the licensor. Citing the following authorities: Owens v. Lewis, 46 Ind. 488; Armstrong v. Lawson, 73 Ind. 498; Cool v. Lumber Co., 87 Ind. 531; Hawley v. Smith, 45 Ind. 183; Hunt v. Rousmanier's Admrs., 8 Wheat. 174; Carter v. Page, 26 N. Car. 424; De Haro v. U. S., 5 Wall. 599; Putney v. Day, 6 N. H. 430; 5 Lawson, Rights, Rem, & Prac. sec. 2674; Ruggles v. Lesure, 24 Pick. 187; Carleton v. Redington, 1 Fost. (N. H.) 291; Johnson v. Carter, 16 Mass. 443. Appellant's counsel relied upon Rogers v. Cox, 96 Ind. 158, as holding a parol license irrevocable, but the court said that "that case involved the verbal sale of a house, treated as personal property, and it was held that the sale raised an implied license to remove the house, such license not being irrevocable before the lapse of a reasonable time in which such removal might be made. We do not therefore regard that case as authority in the present case."

LICENSE-ASSIGNMENT-TERMINATION-EsTOPPEL. That a mere license or personal privilege to use a room in a house is not assignable and terminates by an attempted sale thereof is shown by the decision of Bates v. Duncan, 42 S. W. Rep. 410, recently decided by the Supreme Court of Arkansas. They hold in that case that where trustees buy a lot, and on it proceed to erect a school house, and, by arrangement between them and a Masonic lodge, the lodge agress to build a second story to the building, it to have, use, and occupy the same, it being understood, though not expressly provided, that it is to use it as a lodge room, and afterwards the trustees execute an instrument guarantying to the lodge the exclusive right to use and occupy said room, together with the right of ingress and egress, at such times as the lodge may designate, a mere personal privilege is granted the lodge, which it cannot assign. The court says in part:

The evidence in the case is not before us, except as the facts are stated in the findings of the circuit judge. On this point he found that, "by an arrangement and agreement entered into between the lodge and the appellant trustees, the lodge agreed to furnish the money and build a second story to said building, the floor for the same, and one-half the roof, the said lodge to have, use, and occupy the said second story. It was understood that it was going to use the same as a lodge room, though no limitation of its use to that purpose, or of the right of the lodge to rent or sell the same, was entered into." We understand from this finding that the lodge paid nothing for the

ots, and took no interest in them, but was permitted to build a second story upon the school building owned by the trustees, and to "have, use, and occupy the same." Although there was no express limitation upon the power of the lodge to sell, still we are of opinion that, under the facts found by the court, the law itself affixed a limitation. In other words, we are of the opinion that the authority granted to the lodge to erect and to "have, use, and occupy" the sec ond story was a personal right, conferred upon the lodge, and not assignable. We are confirmed in this view by the instrument of writing, which was afterwards executed by the trustees, and delivered by them to the lodge, and is included in the court's findings of fact. This instrument, which is set out in the statement of facts, guaranties to said lodge "the exclusive right to use and occupy said room, together with the right of ingress and egress, at any and all such times as said lodge or its representatives may designate." The parol agreement did not convey any title to the lodge, and this written instrument does not pretend to convey any, but only grants the right to use and occupy. There is in it no mention of assignees, successors, or use of other words evincing an intent to extend the right to others beyond the members of the lodge to give the lodge authority to assign their interest in the building. On the contrary, the understanding was that the lodge wanted it for a lodge room, and the grant of the right to use and oc cupy is to the lodge and its representatives, thus showing that the grant was a personal privilege to the lodge. Both the lodge and the school district seem to have recognized the fact that the lodge had no title or interest in the land beyond the mere license to use and occupy this second story. The lodge took no conveyance from the trustees, but, in erecting this second story, acted upon a parol agreement, and afterwards accepted a writing, which conveyed no title, but only gave the right to use and occupy. When the lodge sold to the school district, although it was a cash transaction, no deed or writing such as is common in conveyances of land was given, but the transfer was made by a parol agreement; thus evincing a tacit understanding that possession was all the lodge had to convey, and that it owned no interest in the land requiring a written conveyance. These facts strengthen the conviction that the extent of the interest of the lodge in this property was only a license to use and occupy. But a license granted by the owner of land for another to erect a building thereon, with right to use and occupy it, and with privilege of ingress and egress, conveys only a personal right to the grantee, and is not assignable. Jackson v. Babcock, 4 Johns. 418; Harris v. Gillingham, 6 N. H. 9; Prince v. Case, 10 Conn. 375; Jamieson v. Millemann, 3 Duer, 255; Dark v. Johnston, 55 Pa. St. 164; Pearson v. Hartman, 100 Pa. St. 84; Washb. Easem. (4th Ed.) 17. "A man," says Judge Strong, in Dark v. Johnston, supra, "may well accord a privilege upon his lands to one person which he would refuse to all others. Hence it is held that a personal license is not assign. able, and that an assignment by a licensee determines his right. He may abandon or release. He cannot substitute another to his right." And in that case, although the licensee had expended money and made such valuable improvements upon the faith of his license that the court was of the opinion that the license as to him had become irrevocable, still it held that his rights were terminated by the sale, and that such sale conferred no rights in the property to his grantees.

