One rule, therefore, is this: that the action of the court shall not be defined and determined by the terms which the parties have seen fit to apply to the sum fixed upon. Though they call it a penalty, or give to it no name at all, it will be treated as liquidated damages, that is, it will be recognized and enforced as the measure of damages, if, from the nature of the agreement and the surrounding circumstances, and in reason and justice, it ought to be. (e) And although they call it liquidated * damages, it to pay the less; and that it must necessarily be treated in the same way; that is, the penalty must be reduced to the measure of the actual damages. The general reason of this rule is, that where the injury resulting from a breach of contract is ascertainable at once by computation, or is capable of immediate and exact measurement by other means, so that the parties could have certainly provided for exact compensation, if the sum they agree upon is more than this, it may be presumed that it was really intended as a penalty, or that there was oppression on the one side and weakness or inadvertence on the other; or, if not these, that the principle was disregarded, which, alone, the law recognizes as the first measure of damages, that is, the principle of compensation. And the court will do, with the aid of a jury, what the parties have not done; that is, they will apply this principle. (g) But where, among breaks the whole. It would, of course, be most unjust and oppressive to require of him to pay this whole sum, for violating any one of the least important items of the contract But such would be the effect if the words of the parties prevailed over the justice of the case. The sum to be paid would, therefore, be treated as a penalty, and reduced accordingly, unless the agreement provided that it should be paid only when the whole contract was broken, or so much of it as to leave the remainder of no value; or unless the sum agreed upon was broken up into parts, and to each breach of the contract its appropriate part assigned; and the sum or sums payable came in other respects within the principle of liquidated damages. (h)

(e) In Sainter v Ferguson, 7 C. B. 716, the defendant agreed not to " practise as surgeon or apothecary, at Macclesfield, or within seven miles thereof, under a penalty of £500" It was held, that the £500 was not a penalty, but liquidated damages, Coltman, J., said: "Although the word 'penalty,' which would prima facie exclude the notion of stipulated damages, is used here, yet we must look at the nature of the agreement, and the surrounding circumstances, to see whether the parties intended the sum mentioned to be a penalty or stipulated damages. Considering the nature of the agreement, and the difficulty the plaintiff would be under in showing what specific damage he had sustained from the defendant' breach of it, I think we can only reasonably construe it to be a contract for stipulated and ascertained damages." Chamberlain v. Bagley, 11 N. H. 234, 240, per Upham,J.; Brewster v. Edgerly. 13 id. 275; Mundy v. Culver, 18 Barb. 336. In Cheddick v. Marsh, 1 N. J. 463, 465, Green, C. J., said: " If upon the fare of the instrument it he doubtful whether the contracting parties intended that the sum specified in the agreement should be a penalty or liquidated damages, the inclination of courts is to consider the contract as creating a penalty to cover the damages actually sustained by a breach of the contract, and not liquidated damages." Bagley v. Peddie, 5 Sandf. 192; Orisdee v. Bolton, 3 C. & P. 240; Tayloe v. Sandi-ford, 7 Wheat. 13; Shute v. Taylor, 5 Met. 61, 67, per Shaw, C. J.; Baird v. Folliver, 6 Humph. 186. See Lindsay v Amesley, 6 Ired. 186. In Smith v. Dickenson, 3 B. & P. 630, the court expressed themselves clearly of opinion, that the word " penalty " being used in the agreement effectually prevented them from considering the sum mentioned as liquidated damages. The bond, in Fletcher v. Dyche, 2 T. R. 32, used the words "forfeit and pay;" but the sum mentioned was held as liquidated damages. The Supreme Court of the U. S. in Tayloe v. Sandiford, 7 Wheat. 13, say this case is clearly distinguishable from a case where the word penalty is used; also per Marshall, C. J. "In general, a sum of money in gross to be paid for the non-performance of an agreement, is considered as a penalty, the legal operation of which is to cover the damages which the party in whose favor the stipulation is made will be treated as a penalty, if, from a consideration of the whole contract, it appears that the parties intended it as such, (f) or if, where the injury is certain, the sum fixed upon is clearly disproportionate to such injury, and the real claim which grows out of it.

Ac Ry. Co. 79 Ga. 358; Pennsylvania R. R Co. v. Connell, 112 111. 295; Lake Erie, Ac. Ry. Co. v. Fix, 88 Ind. 381; Shepard v. Chicago, etc Ry. Co. 77 la. 54; Carsten p. Northern Pac Ry. Co. 44 Minn. 454; Stutz v Chicago, etc. Ry. Co. 73 Wis. 147. And in other cases where the only substantial injury is mental. Renihan v. Wright, 125 Ind. 536; Kendall v. Albia, 73 la. 241; DeMay v. Roberts, 46 Mich. 160. Mental suffering to be an element of damage, must not be too remote. Thus where in consequence of an illegal eviction some of the plaintiff's family became ill from exposure, grief at their Alness cannot be considered as an element of damage. Fille-brown v. Hoar, 124 Mass. 580. See post, p. * 167, note (r).

* Among the principles which have been found useful in determining this last question, perhaps the two most important and influential are these. The sum agreed upon will be treated as penalty, unless, first, it is payable for an injury of uncertain amount and extent; and, second, unless it be payable for one breach of contract, or, if for many, unless the damages to arise from each of them are of uncertain amount.

The first rule may be illustrated by a promise to pay one thousand dollars in three months, with an agreement, that if the promisor fails in this payment, he shall pay to the promisee two thousand dollars, by way of liquidated damages. Here it is at once obvious and certain, that this bargain differs in no respect but that of form from a bond with a penalty in a larger sum, conditioned may have sustained from the breach of contract by the opposite party. It will not, of course, be considered as liquidated damages; and it will be incumbent on the party who claims them as such to show that they were so considered by the contracting parties. Much stronger is the inference in favor of its being a penalty, when it is expressly reserved as one. The parties themselves expressly denominate it a penalty; and it would require very strong evidence to authorize the court to say that their own words do not express their own intention." But in Hodges v. King, 7 Met. 583, 588, per Hubbard, J.: "The bond has indeed a condition, but that is matter of form, and cannot turn that into a penalty which, but for the form, is an agreement to pay a precise sum, under certain circumstances. See also Mercer v. Irving, 96 Eng. C L. 563; Law v. Redditch, (1892), 1 Q. B. 132.