Everett Forman, for appellant.

It will be noted that the contract in question here is not an option to purchase, but is a contract for the sale of the land on the part of the appellant, and for the purchase of the land on the part of the appellee; therefore, one of sale and purchase and not one of an option to purchase.

"A contract for the purchase of land which recites that the vendor has received a certain sum on account of the purchase money, and which then sets forth the terms of the sale which are to be complied with, is one of bargain and sale and not an option." James on Option Contracts, 108; Hamberger v. Thomas, 118 S. W. 770; Benson v. Shotwell, 87 Cal. 49.

If this contract is a contract of sale and purchase, then surely the demurrer should have been overruled. After the defendant had come into possession of the property and while in possession, to allow him to repudiate his contract would be to give the vendee power by his default to terminate the agreement to purchase without liability to the vendor. James on Option Contracts, section 109, page 21; Mason v. Caldwell, 10 Ill. 196, 48 Am. Dec. 330; Westervelt v. Huiscamp, 101 Ia. 196; Hamberger v. Thomas, 119 S. W. 770; Wright v. Suydam, 72 Wash. 587, 131 Pac. 239; Abel v. Gill, 95 Neb. 279; Hendrick v. Firke, 169 Mich. 549.

Again the demurrer should have been overruled, because the failure of the vendor to convey at the time appointed in the contract or the failure of the vendee to pay the purchase price stipulated in the contract, does not enable either party to avoid the contract without the consent of the other. Beatty v. Harkey, 2 S. M. 563; Green v. Finucane, 5 Howard, 460, 468; Anderson v. Lincoln, 5 Howard, 279; Fletcher v. Wilson, S. M. Ch. 376; Gale v. Green, — S. W. 159, 12 Am.Dec. 548; Kent v. Stephens, 90 So. 241; McLaren v. Parker, 24 Miss. 509.

"A contract for the sale of land on deferred payments by the terms of which, time is made an essential ingredient, and which provides that, on default in payment, the contract shall be void and all payments made shall be forfeited, does not leave performance optional with the purchaser; but on default, the vendor may elect to insist upon the forfeiture or to waive it and enforce the contract, and the failure of the vendee to pay a purchase money note does not, of itself, terminate such contract and release him from liability upon said note." Westerveld v. Huiskamp, 101 Ia. 196.

We now turn to the fifth ground of demurrer, which is to the effect that the cash payment of two hundred and fifty dollars was by the terms of the contract considered liquidated damages, and should the contract be breached, there would be no further liability on the part of the defendant. This seems to be the ground relied upon by the appellee in the argument of the demurrer in the court below, and the ground on which the lower court sustained the demurrer. In all contracts for the sale of land, for the erection of buildings and generally in contracts for the performance of some act, is provided a penalty of some kind. It is immaterial as a general rule whether the contract stipulates for a "penalty" or "liquidated damages," and in support of this statement, I refer the court to the following authorities: 8 R.C.L. 564, par. 114; Hensy v. Metger, 152 Ill. 505; Bilz v. Powell, 50 Colo. 482, 38 L.R.A. (N.S.) 847; Scofield v. Tompkins, 95 Ill. 190, 34 A. R. 160; Foley v. McKegan, 4 Ia. 1, 66 Am. Dec. 107; Condon v. Kempter, 47 Kan. 126, 13 L.R.A. 671; Mason v. Calendar, 2 Minn. 350, 72 Am. Dec. 102; Mammoth Park v. Wallace Iron Works, 55 N. J. L. 132, 39 Am. St. 626; Wilhelm v. Eaves, 21 Ore. 194, 14 L.R.A. 297; Currery v. Larer, 7 Pa. St. 470, 49 Am. Dec. 298; Crawford v. Heatwole, 110 Va. 358, 34 L.R.A. (N.S.) 587; Modler v. Silvertone, 55 Wash. 159, 35 L.R.A. (N.S.) 1st; Wilkes v. Bierden, 68 W. Va. 82, 31 L.R.A. (N. S.) 837; Jaquith v. Wadsworth, 125 L.R.A. 607.

It is the tendency and preference to regard a sum in a contract as a penalty and not as liquidated damages, for by so doing, the sum can be apportioned to the actual damages sustained for the breach of the contract. 13 Cyc., page 95; Bright v. Roland, 3 Howard (Miss.) 398; Coker v. Brevard, 90 Miss. 64, 43 So. 178; Condon v. Kempter, 47 Kan. 126, 13 L.R.A. 671; Peggra v. Wheeler, 24 Ore. 532, 21 L.R.A. 726.

