PENALTY. A clause in an agreement, by which the obligor agrees to pay a certain sum of money if he shall fail to fulfil the contract contained in another clause of the same agreement.
A penal obligation differs from an alterna tive obligation, for the latter is but one in its essence; while a penalty always includes two distinct engagements, and when the first is fulfilled the second is void. When a breach has taken place, the obligor has his option to require the fulfilment of the first obligation, or the payment of the penalty, iu those cases which cannot be relieved in equity, when the penalty is considered as liquidated damages. Dalloz, Diet. Obligation aveo Clause penale.
A distinction is made In courts of equity between penalties and forfeitures. In cases of forfeiture for the breach of any covenant other than a covenant to pay rent, relief will not be granted in equity, unless upon the ground of accident, fraud, mistake, or sur prise, when the breach is capable of com pensation; Eden, Inj. 22; 3 Ves. 692; 18 id. 58.
For the distinction between a penalty and liquidated damages, See LIQUIDATED DAMAGES.
The penalty remains unaffected, although the condition may have been partially per formed: as, in a case where the penalty was one thousand dollars, and the condition was to pay an annuity of one hundred dollars, which had been paid for ten years, the pen alty was still valid; Blackmer v. Blackmer's
Adm'r, 5 Vt. 355.
The punishment inflicted by a law for its violation. The term is mostly applied to a pecuniary punishment ; see Stearns v. Bar rett, 1 Pick. (Mass,) 451, 11 Am. Dec. 223; 1 Saund. 58, n.; 16 Viner, Abr. 301; Torbett v. Godwin, 62 Hun 407, 17 N. Y. Supp. 46 ; U. S. v. Mathews, 23 Fed. 74; The Strath airly, 124 U. S. 571, 8 Sup. Ct. 609, 31 L. Ed. 580; although not restricted to it; State v. Hardman, 16 Ind. App. 357, 45 N. E. 345.
When a statute creating a forfeiture does not prescribe the mode of collecting it, either debt, information, or indictment will lie; U. S. v. Stocking, 87 Fed. 858. Section 975 of U. S. R. S. recognized tile right to insti tute suits, but there are authorities which maintain that unless authorized by statute, the informer cannot sue in his own name for the penalty ; U. S. v. Stocking, 87 Fed. 861.
See Qua TAM.
The words penal and penalty in their strict and primary sense, denote a punish went, whether corporal or pecuniary, impos ed and enforced by the state for a crime or offence against its laws; Huntington v. At trill, 146 U. S. 657, 13 Sup. Ct. 224, 36 L. Ed. 1123.