the second alternative only expressing what the law would imply.(v)1

§ 130. The largeness or smallness of the sum named is no reason for considering it a mere penalty, unless that be the

(v) Finch v. Earl of Salisbury, Finch, 212.

1 Neither will courts of equity suffer "their jurisdiction to be evaded, merely by the fact that the parties have called a sum damages, which is, in fact and in intent, a penalty; or because they have designedly used language and inserted provisions which are in their nature penal, and yet have endeavored to cover up their objects under other disguises The principal difficulty in cases of this sort, is to ascertain when the sum stated is, in fact, designed to be in nomine pence, and when it is properly designed as liquidated damages." Story's Eq. Jur., 1318. See Watts v. Shepherd, 2 Ala., 425. It is said in Owens v. Hodges, 1 McMullan, 106, that where a party to a contract stipulates to perform one or more things, and, in the event of the non-performance of any or all of them, agrees to pay a certain sum, the sum agreed to be paid will be regarded as a penalty, and not as liquidated damages. Where a large sum is agreed to be paid upon the non-payment of a smaller, or the non-performance of a duty, the damages resulting from which may be ascertained with reasonable certainty, and which is much less than the sum expressed, that sum will be a penalty. Watts v Shepherd, 2 Ala., 425. A. engaged by bond "in the full and just sum of $500, liquidated damages," to convey to B. 3,000 feet of land, and afterwards, on B's demand, executed a deed to him, conveying a lot of land described by metes and bounds. B. accepted the deed, and he and A. agreed that, if it was not right, it should be made right. It was afterwards found, upon a survey of the land conveyed, that it contained only 2513 feet. Held, in a suit by B. on the bond, that as he had accepted said deed in part performance of the bond, the sum of $500, was not to be regarded as liquidated damages, but that he was entitled to recover only the actual damages which he had sustained. Shute v. Taylor, 5 Metc., 61. A. agreed to do a piece of work for $758, and gave his bond with sureties, to secure the performance of the work, in the sum of $1,570, not as a penalty but as liquidated damages." Held, that such sum was to be considered as a penalty, and not as liquidated damages. Moore v. Platte County, 8 Mis., 467. Where it was agreed, by the terms of the contract, among other things, that one party should give to the other, on a specified day, a promissory note for $200, and, on a subsequent day, his bond and mortgage for $2,100, and that if either party should fail to perform the contract according to the instrument, he should pay to the other $500 as liquidated damages, it was held that the parties gave the wrong name to this sum, and that it must be regarded as a penalty and not as liquidated damages. Lampman v. Cochran, 16 N. Y. (2 Smith), 275; see Foley v. McKeegan, 4 Iowa, 1. If, by the agreement, it is doubtful whether the parties intended that the sum specified should be a penalty or liquidated damages, courts incline to treat the contract as creating a penalty to cover the damages actually sustained by one breach, and not as liquidated damages. Foley v. McKeegan, 4 Iowa, 1. In Cowan v. Gerrish, 3 Shep, 273, and in Durst v. Swift, 11 Texas, 273, it is said that the lawful intention of the parties, in a case free from fraud, where it can be ascertained, must have a decisive influence in determining whether the sum stated in the instrument is to be regarded as a penalty But, on the other hand, it is held, in Jaquith v. Hudson, 5 Mich., 123, that the real question, in this class of cases, is not what the parties intended, but whether the sum is in the nature of a penalty or of liquidated damages-that this is to be determined by the magnitude of the sum in connection with the subject-matter. But that where, from the nature of the contract, the subject-matter, etc., the actual damages from a breach are uncertain or difficult to ascertain, under these circumstances, the parties are permitted to estimate for themselves, and provide in their contract for the amount to be paid on a breach. [Per Christiancy, J.] Perhaps, however, the true doctrine was laid down in Cotheal v. Talmadge, 5 Seld. (N. Y.), 557. Here it was said that where the damages resulting from the breach of an agreement would be very uncertain, and evidence of their amount very diffi

apparent intention;(w) but where the amount of the penalty is small, as compared with the value of the subject of the contract, it has been considered a reason for treating the sum reserved as a mere penalty, and not in the nature of an alternative contract.(x)

§ 131. In a case where a man, being very uncertain what estate he should derive from his father, entered into a bond

(w) Roy v. Duke of Beaufort, 2 Atk., 190; Astley v. Weldon, 2 Bos. & P., 346; French

v. Macale, 2 Dr. & War, 269. But see Burne v. Madden, Ll. & G.. t. Plunk., 493.