PENALTIES AND LIQUIDATED DAM

AGES.

§ 1. Distinction between Penalties and Liquidated Damages. If a bright young man, just out of law school, were asked to state the distinction in the law of contracts between penalties and liquidated damages, he would deliver himself of a mess of jargon which no layman and few lawyers could understand. He would probably say that when the parties to a contract agree that, in case of a breach by one or the other of them, a stated sum shall be paid, or a stated forfeiture incurred, the courts will sometimes hold that this sum is a penalty agreed upon by the parties for the purpose of securing the performance of the contract, which penalty the courts will relieve against, and require the party suing upon the contract to prove his actual damages; and will sometimes hold that it is liquidated damages, and will, on the breach of the contract being proved, render judgment for those damages. Then, if he were asked to state whether the courts undertake to interpret the contracts of parties as the parties themselves understood them, he would unhesitatingly say "yes;" he would say that whether a stipulation is a stipulation for a penalty or for liquidated damages, is to be determined as a matter of interpretation, but according to certain artificial rules of interpretation which the courts have, from time to time, laid down. Then, if he were asked to state what kinds of stipulations for damages ought to be treated as penalties and what as liquidated damages, he would admit that the question plunges him into a vortex of chaos, contradiction and uncertainty. If, in addition to this, he were asked to explain how a contract which the courts set aside because it is a contract for a penalty is admitted to have been agreed upon by the parties to secure the performance of their agreement, he would probably roll his eyes with a wise gravity and deliver himself of some of the judicial gibberish with which this subject is loaded down. When prodded with the further question how it is that a stipulation in a contract which the courts treat as null, and which the parties to the contract, being presumed to know the law, must know that the courts will treat as null, was put by them into the contract to secure its performance,—in

short, how is it that security does not secure,— if he were inclined to be skeptical or pessimistic he could begin to doubt whether the common law is, in all its branches, the "wisdom of ages," or whether it is not, in some of its titles, the folly of ages. Jeremy Bentham is credited with the statement that the practice of the law sharpens but does not enlarge the human understanding. The judges who have built up the mass of confusion and insanity on this subject of penalties and liquidated damages had their training in the subtleties, the shrewd maneuvering and the skillful fencing of forensic practice. One half of the time on the wrong side, their minds became trained to dismiss moral considerations from their reasoning to such an extent that, when endeavoring to reach a just result, they preferred to reach it by a crooked and devious, rather than by a straight and direct route. The whole mass of legal fictions illustrates this truth. Instead of overruling, in direct terms, a worn out principle of law, they would profess to admit its existence while resorting to a device known to be a sham, and professed to be such, to enable them to steer around it.

§ 2. Courts will not Enforce Unconscionable Contracts as to Damages.-The foundation of this doctrine of a distinction between penalties and liquidated damages lies in pub. lic policy. The real meaning of it is that the sovereign will not enforce contracts which are contrary to public policy; that among those contracts are contracts agreeing upon an unjust, extravagant or unconscionable quantum of damages in case of a breach; that where parties make such contracts, and one of them endeavors to enforce the stipulation against the other, the courts refused to be used for that purpose; they discharge the stipulation, disregard the agreement of the parties, and require the plaintiff to prove up his actual damages, and give him judgment for that and no more. If the judges had put the rule squarely upon this ground-upon the ground that the sovereign, through its courts of justice, will not enforce unconscionable agreements as to damages, the whole

1 That a few of the courts put the doctrine on this ground, see Davis v. Freeman, 10 Mich. 188; Clements v. Schuylkill, etc. R. Co., 132 Pa. 445, 453; Gay Man. Co. v. Camp, 25 U. S. App. 134, 13 C. C. A. 137, 65 Fed. Rep. 794, 68 Fed. Rep. 67; Jennings v. Mille (Tex. Civ. App.), 32 S. W. Rep. 24.

