H. T. 1844. 66 SMITH v. RYAN. (Exchequer of Pleas.) 1843. Nov. 17, 18. 1844. Feb. 8. In covenant by lessor against lessee, sides the usual the lease, bereservation of an annual rent of £528.148.74d and a covenant against assigning or subletting, contained a covenant whereby it was agreed that the THIS was an action of covenant by the lessor against the lessee, founded on a lease for twenty-one years from the 25th March 1841. The lease, beside the usual reservation of an annual rent (£528.14s. 73d.), and a covenant against assigning or subletting, except to the issue of the lessee, contained the following covenant:-" And it is likewise "further covenanted and agreed by and between the parties to these "presents, that the said P. B. Ryan, his executors, &c., shall not nor will, during the term aforesaid, plough, turn up or convert into "tillage, any part of the said lands or premises save and except that "field or garden at the south-west corner of said lands and premises lessee should 'adjoining the high road, containing one and one-half acres or "thereabouts, late in the occupation of Edward Brenan; and shall "not, nor will, cut or save or take away from the said demised lands 'any part of the grass, meadowing or hay which may be growing "upon the upland part of said premises, known by the name of the “Bullock-park, nor any part of said premises except on the callons "below the field called the Dairy Meadow; and in case the said P. B. "Ryan, his executors, &c., shall, during the term aforesaid, demise, “give, grant, set, let, assign or set over, any part or parcel of said "premises, except as hereinbefore provided, or shall plough, turn up 66 or convert into tillage, or cause or permit to be ploughed, turned "up, or converted into tillage, any part of said premises save as "herein before mentioned, or shall cut, save or take away, or permit, "or cause to be cut, saved or taken away, any of the hay or meadow"ing which may be growing on said premises called the Bullock-park, not, during the term, plough, turn up or con vert into tillage any part of the lands except a field therein men tioned; nor cut or save or take away from the den any part of the grass,meadowing, or hay which might be growing upon the upland parts of said premises Bullock-park, nor any part of said premises, except called the on, &c.; and in case the lessee should assign or let, or should plough, turn up or convert into tillage any part of said premises, save as thereinbefore mentioned, or should cut, save or take away any part of the hay or meadowing which might be growing on said premises called the Bullock-park, or any other part of said premises than the place previously excepted, save by the permission of the lessor, "then in any of those cases the lessee, &c., should thenceforth, during the remainder of the term, pay and yield up to the lessor, &c., the yearly rent or sum of £1057. 9s. 3d. for the said demised premises, in the room and stead of the yearly rent first thereby reserved and made payable; such last-mentioned yearly rent to be recovered and recoverable by distress, and by all the means whereby the rent therein firstly reserved was or might be recovered, and to be paid and payable at the time and in the manner as the said firstly reserved rent." Held, that the sum so covenanted to be paid was in the nature of an increased rent or liquidated damages, and not of a penalty, and that on the breach of the covenant by conversion of a portion of the land into tillage, the jury were bound to find the increased rent, and were not at liberty to award arbitrary damages. SMITH บ. RYAN. H. T. 1844. "or any other part of said premises than the callons below the Exch.of Pleas. "aforesaid field called the Dairy Meadow, contrary to the true intent "and meaning of these presents, save by the special permission in writing of the said J. Smith, his heirs, &c.; then, and in any of "those cases the said P. B. Ryan, his executors, &c., shall thenceforth "during the remainder of the term hereby granted, pay and yield up "to the said J. Smith, his heirs, &c., the yearly rent or sum of “£1057.9s. 3d. for the said hereby demised premises, in the room "and stead of the yearly rent first hereby reserved and made payable, "such last-mentioned yearly rent to be recovered and recoverable by "distress, and by all the means whereby the rent herein firstly reserved "is or may be recovered or recoverable, and to be paid and payable "at the times and in the manner as the said hereby firstly reserved "rent." Then followed a covenant against removing from the premises manure made thereon, by which it was declared that in case of a violation of the covenant, the lessee, &c., should pay a forfeit of £10 for "every load, to be computed according to the usual horseload," &c. The breach assigned was, that the defendant turned up and converted into tillage several acres of the lands other than the excepted parts thereof, without the special permission in writing of the lessor. The defendant pleaded several pleas denying the breach, upon which issues were joined. At the trial before BRADY, C. B., at the Sittings after Easter Term 1843, the plaintiff proved the alleged breach of covenant; but failed in proving any damage to have resulted from it. The learned Judge, therefore, directed the jury to find a verdict for the plaintiff for nominal damages only; but reserved to him liberty to move to have such verdict turned into a verdict for one-half year's increased rent (£528. 14s. 74d.), in case the Court above should be of opinion that the annual sum of £1057.9s. 3d. mentioned in the above covenant was not a penalty, but in the nature of liquidated damages. Macdonogh now moved accordingly. This is an express contract for stipulated damages; the jury were bound to find the increased rent, and could not award arbitrary damages. In Farrant v. Olmius (a), Abbott, C. J., says: "There "certainly is nothing unreasonable in a landlord stipulating that "particular lands shall not be converted into tillage at all, and that "in case that be done, a large sum shall be paid by way of stipulated "damages." The Court set aside the verdict because the jury found £600, whereas they ought to have found the enhanced rent; and (a) 3 B. & Ald. 692. when it was urged that the Court ought not to disturb the verdict, mines that. Then, as to equity, Rolfe v. Peterson (c) is in point. That case arose upon a covenant to pay additional rent in case the ancient meadow lands were ploughed up, or