United Shoe Machinery Co. v. Abbott

Citations

• 158 F. 762
• 86 C.C.A. 118
• 1908 U.S. App. LEXIS 3982

Syllabus

<p>1. Damages — Liquidated Damages — Contbacts eob Penalties fob Pailube to Pat Money when Due, Void.</p> <p>A contract by a. ven dor to pay an amount in excess of lawful interest' in the event of his default in the payment when due of a simple contract debt is a contract for a penalty, is against public policy, and unenforceable.</p> <p>[Ed. Note. — For cases in point, see Cent. Dig. vol. 15, Damages, §§ ISA-178.]</p> <p>2. Same — Contbacts fob Discounts fob Payment Befobe Due, Valid.</p> <p>But an agreement in a contract for the sale or lease of property to give the debtor a discount in excess of legal interest in the event of his payment of the agreed price of rental before it is due is not obnoxious to public policy, is not a contract for a penalty, and is enforceable in the courts.</p> <p>[Ed. Note. — For cases in point, see Cent.-Dig. vol. 15, Damages, §§ 154-178.]</p> <p>3. Bailment — Compensation of Bailor — Contract — Construction — Penalties.</p> <p>A. leased machines to B. for agreed monthly rentals due at the ends of the months succeeding those in which they were earned respectively, and agreed to give him a discount of 50 per cent, upon each month’s rental that was paid 15 or more days before it fell due. The lessor accepted payment of several months’ rent after it was due, and allowed the discount thereon, held,</p> <p>■ (1) The agreement to allow the discount was not a contract for a penalty and was valid.</p> <p>(2) Acceptance of several months’ rent after it was due less the discount did not evidence a construction of the contract inconsistent with its terms, nor waive the right of the lessor to collect the agreed rentals for subsequent months.</p> <p>Adams, Circuit Judge, dissenting.</p> <p>(Syllabus by the Court.)</p>