Epitomized Opinion

The city, at the instigation of Free, passed an ordinance authorizing bids for the establishment of a street railway in East Cleveland and a bid made by Free to build said railroad was found to be the best bid received. Free deposited with the city a bond in the sum of $5,000 by the Royal Indemnity Co., also a defendant, conditioned to be void if Free should complete the construction of the railway, otherwise to remain in full force. The city claimed $5000 as liquidated damages although the only actual damage was four dollars spent in advertising the ordinance. The lower court decided in favor of the city and entered a judgment for it for four dollars. The city prosecuted error claiming the full $5000; Held by court of appeals:

.1. A fixed sum provided as payment in the case of forfeiture of rights under or breach of contract is a penalty rather than liquidated damages. A person injured by breach of contract can only recover actual damage suffered limited by the amount stipulated in the contract.

2. Where a contract contains a number of stipulations to be performed for the breach of some of which damages are ascertainable, while as to others they are not, a single sum stipulated as damages for breach will be treated as a penalty and only actual damages can be recovered.

Judgment affirmed.