We call the court's attention to the case of Headrick v. Firke, 169 Mich. 549. A case very similar to the one at bar except stronger in favor of the defendant than the one now under consideration. We also call the court's special attention to the case of Strode v. Smith, 66 Ore. 164. Therefore, we sumbit that the fifth ground of the demurrer was not well taken and the court erred in so holding.

Where, in an action to recover damages retained for delay in completing a building under a clause of the contract providing for liquidated damages, the evidence puts in issue the intention of the parties in using such clause, the question of the parties' intention is for the jury and not for the determination of the court." Kelly Mahon v. Fejervay, 111 Ia. 693.

Again we say that a demurrer will not lie in contracts of the character involved here, because in addition to ascertaining the intention of the parties you must ascertain the measure of damages, because if the damages stipulated for be out of proportion to the damages sustained, it is necessary to ascertain the damages by proof. Tripp v. Bishop, 56 Pa. St. 427; Headrick v. Kirke, 168 Mich. 149; Garrard v. Dollar, 67 Am. Dec. 271.

Therefore, we submit that the demurrer should be overruled and this cause should be reversed.

Chapman Johnson, for appellee.

We shall discuss only the fourth ground of the demurrer; the other grounds have been fully and clearly argued by our associate, Hon. J. Holmes Baker. From his argument it is manifest that the demurrer should have been sustained. The fourth ground of the demurrer which is also decisive of the case, is as follows: "A cash payment of two hundred and fifty dollars was made, which it was agreed between the parties to said contract should be considered as, and was, liquidated damages to accrue to the plaintiff, should the said contract be breached by the defendant, and there is, and could be, no further liability on the part of the said defendant."

The contract filed as Exhibit "A" to the declaration recites that for and in consideration of the sum of two hundred and fifty dollars to the party of the first part this day paid, the receipt whereof is hereby acknowledged, the party of the first part agrees to sell and convey by warranty deed to the party of the second part, certain land in Sunflower county, Mississippi, described in the contract; how the said sum of two hundred and fifty dollars is to be applied and used is provided for in the paragraph of the contract quoted below: "It is agreed and understood that the two hundred fifty dollars cash payment, above referred to, is to be considered a part of the purchase price of the said land, and deducted therefrom, provided the party of the second part shall carry out the provisions of this contract, otherwise, it shall be considered as liquidated damages accruing to the party of the first part."

The contract filed as an exhibit to the declaration is a part thereof and is to be so considered for all purposes. See 735 Miss. Code 1906 (Hemingway's Code, sec. 518); McCormick v. Attmeave, 73 Miss. 86, 19 So. 198; Georgia Home Ins. Co. v. Holmes, 75 Miss. 390, 23 So. 183.

Whether damages are liquidated or whether the amount stipulated is to be considered a penalty, is a question of law for the court. 11 Elliott on Contracts, pp. 848 and 849, sec. 1559; 8 R.C.L., pp. 559 and 560, sec. 110; Mosler Safe Co. v. Maiden Lane Safe Dep. Co. (N. Y.), 93 N. E. 81, 37 L.R.A. (N.S.) 363; Curry v. Larer (Pa.), 49 Am. Dec. 486; Smith v. Newell (Fla.), 20 So. 249, 251; Jones v. Miss. Farms Co., 116 Miss. 295, 306, 76 So. 880; 11 Elliott on Contracts, pp. 847 and 848.

Having laid down these premises, we shall now proceed to discuss whether by the contract the damages for the breach thereof were liquidated. We are not unmindful of the fact that the form of words is not controlling, and that although the contract may denominate the damages as liquidated, yet such language may be construed to impose a penalty, and a provision for a penalty may be construed to require the payment of liquidated damages. We shall not advert to the distinction between liquidated damages and a penalty.

"Liquidated damages are those the amount of which has been determined by an anticipatory agreement between the parties. Where the amount is reasonable and not disproportionate to the injury provided against the injured party will not be allowed to recover more than the sum fixed and he will be regarded as having been injured to the extent of the amount stipulated, especially where the damages are incapable of exact computation. If the amount fixed is greatly disproportionate or unconscionable, it will be construed a penalty and not liquidated damages, and hence, not recoverable for compensation is the basic rule of the law of damages. `A stipulation on the subject of damages differs from a penalty in this,' says one authority, `that the parties are holden by it; whereas, a penalty is regarded as a forfeiture, from which the defaulting party can be relieved.'" 3 Elliott on Contracts, p. 319, sec. 2125.

"As a general rule the parties to a contract may stipulate in advance as to the amount which shall be paid in compensation for loss or injury which may result in the event of a breach of the agreement, at least in those cases where the damages which would result are not fixed by law, and where the amount stipulated does not manifestly exceed the injury which will be suffered."

