should commit a substantial breach of the contract, either in not proceeding with due diligence to carry out the works, or in failing to perform any of the provisions of the contract, then, and in either event, the deposit of £5,000 should be forfeited; and if it had not been paid, the defendant should forfeit and pay to the plaintiff, by way of liquidated damages, the sum of £5,000, and the agreement should be void, but credit was to be given to the defendant for all moneys actually expended. While it was held that the £5,000 was to be treated as liquidated damages, Sir George Jessel, M. R., described it as "a deposit in part payment of the nominal purchase money." And in Hinton v. Sparkes the covenant was, "If the purchaser shall fail to perform his part of the agreement, then the deposit money shall become forfeited in part of the following damages." These cases, and others to which allusion might be made, relate to a different class of contracts. Where parties contract, as they frequently do by a condition of sale, that the deposit money shall be forfeited if the purchaser fail to carry out his contract, the deposit cannot, nor can any part of it, be recovered back on the ground that the forfeiture was in the nature of a penalty, and the actual loss to the vendor was less than the amount of the deposit. In fact, the cases distinguishing between a penalty and liquidated damages do not apply to a pecuniary deposit, which is in reality not a pledge, but a payment in part of the purchase money. Wood, Mayne, Dam., $245; Sugd. Vend., ch. 1, §§ 3, 18. Thus, in Chaude v. Shepard, 122 N. Y. 397, 25 N. E. Rep. 358, it appeared that the defendant leased certain premises to the plaintiff, who deposited with him a sum of money under a provision in the lease that defendant should hold the same as security for the faithful performance by the plaintiff of his covenants in the lease, the same to be applied as payment of rent on the last three months of the term, provided the lease was not sooner terminated by plaintiff's failure to perform, in which last event it was declared that the sum paid should be forfeited, and become the property of the defendant absolutely. Default being made in the payment of one month's rent, plaintiff was dispossessed by the defendant, who refused to pay back any part of the deposit. In an action to recover the same, less the month's rent, it was held that the provision in reference to the deposit was not intended to give it the character of liquidated damages, but rather as a penalty; that the deposit was a security for the performance of plaintiff's covenants. In the opinion of the court it was said: "It is, however, urged by the learned counsel for the defendant that' as the money was actually placed in the possession of the defendant, pursuant to the contract, at the time of the execution of the lease, the disposition of it is governed by a different rule than that which would have been applicable if the claim to it had been founded upon the executory agreement of the plaintiff to pay it. That would have been so if the money had been paid upon the contract by way of partial performance by the plaintiff." Reference is then made to Page v. McDon. nell, 55 N. Y. 299; Lawrence v. Miller, 86 N. Y. 131; Havens v. Patterson, 43 N. Y. 218. And so, where there was a sale, and a deposit was made under a covenant providing that, "if the purchaser shall neglect or fail to comply with any of the above conditions, the deposit shall be forfeited as liquidated damages to be retained by the vendors," it was held that this applied only to a breach of the conditions of sale, and not to a breach of the entire contract to buy. Icely v. Grew, 6 Nev. & Man. 467; Essex v. Daniell, L.R. 10 C. P. 538. It is stated with great clearness

and accuracy by Mr. Brantly, in his admirable work on the Law of Contract (page 192), that "when it is provided that the sum deposited in part performance of the contract is to be forfeited upon failure of the party to complete it, such sum, if not excessive, is liquidated damages." Conversely, if the deposit be not made in part performance of the contract, but be collateral to the contract, and a mere guaranty that its provisions will be observed, and if the making of the deposit is not a part of the thing to be done under or in execution of the contract, but is required simply and solely as a condition precedent to entering into the contract, which distinctly relates to something else, then, obviously, such a deposit would not be treated as liquidated damages merely because it is a deposit, but would be either liquidated damages, or a penalty, as the rules applicable to such a question might cause the court to determine.

We are not prepared to expand the doctrine relating to deposits made on the purchase of land by applying it to contracts of the character now before us. The deposit in the case at bar, when made, was not part of a sum ultimately payable, under the contract, to the city by the appellant, nor was it set apart, either in express terms or impliedly, to meet an obli gation arising out of a purchase; but it was designed to serve precisely the same purpose that a guaranty or other indemnity would have done-to save the city harmless from any actual loss which might arise or grow out of a failure on the part of a bidder to furnish a bond conditioned for the performance of his accepted proposal. It would introduce a sweeping departure from established principles to hold, as an unbending rule applicable alike to all contracts, no matter what their nature or subject, that a deposit made to secure their due performance must invariably be treated as liquidated damages, and never as a penalty. Such a rule would, in its application, ignore or arbitrarily override all other principles of interpretation, and would force courts to regard as liquidated damages sums which obviously would not, according to the canons of construction to which we have alluded, ordinarily be so considered. If the contract now before us falls within the decision in Wallis v. Smith and Hinton v. Sparkes, there is no reason for excluding any other contract from the operation of the same doctrine. Then, no matter how apparent it might be, in a given case, that the parties intended the deposit to be a penalty, and no matter how obvious it might be that the subject-matter of the agreement, the surrounding circumstances attending its execution, and the rules of law applicable to its construction, did not require or permit that the deposit should be treated as liquidated damages, still the mere naked fact that a deposit had been made or exacted would, of itself, without more, convert what would otherwise undeniably be a penalty into stipulated damages. We see no reason for giving to a deposit such a far-reaching effect as that, and, without pausing at this place to review the other cases cited at the argument, we hold that the doctrine of Wallis v. Smith and Hinton v. Sparkes, with which we fully concur, has, and, in the nature of things can have, no application to the contract now before us.