(x) Chilliner v. Chilliner, 2 Ves. Sen., 528.

cult to obtain, and the fair import of the agreement is that the amount named in it is specified and agreed on to save expense, and avoid the difficulty of proving the actual damage, and is not out of proportion to the probable actual damage, it will be regarded as liquidated damages. Thus, in Nobles v. Bates, 7 Cow., 307, a decision in accordance with the English case of Sainter v. Ferguson, 7 C. B., 715, where N. & B. dissolved their partnership in business, and their articles of dissolution declared one object of the dissolution to be, that N. should relinquish the trade-that B. should pay him $3,000, in various installments, the last being $750-and that if N. should set up the business within twenty miles of their former place of business, he should forfeit that installment; held, that the installment of $750 must be considered as liquidated damages; and, as such, to be forfeited by a breach of the condition of N. Sutherland, J., in delivering the opinion of the court, said: "The parties have fixed the value of that item in the consideration at $750. In the nature of the case, the precise injury which the defendant would sustain from the establishment or continuance of the same kind of business could not be accurately ascertained. It must depend upon a variety of circumstances; upon the capital which the party might invest; the industry which he might exert; and the patronage from these, and other causes, he might be able to attract." In Bagley v. Peddie, 16 N. Y. [2 Smith], 469, a bond declared the obligors to be bound in the sum of $3,000 as liquidated damages, and not by way of penalty; for the performance of the covenants of a written agreement. One of the covenants was, not to reveal the secrets of a trade in which the principal obligor was to be employed. It was held, that the amount of damages to result from a breach of this stipulation of the agreement was so uncertain and conjectural, that the sum named in the bond should be considered as liquidated damages, and not a penalty, although the damages of the actual breach were certain. The following cases were also held to be those of liquidated damages: A party agreed to convey a tract of land for $1,200, a part of which was to be paid down, and was to be received as part of the consideration money, if the purchase were completed, or of the damage, if the contract were not performed; and he also covenanted, if he did not conform to his agreement, to pay $500 as forfeiture. Chamberlain v. Bagley, 11 N. H., 234. A. covenanted with B. to procure and deliver to him, within a limited time, the certificate of third persons to a certain effect, and stipulated that if he failed to do so, he would pay him $500 liquidated damages. Hamilton v. Overton, 6 Blackf., 206. Where a party, in consideration of having conveyed to him fourteen city lots for only $21,000, covenanted that he would, by a certain day, erect two brick houses, or in default thereof pay to the grantor, on demand, the sum of $4,000. Where the plaintiffs gave $3,000 for the patronage and good will of a newspaper, and $500 for the type, etc., and the vendors covenanted that they would not publish a rivál paper, etc., and the measure of damages was fixed at $3,000. Dakin v. Williams, 22 Wend., 201. Where the parties contract mutually to do certain acts at a fixed time, and "respectively bind themselves each to the other in the sum of $500, for the faithful performance of the several agreements herein entered into," the sum is not to be considered as a penalty. Gammon v. Howe, 2 Shep., 250. Where publishers agree to sell law reports to all applying or pay $100 for each refusal. Little v. Banks, 85 N. Y., 258.

in £5,000, on the marriage of his daughter, to settle onethird of such property, and the contract so to settle was recited in the condition of the bond, it was specifically performed in full, and not up to £5,000 only. (y) "Such agreement," said Lord Macclesfield, (2) "was not to be the weaker but the stronger for the penalty."

§ 132. The fact that the benefit of the contract would result to one person, or flow in one channel, and the benefit of the sum, if paid, in another, is a strong circumstance against considering the contract alternative in its nature; thus where, on a marriage, the husband's father gave a bond for the payment of £600 to the wife's father, his executors or administrators, in the penalty of £1,200 if he did not convey certain lands for the benefit of the husband and wife and their issue, Lord Hardwicke held that the obligor was not at liberty to pay the £600, or settle the lands, at his election, but compelled the specific performance of the contract to settle-partly on the ground that the £600 would not have gone to the benefit of the husband and wife and their issue, but of the wife's father and his representatives, and partly that the lands to be settled were worth much more than £600.(a)

§ 133. Where the sum reserved is single, and the act stipulated for or against is in its nature continuing or recurring, as, for instance, particular modes of cultivating a farm, the sum will be considered as a security and not an alternative.(b)

§ 134. On the other hand where the sum or sums made payable vary in frequency of payment or amount according to the thing to be done or abstained from, the courts have, in many cases, found that the payment is an alternative.

§ 135. In Woodward v. Gyles (c) a covenant by the defendant not to plough meadow land, and if he did, to pay so much an acre, was held not to be a fit case for an injunction restraining the ploughing; but the exact form of the covenant does not appear. "If," said Lord St. Leonards, (d) "as in Woodward v. Gyles, (e) and Rolfe v. Peterson, (f)

(y) Hobson v. Trevor, 2 P. Wms., 191. (2) 2 P. Wms., 192 (6th ed.).

