1 See Beale v. Hayes, 5 Sandf. 640.
2 Tayloe v. Sandiford, 7 Wheat. 13; Astley v. Weldon, 2 Bos. & Pul. 346; Merrill v. Merrill, 15 Mass. 488; 2 Stark. Ev. (5th Am. ed.) 620, and cases there collected; Boys v. Ancell, 7 Scott, 364; s. c. 5 Bing. N. C. 390; Davies v. Penton, 6 B. & C. 216; Hoag v. M'Ginnis, 22 Wend. 163; Perkins v. Lyman, 11 Mass. 83; Knapp v. Maltby, 13 Wend. 587; Pinkerton v. Caslon, 2 B. & Ald. 706. See, also, Spear v. Smith, 1 Denio, 464.
3 Kemble v. Farren, 6 Bing. 141; s. c. 3 M. & P. 425. But see this case doubted in Atkyns v. Kinnier, 4 Exch. 776, 783; Brewster v. Edgerly, 13 N. H. 278. See, also, Reilly v. Jones, 1 Bing. 303; Barton v. Glover, Holt, N. P. 43; Galsworthy v. Strutt, 1 Exch. 659; Beckham v. Drake, 2 H. L. Cas. 579; Bonsall v. Byrne, Irish R. 1 C. L. 573 (1867); Hinton v. Sparkes, Law R. 3 C. P. 161 (1868); Cotheal v. Talmage, 9 N. Y. 551; Pierce v Jung, 10 Wis. 30; Heard v. Bowers, 23 Pick. 455; Carpenter v. Lockhart, 1 Ind. 434.
4 Bagley v. Peddie, 5 Sandf. 192. Sandford, J.: "The courts have leaned very hard in favor of construing covenants of this kind to be in the nature terms of the contract do not evince a different intention.1 Thus, where the obligee of a bond bound himself to complete
§ 1473. But where it is agreed that if a party do, or neglect to do, a particular thing in respect to which the damof penalties instead of damages, fixed and stipulated between the parties, and, in so doing, have established certain rules which will serve to guide us in determining this case. It may, perhaps, be justly said that in this struggle to relieve parties from what, on a different construction, would be most improvident and absurd agreements, the courts have sometimes gone very far towards making new contracts for them, somewhat varied from the stipulations, which, under other circumstances, would be deduced from the language they used; but we believe no common-law court has yet gone so far as to reduce the damages, conceded to have been liquidated and stipulated between the parties, to such an amount as the judges deem reasonable, which is the course in countries where the civil law prevails.
"Among the principles that appear to be well established are these: -
"1. Whenever it is doubtful on the face of the instrument whether the sum mentioned was intended to be stipulated damages or a penalty to cover actual damages, the courts hold it to be the latter.
"2. On the contrary, where the language used is clear and explicit to that effect, the amount is to be deemed liquidated damages, however extravagant it may appear, unless the instrument be qualified by some of the circumstances hereafter mentioned.
"3. If the instrument provide that a larger sum shall be paid on the failure of the party to pay a less sum in the manner prescribed, the larger sum is a penalty, whatever may be the language used in describing it.
"4. When the covenant is for the performance of a single act or several acts, or the abstaining from doing some particular act or acts which are not measurable by any exact pecuniary standard, and it is agreed that the party covenanting shall pay a stipulated sum as damages for a violation of any such covenants, that sum is to be deemed liquidated damages, and not a penalty. The cases of Reilly v. Jones, 1 Bing. 302; Smith v. Smith, 4 Wend. 468; Knapp v. Maltby, 13 Ib. 587, and Dakin v. Williams, 17 Ib. 447; s. c. in error, 22 Ib. 20 , were of this class.
"5. Where the agreement secures the performance or omission of various acts of the kind mentioned in the last proposition, together with one or more acts, in respect of which the damages, on a breach of the covenant, are certain, or readily ascertainable by a jury, and there is a sum stipulated as to damages, to be paid by each party to the other, for a breach of any one of the covenants, such sum is held to be a penalty merely. This was the principle of the leading case, Astley v. Weldon, 2 Bos. & Pul. 346; and of Davies v. Penton, 6 B. & C. 216; Kemble v. Farren, 6 Bing. 141; and Boys v. Ancell, 5 Bing. N. C. 390. The latter case is a little remarkable, for the reasons assigned by some of the judges for the decision of Kemble v. Farren, by the same court ten years before. As neither of those judges were then members of the court, and as no such reasons appear in Mr. Bingham's report of the case, we do not conages are uncertain, a certain sum shall be paid him, there the sum stated may be treated as liquidated damages, if the aider the statement in Boys v. Ancell to be sufficient to establish those reasons as the ground for its decision. It is true that Tindal, C. J., in pronouncing the judgment in Kemble v. Farren, relied on Astley v. Wel-don, and that Heath, J., in the latter case, took a distinction between a sum stipulated a damages, in respect of a single act, and a like stipulation for the performance of each of several acts, and said that the latter was to be considered a penalty. But this was clearly not the ground upon which Astley v. Weldon proceeded, nor was Kemble v. Farren decided upon any such distinction. The decision in Reilly v. Jones (1 Bing. 302), was adverse to that doctrine, as was Knapp v. Maltby (13 Wend. 587). In the case of Boys v. Ancell there was a covenant to pay the expenses of the lease, to which the sum claimed as stipulated damages was applicable, as well as to the covenant which had been broken on the other side; and as those expenses were of a certain nature, the case was in principle like Kemble v. Farren.
"Now let us apply the rules we have ascertained to the case at bar. We prefer to pass over the first and second, and it is not claimed by the defendants that the third rule is applicable, except in connection with the fifth. They insist that the case is within the latter, and the plaintiff insists it is within the fourth proposition.
"The instrument binds the defendants to pay the ' three thousand dollars liquidated damages,' in case Charles B. Peddie should refuse to continue with or serve the plaintiff, or should violate any of the covenants mentioned in the recited agreement between him and the plaintiff. The agreement they recited bound C. B. Peddie to the performance of numerous acts, among which he covenanted to be just, true, and faithful to the plaintiff, in all matters and things, and in no wise to wrongfully detain, embezzle, or purloin any moneys, goods, or things whatever, belonging to the plaintiff; to keep a just account of all things relating to the plaintiff's business committed to his care or management, and to give a true account of the same when required.