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or weekly sum stipulated is out of proportion to any possible damage that could be caused by a delay, it will be held penal even for delayed performance. Similarly, for delay by a carrier, the contract may provide for reasonable daily damages; and the common provisions for demurrage in charter parties involve the same principle.85 So in contracts for the sale of goods, or for engaging in competitive business, or other contracts, damages for each day's breach may be fixed. But when a contract is to furnish numerous articles, courts have refused to enforce a stipulation for the same daily damages for total failure to deliver any part of the goods and for a failure to deliver a single one of the articles to be delivered, especially where there has been substantial compliance with the con

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April 1 to Oct. 6, when the owner ejected the contractor. Phaneuf v. Corey, 190 Mass. 237, 76 N. E. 718. And in Bedford v. J. Henry Miller, Inc., 212 Fed. 368, 129 C. C. A. 44, damages of $50 a day for 392 days were enforced.

83 Coen v. Birchard, 124 Iowa, 394, 100 N. W. 48 ($5 a day for building which would rent for $25); Ross v. Loescher, 152 Mich. 386, 116 N. W. 193, 125 Am. St. Rep. 418 ($20 a day on structure costing $825); Cochran v. People's Railway, 113 Mo. 359, 21 S. W. 6 ($50 a day on building costing $18,000); McCann v. Albany, 11 N. Y. App. Div. 378, 42 N. Y. S. 94 ($50 a day, sewer construction); Wheedon v. American, etc., Co., 128 N. C. 69, 38 S. E. 255 ($10 a day for building which would rent for $30 a month); West v. Higgs, (N. C. 1917), 93 S. E. 719; Jennings v. Willer (Tex. Civ. App.), 32 S. W. 24 ($25 a day for house which would rent for $150); J. G. Wagner v. Cawker, 112 Wis. 532, 88 N. W. 599 ($50 a day on $17,000 building); Grant Marble Co. v. Marshall & Ilsley Bank, 164 Wis. 547, 165 N. W. 14. Damages of $10 a day for delay in constructing a house were sustained in DeGraff v. Wickham, 89 Ia. 720, 52 N. W. 503, 57 N. W. 420;

Crawford v. Heatwole, 110 Va. 358, 66 S. E. 46, 34 L. R. A. (N. S.) 587; Reichenbach v. Sage, 13 Wash. 364, 43 Pac. 354. In Baltimore Bridge Co. v. United Rys., etc., Co., 125 Md. 208, 93 Atl. 420, liquidated damages of $25 a day were allowed for 59 days' delay in completing a bridge the total cost of which was less than $7,000, but there were large actual damages due to the interference with the operation of a railway, and in John Cowan, Inc., v. Meyer, 125 Md. 450, 94 Atl. 18, liquidated damages of $95 a day were allowed for about thirty days on a contract for excavation, for which the price was about $10,000.

84 Harmony v. Bingham, 12 N. Y. 99, 62 Am. Dec. 142.

85 Creighton v. Dilks, 49 Fed. 107; Randall v. Sprague, 74 Fed. 274, 21 C. C. A. 334, 33 U. S. App. 464; Baldwin v. Sullivan Timber Co., 20 N. Y. S. 496.

80 Bergheim v. Blænavon, etc., Co., L. R. 10 Q. B. 319; Louisville Water Co. v. Youngstown Bridge Co., 16 Ky. L. Rep. 350.