vendor's equitable lien present some of the most interesting anomalies, and some of the most striking contradictions and conflicts of judicial decision to be found anywhere in the law. This lien appears to have had its origin in the civil law, under which it was applicable also to personalty; and by the law of Louisiana, which is derived from that system, it yet attaches to a sale of movables,2 but elsewhere in this country, as in England, it is confined to realty alone. Manifestly the Manifestly the claim of the vendor of personalty to a preference right to hold the specific property liable for the debt contracted for it, whenever it can still be reached, is as equitable as that of him who sells realty, and one of the objectionable features of the lien as it obtains here is the injustice which gives it this partial application. Its adoption by the courts of England, in part only, was doubtless due in a large measure to the higher consideration which was there accorded to realty, and its greater importance and value over personal property. Feudalism had long inculcated the idea that a divinity hedged about land such as pertained not to other property; and as late as the time of Geo. II. it was the law of Great Britain that lands in the hands of the heir were not liable for the general or simple contract debts of the ancestor, and 14 Kent's Com. 152, 153; 2 Story Eq. 642; Macreth v. Symmons, 15 Ves. 329. Mr. Pomeroy designates the lien of one who has only agreed to convey by some form of land contract as the vendor's lien, and that of one who has conveyed as the grantor's lien. This distinction as to nomenclature may be well taken, but as the term "vendor's lien" is the one generally, and almost exclusively, used, it is in this article applied to the latter class of cases, and whether the lien be implied only, or expressly stipulated for in the deed.

2 Fenner, J., in Winder v. Shelly, 36 La. Ann. 182, on the proposition that the vendor's lien on the movables sold (certain mules) was extinguished by their conversion into immovables by destination-i. e., by being placed on a plantation-says that "certain French authors are quoted in support of the proposition, but others are of a contrary opinion. The court adopts the view of Troplong, to the effect that the purchaser of such movables as mules, agricultural implements, etc., cannot affect the rights of the vendor thereof by impressing upon them the purely metaphysical quality of immovables." It would thus appear that the vendor's lien, itself purely metaphysical, cannot be countervailed by other metaphysical considerations respecting the destination of mules, though

therefore he who had sold lands to the decedent on credit, if the personal property of the estate proved insufficient, was remediless. It was considered an original and natural equity that the creditor, whose debt was the price of the land, should, by virtue of that consideration, be allowed to charge the land upon a failure of the personal assets; and it was deemed so flagrantly unjust that one should enjoy lands which had not been paid for, that on application to equity for relief, the chancellors contrived the adoption of the vendor's lien to meet that situation.5

In Dunton v. Outhouse, 64 Mich. 425, the doctrine of the vendor's lien is thus declared by Justice Champlin: "The vendor of land who has taken no security, although he has made an absolute deed and acknowledged the receipt of the purchase price, yet retains an equitable lien for the purchase money, unless there be an express or implied waiver and discharge of it, which will be enforced in equity against the vendee, volunteers, and all others claiming under him with notice; that is, against all persons except bona fide purchasers without notice." This is substantially the statement of the doctrine as given by Lord Eldon in Macreth v. Symmons, 15 Ves. 329, the earliest case in which the doctrine is fully discussed, and the rule declared to be established by virtue of the prior decisions.6 Having become once established, it was continued from force of precedent after the condition of the law that brought about its recognition had passed away and the reason for it had ceased to exist. The lien has been accounted for on different grounds that are equally untenable. In Pollexfen v. Moore, 3 Atkins, 272, Lord Hardwicke puts it on the ground that "the vendee was, from the time of the agreement or contract of sale, a trustee as to the purchase price for the vendor;" but this theory,

43 Pom. Eq. Jur. § 1250. "The general doctrine relating to what is understood as the vendor's lien upon realty, rests on the postulate that it is not equitable for one to absorb another's wealth without recompense; and, therefore, as between grantor and grantee, the court will intend that the purchased estate was held for the unpaid purchase money." Donovan v. Donovan. 85 Mich. 63. 66. quoting from Hiscock v.

