U.S. Supreme Court PERIT v. WALLIS, 2 U.S. 252 (1796)
2 U.S. 252 (Dall.)
Supreme Court of Pennsylvania
September Term, 1796
This was an action of debt, on a bond which was executed upon the 29th of January 1789, by the defendant, to Peletiah Webster, the Testator, in the penal sum of L 5000, with the following condition subjoined: 'Whereas the said Samuel Wallis did, by his deed, duly executed under his hand and seal, bearing even date with these presents, grant, bargain and sell unto the said Peletiah Webster a certain tract of land therein described, containing 12,625 acres, and contracted to make a clear title in fee, under a patent or patents from the State of Pennsylvania, for the same: And whereas patents for the said lands have
not yet been obtained: NOW KNOW YE, that the condition of the above obligation is such, that if the above bounden Samuel Wallis doth, within six months from the date hereof, well and truly obtain from the land office of the State of Pennsylvania aforesaid, good and sufficient patents for all the lands described and conveyed within the deed aforesaid, as reference being thereunto had will appear, and convey or cause them to be paid to the said Peletiah Webster, by good and sufficient deeds and assurances in the law, then the above written obligation to be void, otherwise to be and remain of full force and virtue.'
After Oyer, the defendant pleaded performance of the condition; and the plaintiff replied non-performance, assigning as a breach of the condition, that the defendant did not, within six months after the execution of the bond, obtain patents for the lands, and convey them, or cause them to be conveyed, to the plaintiff. On these pleadings issue was joined, the cause was tried, and a verdict was given in favor of the plaintiff, 'for L 5000 debt, and L 1922 10 damages and costs; subject to the opinion of the Court on the damages, which are given for interest.'
The question before the Court was: Whether the plaintiff was entitled to recover interest upon the L 5000 penalty, from the expiration of the six months allowed for the performance of the contract? And it was argued by Ingersoll and Lewis, for the plaintiff; by Coxe and M. Levy, for the defendant.
For the plaintiff it was insisted, that in every point of view the interest ought to be allowed, and that it was the province of the Jury to allow it by way of damages. And the Counsel illustrated, exemplified, and enforced the principle of their argument, by cases of penalties given under particular statutes; by cases where the penalty is given in a bond for the payment of an additional sum, if the sum mentioned in the condition should not be punctually paid; by cases where the penalty is given as a security for the performance of a collateral act; and by cases where the penalty is considered as the fixed and ascertained damages, mutually agreed upon by the parties themselves; in all which, it was urged, that damages had been carried beyond the penalty; and the following authorities were cited. 2 T. Rep. 388. 9. Bund. 23. Show. Parl. Ca. 15. 16. Bull. N. P. 178. 1 Salk. 206. 1 Vent. 133. 3 Cro. C. 559. 1 Fonbl. Eq. 141. 1 Brown. Ch. 418. 2 Fonblan. 430. 1 Vent. 133. 2 Hawk. P. C. 273. Carth. 230. 3 Lev. 374. If, then, the Jury had a power to give damages at all, the interest was the most reasonable rule that could be adopted to estimate them. 2 Fonbl. Eq. 423. 1 Dom. C. L. 407. And the expiration of the six months was the proper time to compute the damages from, without regard to any demand; for, where a certain
sum is payable on a certain day, a demand is not necessary to be made, or proved. Imp. Mod. Pr. 194. 202. The plaintiff might have proceeded on the covenant in the original deed, and would doubtless be then entitled to recover damages commensurate with the injury; and the penalty is only a collateral guard to the agreement, providing a further remedy at law. 1 Fonbl. Eq. 141.