87 Kimbro v. Wells, 112 Ark. 126, 165 S. W. 645.

88 Morris v. Wilson, 114 Fed. 74, 52 C. C. A. 22.

tract. "Suppose," it has been said, "the contract was to furnish 10,000,000 brick, and the plaintiff had substantially furnished that number, but through inadvertence the delivery was two or three bricks short of the 10,000,000. Would that subject the plaintiff to $50 a day for an indefinite time?" " The distinction, however, between a contract for a building and one for building materials is somewhat tenuous. One who contracts to erect a building must procure numerous materials. If he will be unable to finish the building until he obtains all of the numerous articles for which he has contracted, the failure to furnish any substantial amount of the materials will involve corresponding delay in finishing the whole building. In the decision from which the passage above quoted is taken, the general contractor required for the performance of his contract a quantity of terra cotta manufactured according to special designs. If the general contractor is subject to a daily liability for each day's delay in finishing the building, and that delay is due to the failure to obtain all the terra cotta required, the stipulation seems as reasonable when applied to the building materials as when applied to the building itself. The case illustrates the difficulty of laying down any narrower test than the reasonableness in each particular case of the sum agreed upon as compensation for the breach. A lump sum made payable for any delay whatever beyond a stipulated date is ob89 Northwestern Terra Cotta Co. v. 104 Pac. 165, 166, 34 L. R. A. (N. Caldwell, 234 Fed. 491, 505, 148 C. C. S.) 1. A. 257, citing Chicago, B. & Q. R. Co. v. Dockery, 115 C. C. A. 173, 195 Fed. 221; East Moline Co. v. Weir Plow Co., 37 C. C. A. 62, 95 Fed. 250; O'Brien v. Illinois Surety Co., 121 C. C. A. 546, 203 Fed. 436; Heatwole v. Gorrell, 35 Kan. 692, 12 Pac. 135, 137; Gower v. Saltmarsh, 11 Mo. 271; Long v. Towl, 42 Mo. 545, 550, 97 Am. Dec. 355; Boulware v. Crohn, 122 Mo. App. 571, 99 S. W. 796, 800; Wilkinson v. Colley, 164 Pa. 35, 30 Atl. 286, 26 L. R. A. 114; Emery v. Boyle, 200 Pa. 249, 49 Atl. 779, 780; Keeble v. Keeble, 85 Ala. 552, 5 So. 149; Madler v. Silverstone, 55 Wash. 159,

In Northwestern Terra Cotta Co. v. Caldwell, 234 Fed. 491, 148 C. C. A. 257, the contract in question was for the manufacture and sale of $13,000 worth of ornamental terra cotta to be used by the purchasers in the construction of a court house for which they were the general contractors. The contract for the terra cotta provided that should the contract not be completed by a fixed date the manufacturer should pay $50 liquidated damages for each day's delay, but should the contract be completed earlier he should receive $50 per day as bonus. The stipulation for damages was held unenforceable.

noxious to the objection of giving the same damage for a small breach as for a large one, and should not be allowed,90 unless any delay whatever is totally destructive of the value of the performance.

§ 786. Stipulation for attorney's fees.

It is a common provision in promissory notes and an occasional provision in other contracts, especially mortgages, that in case of breach the promisor will pay an attorney's fee (the amount of which is sometimes stated) for enforcing the obligation. There seems no occasion to distinguish between mortgages and other contracts with reference to the provision. If it is penal or the reverse in one it is in the other.91 It was much litigated prior to the passage of the Negotiable Instruments

*Tayloe v. Sandiford, 7 Wheat. 13, 5 L. Ed. 384; Savannah &c. Railroad . Callahan, 56 Ga. 331; Condon v. Kemper, 47 Kans. 126, 27 Pac. 829, 13 L. R. A. 671; Ward v. Hudson River Building Co., 125 N. Y. 230, 26 N. E. 256. In Brooks v. Wichita, 114 Fed. 297, 52 C. C. A. 209, the court enforced a provision for $10,000 damages for failure to have in operation by April 1, 1899, 150 arc lights. The court said: "The contract in this case does not stop with declaring that the sum of $10,000 has been agreed upon between the parties as liquidated damages in case of its breach, but it contains the further and somewhat unusual provision that they have agreed upon this sum 'for the reason that the actual damages sustained by the said city in case of a breach of this contract cannot be definitely or accurately ascertained or computed.' This clause of the contract evinces a knowledge on the part of the contracting parties of the rules of law to which we have adverted, and which preclude a city from recovering substantial damages in this class of cases unless they are liquidated by the agreement of the parties. It was the knowledge of this fact that led the parties to this contract to agree on the

damages for its breach, and this is conclusive evidence that they intended what they expressed in their contract, namely, that the sum agreed upon was 'liquidated damages, and not a penalty.' If this provision of the contract does not mean what it says, then it does not mean anything." If this argument were sound any penalty which the parties agreed upon could always be enforced. They can always assert in the contract that the most unreasonable sum is agreed upon as a bona fide estimate of damages which were difficult to estimate. That such statements should be admissible evidence of the facts is clear, but if they are regarded as conclusive, or even as entitled to much weight, the rules which equity has built up against penalties are turned into a mere technicality with little to commend it.