matter would have been simple and plain, and the books of the law would not be loaded down with the intertangled, incongruous and disgraceful mass of decision and dicta upon this subject. But they preferred to pretend to enforce the contracts which the parties had really made, by interpreting them to mean something different from what the parties had plainly expressed. If the judges had put it upon its true ground, that ground would have agreed with the policy of the usury laws, in which the State, through its legislature, says that no more than a certain percentage shall be taken for the hire or forbearance of money. It would also have concurred with the popular understanding, and would hence have been divested of all its mystery; for if A should agree to pay a certain sum of money, or do a certain act for the benefit of B, in default of which he would forfeit his life to B, or would sell himself into perpetual slavery to B, the most ignorant man would say that such a contract cannot be enforced. But this is only a strong illustration of what is evidently a part of that residuary mass of custom and habit of thought and acting which forms the ground work of the common law of this and every other people. Clearly, it is a part of that law that contracts for unconscionable damages will not be enforced in the courts of justice.

§ 3. How the Distinction between Penalties and Liquidated Damages Arose.-Unquestionably, the doctrine of a distinction between what in this relation is called a penalty and what is called liquidated damages had its origin in the paternalism of the British government, manifested in various ways in acts of Parliament and through the court of chancery. Parliament, untrammeled by the restraints of a written constitution, undertook to do all sorts of things which our legislatures cannot do; such as regulating the price of labor, the price of bread, and even the clothing and domestic habits of the people; and the chancellor, wielding the power of the king as parens patriæ, undertook, in accordance with theories that had their origin in the breasts of ecclesiastics, to administer a mild benevolence in the place of the rigorous justice of the common law, by relieving parties from the hardships of their improvident contracts, as by setting aside forfeitures, and the like. All the

historical disquisitions upon this subject which have come under my notice concede that the doctrine had its origin in the practice of the court of chancery of relieving against penalties and forfeitures, and that in later times the courts of law took it up;2 so that now there is no substantial distinction between the principles applied in courts of equity and in courts of law upon this subject. This ancient paternalism would be well enough, even in modern times, if it limited itself to setting aside, or refusing to enforce, stipulations for unconscionable damages. But, as actually administered in the courts, it does not so limit itself. Proceeding on fictitious rules of interpretation, while pretending to be making an effort to ascertaining the real meaning of the parties, the courts have swamped themselves in all manner of difficulties, floundering in which their judgments result in setting aside fair bargains as to damages in cases where the damages are incapable of assessment, as well as unconscionable or extravagant bargains in cases where the damages are capable of assessment.

§ 4. Relation of this Doctrine to the Modern Doctrine of "Freedom of Contract," -While the judges are mouthing the ancient jargon upon this subject, and are every day setting aside fair agreements which parties who are sui juris and dealing with each other at arms' length have made, as to the damages which shall be paid for a breach of a contract into which they have entered, such damages not being assessable though known to the parties to be great, the same judges are building up a new doctrine, the modern doctrine of "freedom of contract." They are erecting this doctrine upon a constitutional foundation. They find warrant for it in that provision of the fourteenth amendment to the federal constitution which prohibits the States from depriving any person of "liberty or property without due process of law." They hold that the word "liberty," in this instrument, includes what is called "liberty of pursuit" or "liberty of contract," although the same word in the 2 A brief history of the growth of the doctrine, show. ing how it originated in the practice of the court of chancery of relieving against penalties and hard bar. gains, with a citation of some of the ancient cases, is given by Lord Justice Kay, in Law v. Local Board (1891), 1 Q. B. 127, 133, C. A.

3 Allgeyer v. Louisiana, 165 U. S. 578.

The

ancient fourteenth amendment in the Magna Charta of King John-was always understood to refer to freedom from bodily restraint. And they hold that the same provision in the fifth amendment to the federal constitution, which is merely a limitation upon the powers of congress and the general government, has the same meaning, and operates to prevent the congress and the general government from abridging "freedom of contract" or "freedom of pursuit." This new doctrine of "freedom of contract" is based upon the obvious conception that the immunity against being deprived of property without due process of law, necessarily includes an immunity against being deprived of the right to make and take contracts by which property is acquired and preserved, without the like due process of law. new doctrine, applied in a variety of situations, is that persons who are sui juris have the constitutional right to make their own contracts; that, except in respect of contracts which are opposed to sound morals or to a sound public policy, the legislature can not deprive them of that right. In the face of this new doctrine of "freedom of contract" what becomes of the ancient doctrine which allows courts to set aside fair contracts between competent parties by which they have agreed upon the damages which shall be paid for the breach? If the courts will not allow the legislature to abridge the freedom of contract because of constitutional restraints, what right have the courts to do it themselves? Clearly, if the legislature cannot do it, the courts ought not to do it, by saying that, although they have made a contract it shall not be interpreted according to their plain intent in making it, nor carried out according to that intent. Neither the legislature nor the courts ought to say to two solvent merchants: "You shall not agree together, for a consideration, that one of you will refrain from doing an act plainly See United States v. Lee, 106 U. S. 196; Clark v. Mitchell, 64 Mo. 564, and 69 Mo. 627.