For the defendant, it was premised, that a great contrariety of opinion appeared, in the cases on this subject; and that a rule had certainly been adopted in the Court of Chancery different from that which prevailed in the Courts of Common Law; the former allowing interest, sometimes even exceeding the penalty, but the latter always refusing it. 3 Br. Ch. Rep. 489. 496. When, however, the allowance was made, it was confined to cases of Bonds for the payment of money, where interest, by a computation on the sum mentioned in the condition, may exceed the penalty; but the present question must be classed with the cases of fixed and ascertained damages; and there is no instance, in such a case, of more than nominal damages being given beyond the penalty, and that merely for the purpose of entitling the party to his costs. H. Bl. Rep. II. 1 Cases in Ch. 226. 16 Vin. 303. pl. 10. 1 Vern. 350. The penalty is the fixed and stipulated extent of the damages for not performing the contract, including all delay, vexation and interest: It may be regarded as such, without any express declaration in the instrument; and whatever is the contract of the parties must prevail; for, modus et conventio vincunt leg. H. Bl. Rep. 231. 232. In 2 Bl. Rep. 1190, there is the case of an indemnity bond, which is precisely analogous to the present bond; and the Chief Justice there declared, that as the penalty of the bond ascertained the damage by consent of parties, the plaintiff was intitled to recover no more. Equity will relieve against a penalty; but it will never go beyond it. 4 Burr. 2228. It is true, that if the plaintiff had proceeded on the original covenant, he might have recovered damages to the amount of any injury that he could prove; but having proceeded for the penalty of the bond, which was taken by way of collateral security, he has himself chosen to make that the measure of his recovery. All the cases cited on the other side, are bonds for the payment of money; except those arising under statutes; and, it is not contended that in them the damages are carried beyond the penalty, where it is given to a common informer, but only where it is given to the party agrieved; when, perhaps, the damages actually sustained, are fairly to be computed from the time the injury was done, and nothing is to be presumed from the contract of the parties. Besides the penalty, though due in strictness at the expiration of six months was only payable on demand; the interest could,
therefore, only arise from the time of actual demand; and there was no evidence given at the trial of any demand having been made. Lewis, being about to reply, was stopped by the Court:
M'Kean, Chief Justice: The only question before the Court is, whether the Jury had a power, under the circumstances of this case, to give any damages beyond the penalty of the bond: The quantum (which might be a subject of dispute on a motion for a new trial) is not at all involved in the point submitted to our decision. Of the power of the Jury we do not entertain a doubt. Though postive law, and judicial precedents, should be totally silent on the subject, the principles of morality, equity, and good conscience, would furnish an adequate rule to influence and direct our judgment. By that rule we must discover, that the defendant, having contracted to make a conveyance, or to pay a specific sum, within a limited time, was guilty of an immoral act in omitting to perform either of the alternatives; and, of course, he ought not to be allowed to be a gainer by the violation of his engagement. It is true, that we cannot compel him specifically to comply with the terms of the contract, as a Court of Chancery might do; but we can enforce the payment of a compensation for the breach; and as the breach was made in the contract, at the end of six months; when either the lands should have been conveyed, or the penalty should have been paid, the interest ( which is a reasonable and moderate measure of damages) ought in justice to run from that period. The verdict, for the whole amount is, therefore, in our opinion, moral and equitable; nor is there, I will venture to aver, any authority to impeach it, upon the strictest principles of law.
Shippen, Justice: If the Jury had undertaken to give more than L 5000 for the injury sustained, by the infraction of the original contract, their verdict would have been affected by the cases that have been cited. But the cases go no further; and certainly do not deny the right of the Jury to make an allowance of interest, for the detention of the money, after the time limited for its payment. Indeed, the strongest possible inference to the contrary is to be drawn from the cases cited for the defendant; for, Lord Mansfield, having asked what else the Jury could give than the penalty, expressly adds 'unless they had also given interest after the three months,' stipulated in the contract. 4 Burr. 2228. In short the L 5000, paid with interest at this day, is not, in fact or law, more than the L 5000 paid, without interest, at the day it became due.
Smith, Justice: The plaintiff is clearly entitled to the interest, on every principle of law, morality, and equity. It would have been sufficient to me, therefore, if the verdict had been
unsupported by any precedent: But, I am the more strengthened in my opinion, as not a single authoritative dictum is to be found against it.
By the Court: Let judgment be entered for the plaintiff, for damages, interest, and costs.