The damages so fixed are termed liquidated or stipulated, the distinction between a penalty and liquidated damages being that one is a surety for, and the other is to be paid in the event of nonperformance of, the act to be done.

The purpose in permitting a stipulation for damages as compensation is to render certain and definite that which appears to be uncertain and not easily susceptible of proof." 8 R.C.L., 559, sec. 110.

Damages in the following cases are always susceptible of being construed as penalties: 1st: An agreement to pay a larger sum of money on default in payment of a smaller sum, or to pay, in addition to the debt owing, a fixed sum. 2nd: An agreement to pay a sum on the breach of a contract containing various and diverse covenants, damages for the breach of some of which are certain and of some uncertain. 3rd: An executory agreement to pay a certain sum of money on the breach of a contract, where such sum is unconscionable or disproportionate to the damages actually sustained. 4th: Where a deposit is made on entering into a contract, not in part performance thereof.

An examination and analysis of the authorities make apparent that in any of the above instances damages, whether they be called liquidated or a penalty, may always be construed as penalties; but it is equally clear that where a sum is paid in part performance of a contract and is to be forfeited as liquidated damages upon the failure of one of the parties to complete it, such sum is considered liquidated damages; the cases distinguishing between a penalty and liquidated damages do not apply to a deposit of money, which is in fact a part payment of the purchase money. In discussing contracts involving money deposits, the rule is stated in 8 R.C.L., p. 576, sec. 125. Jones v. Miss. Farms Co., 116 Miss. 295, 298, 305, 306; Wilson v. Baltimore (Md.), 34 Atl. 774; 34 L.R.A. (New Series), Note p. 7, 8; 34 L.R.A. (New Series), p. 9 Note; K. P. Mining Co. v. Tony Jacobson (Utah), 4 L.R.A. (N.S.) 755, 8 Am. Eng. Enc. Law (2 Ed.), p. 636; 1 Sutherland, Damages (3 Ed.), 279; Hennessy v. Metser, 152 Ill. 505, 43 Am. St. Rep. 267, 38 N. E. 1058; Jackson v. Hunt, 76 Vt. 284, 56 Atl. 1010. This doctrine is so well settled that we deem a further discussion and citation of authorities unnecessary.

The case at bar falls squarely within, and unequivocably meets the requirements of, the rule for the stipulation or liquidation of damages in anticipation of a breach of a contract. A sum certain was paid in part performance of the contract and was to be forfeited as liquidated damages upon failure of the party to complete it;-there was no agreement to pay a larger sum of money on default in payment of a smaller amount; the contract did not contain various and diverse covenants, damages for the breach of some of which were certain and some uncertain; this was not a deposit made on entering into a contract, not in part performance of it, but collateral to it to secure or guarantee its performance, but it was a sum paid in part performance of the contract; this was not an executory agreement to pay a certain sum of money on the breach of a contract, but as just stated, a sum certain was paid in part performance of the contract; in other words, in part payment of the purchase money, which sum would be forfeited by the party paying it, should he make default in performance. The contract is a contract for the sale of land, the damages for the breach of which are always considered uncertain and may always be stipulated. In Willson v. Mayor, etc. of Baltimore (Md.), 34 Atl. 774; Hendrick et ux. v. Firke (Mich.), 135 N. W. 319; Nelson et al. v. Butler (Tex.), 190 S. W. 811. 132 Miss. — 19

We feel confident that no sound decision can be found holding that, in a contract for the sale of land where a sum of money is paid on the execution of the contract in part payment of the purchase money, which it is agreed shall be forfeited upon the failure of the vendee to carry out the contract, and shall be considered as liquidated damages accruing to the vendor, such agreement is not enforceable as an agreement liquidating the damages sustained by reason of a breach of the contract.