State v. Loomis, 115 Mo. 307, 319; Com. v. Perry, 156 Mass. 117, 28 N. E. Rep. 1126; Godcharles v. Wige. man, 113 Pa. 431; State v. Goodwill, 33 W. Va. 179; State v. Coal & Coke Co., 33 W. Va. 188; Millett v. People, 117 Ill. 294; Frorer v. People, 141 Ill. 171, 31 N. E. Rep. 395; Ritchie v. People, 155 Ill. 98; Low v. Rees Printing Co., 41 Neb. 98, 59 N. W. Rep. 362; Coal Co. v. People, 147 Ill. 66; Ramsey v. People, 142 Railway Co., 58 Ark. 407, 416, and

Ill. 380; Leep v. cases there cited.

injurious to the other, and that if he violates the agreement he shall pay to the other a stated sum of money, not shown to be unconscionable or disproportionate to the damages inflicted.” A little reflection will make it obvious that these two doctrines, the doctrine of freedom of contract and of penalties and liquidated damages, are really opposing and irreconcilable doctrines. The amazing thought about it is that they are built up side by side and in plain sight of each other by the same courts. They stand frowning against each other, like two hostile battle towers in the times of Alexander or of Hannibal. § 5. Cases in which the Courts Profess to Allow the Parties to Make their Own Contracts as to Damages.-The courts do, however, in many cases, carry out their profession of allowing parties who are sui juris to make their own agreements as to the damages which shall be paid for a breach of a given contract, covenant or stipulation, where the damages inflicted by the breach of the contract, covenant or stipulation, are in their nature incapable of measurement, assessment or estimation, and where it does not appear that the amount, agreed upon by the parties is extravagant or unconscionable,-that is to say, out of proportion to any fair conception. of the actual damage done. A great array of cases can be cited where the courts have either declared or acted upon this principle, or both. The limits of this article preclude any attempt to analyze them."

6 Brennan v. Clark, 29 Neb. 385, 393; Cushing v. Drew, 97 Mass. 445; Tingley v. Cutler, 7 Conn. 291; Hamilton v. Overton, 6 Blackf. (Ind.) 206; Leggett v. Mutual Ins. Co., 50 Barb. (N. Y.) 616; Williams v. Green, 14 Ark. 315, 328; Durst v. Swift, 11 Tex. 273, 282; Gobble v. Linder, 76 Ill. 157, 159; Hise v. Fister, 17 Iowa, 23; Ryan v. Martin, 16 Wis. 57; Pettis v. Bloomer, 21 How. Pr. (N. Y.) 317; Studabaker v. White, 31 Ind. 211, 215; Reilly v. Jones, 1 Bing. 302; Knapp v. Maltby, 13 Wend. 587; Dakin v. Williams, 17 Wend. 447, 22 Wend. (N. Y.) 201; Mills v. Paul (Tex. Civ. App.), 30 S. W. Rep. 558; Miller v. Elliott, 1 Ind. 484, 488; Holmes v. Holmes, 12 Barb. (N. Y.) 137; Beale v. Hayes, 5 Sandf. (N. Y.) 640, 644; Tardeveair v. Smith, Hardin (Ky.), 175; Westerman v. Means, 12 Pa. St. 97; Downey v. Beach, 78 Ill. 53; Dwinell v. Brown, 54 Me. 468; Atkins v. Kinner, 4 Exch. 776; Sainter v. Ferguson, 7 C. B. (M. G. & S.) 716, 730; Dennis v. Cummins, 3 Johns. Cas. 297, 298; Hasbrouck v. Tappen, 15 Johns. (N. Y.) 200; Bagley v. Peddie, 5 Sandf. (N. Y.) 192, 194, 16 N. Y. 469; Lange v. Werk, 2 Ohio St. 619, 533; Orr v. Churchill, 1 H. Bl. 227, 232; Barton v. Glover, Holt N. P. 43; Crisdee v. Bolton, 3 Car. & P. 240; Farrant v. Olmins, 3 Barn. & Ald. 692; Wolf Creek Co. v. Shultz, 71 Pa. St. 180; Rolfe v. Peterson, 2 Bro. P. C. 436; Hodges v.