91 Jarvis v. Southern Grocery Co., 63 Ark. 225, 38 S. W. 148; Turner v. Boger, 126 N. C. 300, 35 S. E. 592, 49 L. R. A. 590; McAllister's Appeal, 59 Pa. 204; First Nat. Bank v. Larsen, 60 Wis. 206, 19 N. W. 67, 50 Am. Rep. 365. A contrary suggestion in Broadbent v. Brumback, 2 Idaho, 366, 16 Pac. 555, is without support.

Law, whether such a provision did not destroy negotiability of a bill or note.92 By that statute, however, 93 which has now been generally adopted, it is provided that an instrument is not rendered non-negotiable by such a stipulation. This statutory provision is in accordance with the weight of authority prior to its enactment; and its almost universal enactment renders a discussion of the effect of the provision on the negotiability of a note, academic. The statute, however, does not affect the question whether such a provision is penal. The contract sometimes makes no provision concerning the amount of the stipulated fee; sometimes fixes a sum, either by stating a percentage (usually five or ten per cent) of the principal debt or by stating a lump sum. Any jurisdiction which permits a recovery of the fee where the amount is stated would undoubtedly allow a recovery of a reasonable fee where no sum is named in the contract.95 Most jurisdictions enforce a provision fixing the amount, if its reasonableness is not justifiably attacked.96 But if the amount is penal, either because of its size, or because the creditor was not compelled to pay an attorney the stipulated fee, the provision will be held to entitle the creditor only to a reasonable fee actually paid by him.97 And in some 92 See Daniel, Negotiable Instruments, § 62a.

93 Sec. 2 (5); infra, § 1137.

94 Miller v. Kyle, 85 Ohio St. 186, 97 N. E. 372; Raleigh County Bank v. Poteet, 74 W. Va. 511, 82 S. E. 332, L. R. A. 1915, B. 928.

95 See Potts v. Crudup (Okl.), 150 Pac. 170; McCornick v. Swem, 36 Utah, 6, 102 Pac. 626.

96 Re Keeton, 126 Fed. 426; Re Roche, 101 Fed. 956, 42 C. C. A. 115; Whaley v. American Freehold Land Mtge. Co., 74 Fed. 73, 42 U. S. App. 90, 20 C. C. A. 306, aff'g. 63 Fed. 743; Langley v. Andrews, 142 Ala. 665, 38 So. 238; Mason v. Luce, 116 Cal. 232, 48 Pac. 72; Carhart v. Allen, 56 Fla. 763, 48 So. 47; Broadbent v. Brumback, 2 Idaho, 366, 16 Pac. 555; Baker v. Jacobson, 183 Ill. 171, 55 N. E. 724; Keenan v. Blue, 240 Ill. 177, 88 N. E. 553; Smiley v. Meir, 47 Ind. 559;

Sharp v. Barker, 11 Kan. 381; Hansen v. Creditors, 49 La. Ann. 1731, 22 So. 923; Mjones V. Yellow Medicine County Bank, 45 Minn. 335, 47 N. W. 1072; Duncan Bank v. Brittain, 92 Miss. 545, 46 So. 163; First Nat. Bank v. Stam, 186 Mo. App. 439, 171 S. W. 567; Exchange Bank v. Tuttle, 5 N. M. 427, 7 L. R. A. 445, 23 Pac. 241; Howey v. Gessler, 16 N. M. 319, 117 Pac. 734; Cooper v. Bank of Indian Territory, 4 Okla. 632, 46 Pac. 475; Equitable Bldg. & L. Asso. v. Hoffman, 50 S. C. 303, 27 S. E. 692; Daly v. Sumpter Drug Co., 127 Tenn. 412, 155 S. W. 167; Miller v. Gaar-Scott & Co. (Tex. Civ. App.), 141 S. W. 1053; Morrill v. Hoyt, 83 Tex. 59, 18 S. W. 424, 29 Am. St. Rep. 630; First Nat. Bank v. Larsen, 60 Wis. 206, 19 N. W. 67, 50 Am. Rep. 365.

