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many breaches, cannot be secured by means of penalties, nor even can moderate damages for the breach of such agreements be settled by contract between the parties, except, perhaps, to a very limited extent, for certain specified breaches capable of being accurately defined. For this unsatisfactory result, which has, of late years, not escaped severe judicial comment, it is difficult to say whether Law or Equity is most to blame.

The cases limiting the right of persons to have their intentions carried into effect by calling penalties by the name of liquidated damages were all of them decided at Common Law, nominally under a Statute of William III., instead of under the Rule of Equity as enunciated, though not apparently for the first time, by Lord Macclesfield; but as it is the unanimous opinion of all the Judges who have ever discussed the point that the Statute was only passed in order to import the Equitable Rule into the Courts of Law, and thereby do away with the necessity of going into Equity for relief, and that the same rule does and ought to obtain in both Courts, or, as we now say, Divisions, it would seem that Equity is the original offender. But then we must recollect that Equity had, in some cases, a good excuse for interference, owing to the very singular circumstance that persons were in the habit of putting their hands to agreements which did not in fact express their real meaning, a state of things for which the technicalities of the Law were presumably responsible.

There is another doctrine connected with the law of penalties which adds to the difficulty of extracting any intelligible principle from the cases. It has been shown that in the case of a complicated agreement involving many possible breaches, a penalty extending to every breach cannot be made enforceable under the name of liquidated damages, and it has frequently been held that an agreement to buy a public-house, even where the agreement contains no complicated stipulations as to indemnity,

valuation, &c., comes within the category of agreements to which no enforceable penalty can be attached. Oddly enough, however, though no penalty, either co nomine or under the guise of liquidated damages, can be stipulated for, yet it is perfectly lawful to stipulate that the intending buyer shall, on signing the contract of purchase, pay a deposit, and that in the event of his declining to complete the sale that deposit shall be forfeited. It has lately even been held (Hinton v. Sparkes, L.R. 3, C.P. 161) that under such a clause of forfeiture an action may be brought on an I.O.U. which has been accepted as a deposit instead of a cash payment.

It is difficult to see on what principle the mere fact of an intending buyer having paid, or promised to pay, a deposit on the purchase-money, should render him liable to a penalty for the non-completion of his purchase, which, but for such payment or promise to pay, could not have been enforced.

The fact is that the assumption of the Court of Chancery, ratified to some extent by statute, of the power of construing written agreements, not according to the plain meaning expressed by the parties, but according to what the Court may consider ought to have been their meaning, has resulted, and could not but result, in numerous contradictions and absurdities. It is often difficult enough to put a satisfactory construction on written agreements, even starting with the assumption that the intention of the parties was to express within the four corners of the agreement what they really meant; but if we start with the contrary assumption, that the parties do not mean what they have said, but something else which the Court is of the opinion, under the circumstances, they ought to have meant, we have clearly constructed for ourselves a very pretty puzzle indeed.

We have already observed that we are willing to give Equity the credit of having been actuated by the best of

motives in tampering with the plain meaning of written agreements, but the policy of the Court, though doubtless well intentioned, was, we cannot help thinking, a mistaken one. The doctrine of relief against penalties, if it is to be justified at all, must be justified on very different grounds from those hitherto assigned, and restrained within very narrow limits. We are aware that, from time immemorial, it has been, and still is, the invariable practice to instance the interference of Equity on behalf of the oppressed mortgagor as an ever memorable example of the courage and dexterity with which the Chancellors frustrated the iniquities of the Law, and contrived to do complete justice between man and man. At first sight this view of the case, no doubt, seems plausible enough. It is certain that the legal position of a mortgagor is one of intolerable hardship, and it is equally certain that although the law of mortgages is by no means free from doubt and difficulty, an ordinary mortgage deed does, owing to the intervention of Equity, work substantial justice between borrower and lender. Equity, then, has provided an efficacious remedy against a particular form of injustice, and is, so far, primâ facie entitled to our thanks; but before entering final judgment various considerations must be taken into account which, unless we are very much mistaken, will be found quite sufficient to make us pause, and raise uncomfortable doubts as to whether it was altogether politic to lay down the rule that the intention of the parties to an agreement is not always to be deduced from the plain. meaning of the document they have subscribed, and to invest the Court with full power and authority to bind persons to the observance of a contract very different from the one which they had in fact executed. In estimating the services rendered by Equity to impecunious mortgagors it would seem to be taken for granted that, but for the intervention of Equity, they would constantly be obliged to submit to the grossest injustice under sanction of the

Law. The form of mortgage deed at present in use has, with a few variations, served for so many generations the turn of thriftless landlords and thrifty capitalists, that, at last, it has become impossible for the legal mind to conceive the notion of land being made available for purposes of borrowing, except through the instrumentality of a document drawn up in accordance with the precedents of Bythewood or Davidson. In making this assumption the profession have greatly underrated both the common sense of mankind and their own ingenuity. It appears to us very certain that if Equity had not interfered the result would have been, not the wholesale and continuous ejection of landlords from their ancestral tenements (which is the view of the case always presented to the law student), but the overthrow of the present absurd form of mortgage, and the substitution of another expressing, in clear and distinct terms, the real agreement between the parties. Equity, by the very process of healing over the surface, has perpetuated, instead of extirpating, the disease it professed to doctor, and, to our thinking, the last state of the patient is worse than the first.

If the only result of patching up the relations between mortgagor and mortgagee had been to perpetuate a form of mortgage purporting to bind persons to stipulations they never intend shall be carried into effect, that of itself would be no inconsiderable evil, for it is quite unworthy of a civilised people that one of the commonest forms of contract should be drawn up in such a way as to require the interposition of the Court of Equity to prevent the perpetration of a gross injustice. Such a clumsy method of doing justice between man and man might recommend itself in an archaic state of society, which delights in tricks. and fictions, but is quite out of place in a nation that has deliberately done away with Messrs. John Doe and Richard Roe, Fairtitle and Goodright, and is laying to heart the important lesson that justice ought to be dealt out in a

Unfortunately,

straightforward and intelligible manner. the heroic remedy adopted for the relief of mortgagors has, as we have seen, led to other results more serious than the retention of an absurd form of mortgage deed. The refined instinct, by virtue of which the Equity Judges felt themselves competent to discover the real intention of the parties to a mortgage, without any other evidence than that afforded by a deed, in which a very different intention had been expressed, was soon brought to bear upon other contracts besides mortgages, to the great gain of the profession and the consternation of contracting parties, who found their agreements construed for them by the light of rules which to the minor disadvantage of entirely defeating the obvious intent of the contract, added the more serious evil of practically curtailing the acknowledged rights of contracting parties and of being uncertain in their application. Nominally it is perfectly lawful to enforce the performance of an agreement through the medium of liquidated damages, but the result of the decisions is, as we have pointed out, to render it impossible to frame a certain class of agreements so as to enforce payment of the damages stipulated for, while on the other hand some agreements may be easily expressed in such a way as to render them enforceable under the sanction of what is, in point of fact, a penalty.

In allowing parties to name their own liquidated damages, the principle of enforcing agreements through the medium of penalties was admitted; surely then it would be wiser to do away with the vexatious and uncertain restrictions encumbering the exercise of a right which is admitted in all but the name, particularly as these restrictions profess, as we have seen, to be grounded not upon motives of public policy, but only upon a notoriously false presumption as to the intention of the contracting parties. This presumption has now afforded work for the Bar, perplexed the Bench, and exasperated suitors, for two hundred years—a suffi

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