(a) Chilliner v. Chilliner, 2 Ves. Sen., 528; Roper v. Bartholomew, 12 Pri., 797.

(6) French v. Macale, 2 Dr. & War., 269.

And see Roper v. Bartholomew, 12 Pri., 797. (c) 2 Vern., 119.

(d) 2 Dr. & War., 284.
(e) 2 Vern., 119.

(f) 2 Bro. P. C., 436.

there is evidence of intention that the party is to be at liberty to do the act if he choose to pay the increased rent, of course the court cannot interfere, because this court never interferes against the express contract of the parties."

§ 136. In Rolfe v. Peterson (g) the question was whether the payment was a penalty and so came within the doctrine of equitable relief against penalties; but of it Lord Loughborough said, in Hardy v. Martin (7): "That was a case of demise of land to a lessee to do with the land as he thought proper; but if he used it one way he was to pay one rent and if another way another rent." Similarly, a covenant in a farm lease not to do certain things "under an increased rent of," etc., was held to give the tenant the right to do the act on paying the increased rent, (i) and a contract to renew perpetually "under a penalty of £70," was held alternative.(j)

§ 137. But where, in addition to the increased rent, there is a stipulation that the act provided against shall be a forfeiture of the covenantor's interest, the sum is held to be a security only and not an alternative; and consequently the court would restrain the doing of the act ;(k) and, of course, the usual form of lease giving the lessor the right to re-enter and avoid the lease on breach of covenant offers no impediment to the enforcement of the covenants specifically.(7)

§ 138. Where the contract would be unreasonable unless it gives an option to the person stipulating to pay the sum, this will be a strong circumstance for treating the contract as alternative. So where a lady, administratrix of her husband, covenanted, under a penalty of £70, to renew a sublease as often as she obtained a renewal of the head-lease, and it appeared that the fines on the head-lease were raised on renewal, according to the then value of the property, so as to render her covenant unreasonable except upon the construction of its giving her an option, the House of Lords treated the contract as alternative. (m)

(g) 2 Bro. P. C., 436. (h) 1 Cox, 26.

(i) 2 Legh v. Lillle, 6 H. & N., 165; 9 W. R., 55; 30 L. J. Ex., 25. And see Hurst v. Hurst, 4 Ex., 571; Gerrard v. O'Reilly, 3 Dr. & War., 414.

5

(j) Magrane v. Archbold, 1 Dow, 107. (k) Barret v. Blagrave, 5 Ves., 555, as explained by Lord St. Leonards in French v. Macale, 2 Dr. & War., 278-9.

(1) Dyke v. Taylor, 3 De G. F. & J.. 467. (m) Magrane v. Archbold, 1 Dow, 107.

PART II.

PARTIES TO THE ACTION.

CHAPTER I.

OF THE GENERAL RULE.

§ 139. In considering the subject of this chapter it will be convenient to treat separately (1) of the rules formerly applicable to suits for specific performance in the court of chancery, and (2) of the rules now applicable to like actions in the high court constituted by the judicature act, 1873. It is not yet possible to neglect the old practice, as it will no doubt be appealed to, from time to time, as assisting to guide the court under the new practice.

1. As to the former practice of the court of chancery. § 140. The general rule with regard to suits to enforce contracts was that the parties to the contract, or their representatives, were the necessary and sufficient parties to the suit that all the parties to the contract should be parties to the suit and no one else. (a) The contract is what conelse.(a)1 stitutes the rights and regulates the liabilities of the parties; in a stranger there is no liability; and against him, therefore, there was no more right to enforce specific performance in equity than to recover damages at law. (b)

(a) Mole v. Smith, Jac., 490; Tasker v. Small, 3 My. & Cr., 63, 69; Wood v. White, 4 id., 460, 483; Humphreys v. Hollis, Jac, 73; Patterson v. Long, 5 Beav., 186; Peacock v. Penson, 11 id., 355; Bishop of Winchester v. Mid-Hants Railway Co., L. R. 5 Eq., 17, 21;

Lumley v. Timms, 21 W. R., 319; S. C., id., 494; Halifax Joint Stock Banking Co. v. Sowerby Bridge Town Hall Co., 25 Sol. Jo., 450; W. N., 1881, 65.

(b) Hare v. London and North Western Railway, 1 J. & H., 252.

1 McKee v. Beal, 3 Litt. (Ky.), 190; McWherter v. McMahon, 1 Clark (N. Y.), 400. A party sold land which had been decreed to him. Held, that the purchaser might compel a conveyance to himself by an original bill. Respass v. McClanahan, 2 A. K. Marsh, 577.