97 Montgomery v. Crossthwait, 90 Ala. 553, 8 So. 498, 12 L. R. A. 140, 24

States, the courts regard such a stipulation as necessarily penal or as opposed to the policy of the law, without reference to the amount of the fee.98 In such States it is immaterial that the contract was made or performable in another State where the stipulation was enforceable.99

§ 787. Other illustrations.

A stipulated sum for breach of a contract not to compete by one who has sold the good will of a business has generally been enforced. It is obvious that the actual amount of damage in such a case is difficult to estimate even though it be considerable. On the other hand, the breach may be large or small, and stipulated damages of the same amount for a considerable breach, and for a small one are not usually permitted. Am. St. Rep. 832; Moran v. Gardemeyer, 82 Cal. 96, 23 Pac. 6; Florence Oil & Ref. Co. v. Hiawatha Gas, Oil & Ref. Co., 55 Colo. 378, 135 Pac. 454; Porter v. Title Guaranty & Surety Co., 17 Idaho, 364, 106 Pac. 299, 27 L. R. A. (N. S.) 111; Henke v. Gunzenhauser, 195 Ill. 130, 62 N. E. 896; Goss v. Bowen, 104 Ind. 207, 2 N. E. 704; White v. Lucas, 46 Iowa, 319; Campbell v. Worman, 58 Minn. 561, 60 N. W. 568; Warwick Iron Co. v. Morton, 148 Pa. 72, 23 Atl. 1065; Coley v. Coley, 94 S. C. 383, 77 S. E. 49; Holston Nat. Bank v. Wood, 125 Tenn. 6, 140 S. W. 31; First Nat. Bank v. Robinson, 104 Tex. 166, 135 S. W. 372; Miller v. Laughlin (Tex. Civ. App.), 147 S. W. 711; Utah Nat. Bank v. Nelson, 38 Utah, 169, 111 Pac. 907; First Nat. Bank v. Larsen, 60 Wis. 206, 19 N. W. 67, 50 Am. St. Rep. 365; Mechanics' American Nat. Bank v. Coleman, 204 Fed. 24, 122 C. C. A. 338.

Boozer v. Anderson, 42 Ark. 167; Arden Lumber Co. v. Henderson, etc., Co., 83 Ark. 240, 103 S. W. 185; WhiteWilson-Drew Co. v. Egelhoff, 96 Ark. 105, 131 S. W. 208; Witherspoon v. Musselman, 14 Bush, 214, 29 Am. Rep. 404; Clark v. Tanner, 100 Ky. 275, 38

S. W. 11; Equitable, etc., Assoc. v. Smith, 23 Ky. L. Rep. 1567, 65 S. W. 609; Oman v. American Nat. Bank, 32 Ky. L. Rep. 502, 106 S. W. 277; Bullock v. Taylor, 39 Mich. 137, 33 Am. Rep. 356; Wright v. Travers, 73 Mich. 493, 41 N. W. 517; People v. Bennett, 122 Mich. 281, 81 N. W. 117; Kemp v. Claus, 8 Neb. 24; Dow v. Updike, 11 Neb. 95, 7 N. W. 857; National Bank v. Thompson, 90 Neb. 223, 33 N. W. 199; Howey v. Gessler, 16 N. Mex. 319, 117 Pac. 734; Tinsley v. Haskins, 111 N. C. 340, 16 S. E. 325, 32 Am. St. Rep. 801; Exchange Bank v. Apalachian, etc., Co., 128 N. C. 193, 38 S. E. 813; Miller v. Kyle, 85 Ohio St. 186, 97 N. E. 372; Ronald v. Bank, 90 Va. 813, 20 S. E. 780; Raleigh County Bank v. Poteet, 74 W. Va. 511, 82 S. E. 332, L. R. A. 1915, B. 928. In Nebraska and in North Carolina, a special provision is inserted in the Uniform Negotiable Instruments Act, to the effect that nothing therein shall authorize the inclusion of attorney's fees.

99 Clark v. Tanner, 100 Ky. 275, 38 S. W. 11; Carsey v. Swan, 150 Ky. 473, 150 S. W. 534; Hallam v. Telleren, 55 Neb. 255, 75 N. W. 560.

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