None of the decisions referred to by appellant are in conflict with the views hereinabove expressed. The case of Garrard v. Dollar, 67 Am.Dec. 271, and many of the other cases cited by the appellant, do not have under consideration the question of liquidated damages or penalties; the case of Garrard v. Dollar, discusses the measure of damages for the breach of a contract for the sale of land where the contract itself does not undertake to fix the amount of damage, and it may be said, by way of parenthesis, that the rule there laid down is not the rule adopted in many jurisdictions; 27 R.C.L., p. 619, sec. 373; but we are not concerned now with what is the measure of damages for a breach of a contract for the purchase of land, but with the question, under what circumstances the parties to a contract are permitted to fix in advance the damages, and whether the contract in this case comes within that class, and the parties to that contract did measure and liquidate their damages thereby. The cases of Mason v. Caldwell (Ill.), 48 Am. Dec. 330, and Beaty v. Tarkey, 2 S. and M. 563, and the other cases cited by counsel involving the same principle as is involved in those two cases have no reference to the question of liquidated damages; the principle in those cases is distinct and easily differentiated from the principle controlling the instant case. In those cases the courts were construing the meaning of contracts containing a provision that on failure to perform certain agreements the contract should become null and void; of course a purchaser cannot by failing to perform an obligation relieve himself from further liability; the option is with the vendor, whether the contract will be terminated or enforced; the question of whether by agreement the damages have been anticipated does not enter into any of those decisions and under no theory can they throw any light on the present case; the principle involved in that line of decisions is fully discussed in Kent et al. v. Stevenson, 127 Miss. 529, 90 So. 241. A purchaser cannot by failing to pay an instalment of the purchase money, thereby rescind the contract and relieve himself from liability for the remaining instalments, though there be a provision in the contract declaring it at an end on the purchaser's default; but he may by an express provision stipulate that a certain sum, or the instalments theretofore paid, shall be the damages for his failure to perform, and such a provision will be given effect.

Neither the case of Coker v. Brevard, 90 Miss. 64, 43 So. 178, nor of Bright v. Rowland, 3 How. 398, is in point here. We respectfully submit that for the reasons set forth in the able brief of our learned associate, as well as for the reasons hereinabove given, the case should be affirmed.

J. Holmes Baker, for appellee.

The declaration does not state that any one of those conditions precedent had been performed by the plaintiff at the time of the alleged breach by the defendant. Nor does it allege facts in excuse for non-performance. "When a specific act is to be done by the plaintiff or any number of acts, by way of conditions precedent, he must show in the pleading precisely what he has done by way of performing them. 4 Encyc. Pl. Prac. 632, Ib 628, citing Fultz v. House, 6 S. M. (Miss.) 404; Fultz v. House, 6 S. M. 404; 1 Chitty, P1. 427; 4 Ency. Pl. Prac. 633.

The agreement as to the possession of the land cannot be construed as in anywise relieving the vendor from her obligations under the contract, nor could such possession in any way impose new or additional obligations upon Early to those mentioned in the contract; and certainly the possession of the land by Early pending the consummation of the land sale did not give Early any greater benefits or advantages under the contract than he had before. Neither did it deprive Mrs. Shields, the vendor, of any of her rights or advantages under the contract.

The fact is that this possession alleged to have been given to Early by "mutual agreement" some days after the execution of the contract had no effect one way or the other upon the rights, duties and obligations of the respective parties in carrying out the terms and conditions of the proposed sale. In support of their argument with regard to the knowledge of Early that Mrs. Shields expected to sell the land to him for the purpose of paying the Tonkel debt and also the fact that Early was placed in possession of the land after the execution of the contract, counsel have cited many cases but an examination of these cases will show that the principles there announced are not applicable to this case. Beatty v. Harkey, 2 S. M. 563.

That is our contention in this case, that the default on the part of Mrs. Shields to make the title as stipulated in the contract, conferred upon Early the right to refuse payment and to rescind the contract. Because Early knew there were encumbrances upon the land which he agreed to purchase from appellant, it is argued that he was bound to accept the deed to the land without those encumbrances being first removed. This argument is made in the face of the plain provisions of the contract, which clearly negatives any such construction. In attempting to sustain this position they cite in their brief the case of Coleman v. Rose, 5 How. 468; Green v. Finucane, 5 How. 542, and Anderson v. Lincoln, 5 How. 597, and other cases.

In the case at bar there was to be no independent payments by Early; on the other hand he was to make no payment until the encumbrances and liens upon the land were satisfied and evidence of that fact furnished to him in the form of an abstract of title, showing the same to be clear of all encumbrances and liens. Another theory argued by counsel is that because Early did not demand a rescission of the contract on January 1, 1920 (the date to which he agreed to carry the H. C. Newman indebtedness) and surrender possession of the land, that his failure to do so constituted a waiver of his right to rescind. In support of this contention, they cite the following cases: Fletcher v. Wilson, S. M. Ch. 376; Gale v. Green, 12 Am. Dec. 548; Kent v. Stephens, 90 So. 241; Hanna v. Harper, 3 S. M. 793. This is all excellent law but it is not applicable here.

There can be no question but that under the circumstances and facts set out in all these cases, the vendee failed to make out proper cases for equitable intervention, and relief; therefore, this was denied them. It is very clear that the equitable principles announced in these cases have no application to the case at bar.