if any part of the arable lands should be ploughed or sowed out of course, contrary to the meaning of the indenture and the covenants therein contained. There the argument was, that this increased rent was to be considered as a penalty; and that although a Court of Law was bound by a penal covenant, a Court of Equity could relieve against it. But the Court decided otherwise. The cases were cited and confirmed in Aylett v. Dodd (d). The Court there took the distinction between the case where a nomine pœnæ is reserved for the non-performance of certain acts, for instance, the appointment of a schoolmaster, and where it is reserved in leases to prevent a tenant from ploughing. In the first case, it stands as a security only for the damage sustained. In Benson v. Gibson (e), and in Woodward v. Gyles (ƒ), the same distinction is preserved. Therefore, although it was originally conceived that these contracts were in the nature of a penalty, it is now held that they are contracts for specific rents, and that the landlord is entitled to the whole as liquidated damages. In Astley v. Weldon (g) there is a very elaborate judgment of Lord Eldon, where the distinction between a case of penalty and one of stipulated damages is fully elucidated. In French v. Macale (h), decided in 1842, the present Lord Chancellor reviews these cases, and puts the law as the plaintiff here insists it is. In Gerrard v. O'Reilly (i), in which the covenant was precisely similar to that in the H. T. 1844. SMITH บ. RYAN. H. T. 1844. present case, the Chancellor held it to be a case of liquidated damages Exch. of Pleas and not a penalty. SMITH บ. RYAN. A continued reservation of payments of additional rents stamps the contract as for agreed damages. To refer to principle, apart from cases, the construction of the covenant must depend on the intention of the parties, to be collected from the terms and nature of the covenant. In this case this sum is reserved as rent, and receivable on the same days and times. The words are "pay and yield up," not "forfeit and pay," as in the very next covenant in the same lease. On the other side it is contended that, because there are several matters on the breach of which the rent is reserved, therefore it must be penalty. This is quite a misconception of the authorities. On this branch of the case the principles are two-fold; first, where there are several stipulations of various degrees of importance, some of an ascertained, some of an unascertained amount, then the amount of the award cannot be regarded as liquidated damages; secondly, when the payment of a smaller sum is secured by a larger. In both these cases it is penalty. Kemble v. Farran (a) illustrates the first principle. In Reilly v. Jones (b) the agreement was for the performance of several and independent acts, yet the Court held the sum at foot to be liquidated damages, they having a tendency to effectuate one object. In Huband v. Grattan (c) Bushe, C. J., says :-" The several covenants "bear upon one object. Here, the primary object was to preserve "the lands as they were, which, by alienation or ploughing, or "sowing or saving hay, would have been prevented. To keep it as a grazing farm was the object of this contract, which the Court 66 ought not to invalidate." 66 Napier and Lynch, contra. Cases of this decription must turn upon the wording of the particular agreement in each case; there is no general rule applicable to all, as the authorities upon the subject are conflicting. Thus, in Boys v. Ancell (d), in which a similar question arose, Bosanquet, J, says:-"Upon this subject there have been many decisions, some of "which are not quite reconcileable with each other. We must look "at the agreement itself, to see whether it would be consistent with "the intention of the parties to hold this to be liquidated damages." * See Davies v. Penten, 9 D. & Ry. 376, and Greenslade v. Tapscott, 1 Cr. M. & R. 55. SMITH v. In Burne v. Madden (a), in which the question arose upon a H. T. 1844. covenant similar to that in the present case, it was held by the Exch.of Pleas. Chancellor that the sum mentioned in the covenant, being disproportionate to the damage contemplated, was in the nature of a penalty, and not of liquidated damages, and that the Court could consequently interfere to restrain by injunction the lessee from violating the covenant. The principle to be deduced from a consideration of all the cases is, that where a single act is provided against, and a stipulated sum is agreed on to be paid in the event of that act being done, there the Courts hold that the parties have precalculated the damages to the amount agreed on; but where there are several matters provided against, of different kinds and of various degrees of importance, it will be held not to have been the intention of the parties that the large sum of money stipulated should be forfeited by the breach of the contract in respect of any one, even the most insignificant of the matters provided against. The rule is thus stated by Heath, J., in Astley v. Weldon (b) :—“ It is very difficult to lay down any general "principle in cases of this kind; but I think there is one which may "be safely stated. Where articles contain covenants for the per"formance of several things, and then one large sum is stated at the "end to be paid upon breach of performance, that must be considered "as a penalty. But where it is agreed that if a party do such a "particular thing, such a sum shall be paid by him, there the sum "stated may be treated as liquidated damages." So in Charrington v. Laing (c) it was stated by the Court that they did not mean to say that a cognovit might not be so worded as to render the sum secured by it payable in the same way as liquidated damages; but that the question there was, whether they could consider the cognovit in that case as any other than a security by penalty for certain work to be done by the defendant; and Tindal, C. J., in giving judgment, says: "In the defeasance there are stipulations "of various degrees of importance; and as it would be unjust to say, "that if the road were completed only one day after the term agreed "on, the defendant should pay the whole £200, it would be equally so to say he should pay the whole after performance of a portion "of the work." 66 So here it would be obviously unjust and unfair to stipulate beforehand, that to cut a single cock of hay and to break up the entire of the lands, should be the subject of the same penalty. RYAN. |