damages had been sustained by the neglect or refusal to abide the award. It would be the sum awarded with interest. I think the gross sum of one hundred dollars was inserted in terrorem ; and not as the amount to be actually paid, any more than the sum mentioned in the penal part of a common bond.

Footnotes

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(a) The defendant would have been bound to pay the sum awarded, though it had greatly exceeded the one hundred dollars; and I think he is only bound to pay the sum awarded, though it is less than the one hundred dollars.

Judgment reversed.

The submission in this case appears to have authorized only an award for the payment of money. In Burgess v. Tucker, (5 J. R. 105,) a bond conditioned to perform an award, where the payment of a sum less than the penalty was awarded, was regarded in reference to the statute of set-off as a bond for the payment of money only; and where the payment of a smaller sum is secured by a greater, the larger amount will always be considered as a penalty, whatever language the parties may have used. (Astley v. Weldon, 2 Bos. & Pul. 346 ; Dakin v. Williams, 17 Wend. 447, per Nelson, C. J.)