it has been justly said, would as logically convert the non-performance of every promise made in consideration of a sale of property into a breach of trust, and attach the trust to the property as well as to the price of its sale. It is most commonly said to arise from a natural equity, but this proposition will be seen upon examination to be urfounded in principle. It is the unquestionable right of a vendor, as a part of his contract of sale, to retain if he chooses a lien upon the property to secure his debt; but where this is not done, and he voluntarily places himself in the attitude of a general creditor, the contention that his debt has any intrinsic superiority or is entitled to any precedence over other debts, because it is for land and the land still exists, has no merit whatever. Land is not more essential to human existence and welfare than water or food and raiment, nor is a town lot a thing of greater intrinsic excellence than education or a library, nor is the farmer under a higher moral obligation to the man who sells him land than to him who furnishes a horse and plow with which to cultivate it; and no just distinction can be made in the legal obligation of debts on such ground. If debts should be ranked according to their moral qualities, certainly the highest ground of distinction that could be taken, it is not seen that a debt for land would gain any precedence on that account. Since land is indestructible, while personal property may often be consumed, or may of necessity perish and pass away, the vendor of land, in having a better opportunity of securing his debt by contract lien, enjoys in this respect an advantage over other vendors existing in the nature of the case; and it is the vendor of personalty whose more defenseless situation should invoke the special aid of a court of equity, which in this matter, however, gives to him who hath, and withholds from him that hath not, even as saith the scriptures. It may be further noticed here, that if the special interposition of courts of equity is warranted merely on the ground that it is unconscionable that one should enjoy property for which he has not paid, this would authorize them to also interfere and set aside

Ahrend v. Odiorne, 118 Mass. 261.

Senter v. Lambeth, 59 Tex. 259; Gordon v. Rixley, 76 Va. 694; Blackburn v. Gregson, 1 Cox Ch. 90, 100; Warren v. Fenn, 28 Barb. 333.

the statutes of limitations and of exemptions in every case where a just debt is extinguished by the bar of the one or defeated by virtue of the others, since it can make no sort of difference in principle, as affecting the seller's right to recover from the purchaser a quid pro quo in some form, that the property of which the latter has had the full benefit may or may not continue to exist in the vendee or his assigns with notice, or in any form whatsoever. To the reflecting mind, the injustice of non-payment is no less flagrant merely because the buyer may have resold the thing bought and invested the proceeds in other property, or may have consumed it, and thus in some measure placed the wrong, like the errors of the doctor that are hidden away in the graveyards, out of mind because out of the actual, physical sight. It has been judicially declared, even in a State where the lien is enforced, that its existence is determined by no well settled rules, and is usually dependent upon the facts of the particular cases, and the questions arising therefrom, such as whether a case of natural equity is shown, and if so, whether it should not yield to superior equities in some other person; whether the party claiming the lien has not waived it, or intended that it should be postponed to some other equity, or by acts of commission or by omission or laches has not lost the right to enforce it.10 When the courts make distinctions where no difference in principle exists, it is not strange that the result should be a confusion and conflict such as the adjudicated cases on this subject present; a conflict not only as between decisions of the different States, but often a conflict between those of the same State such as no judicial ingenuity can reconcile. It is well said by one of our most eminent writers on equity jurisprudence, that no other doctrine of equity has occasioned such diversity and discord among the American courts; a discord so great that is practically impossible to formulate any general rule that would represent the doctrine as established throughout the whole country. The decisions of the court are conflicting upon nearly every question that has arisen as to the operation of the lien, its waiver or dis

10 Fisk v. Potter, 2 Abb. App. (N. Y.) 138. 11 2 Jones on Liens, §§ 1061 et seq.

charge, the parties against whom it avails, and the parties in whose favor it exists.12

The reception of the doctrine in America has been far from uniform. The federal courts have refused to recognize the implied lien, except in affirmance of the local law of the State wherein the particular land in controversy was situate; 13 and Chief Justice Marshall, in Bailey v. Greenleaf, 7 Wheat. 46, declares it inconsistent with the principles of equity and with the spirit of our laws that such a lien should be set up in a court of chancery to the exclusion of bona fide creditors. The courts of a number of the States, including those of Pennsylvania, Massachusetts, Maine, New Hampshire, North Carolina, South Carolina, Nebraska and Kansas, have never recognized the doctrine of the implied vendor's lien, but have rejected it from the beginning as inequitable, unsuited to the usages of this country, not in harmony with our laws of real property, unnecessary for the protection of the just rights of creditors, and as introducing an unwarranted exception to the statute of frauds.14 They refuse to make by implication a contract for a vendor of realty which he has not chosen to make for himself, and which the law does not make for other vendors, and they declare that in a mere contest of equities the vendor's lien is entitled to no preference whatever. 15 "In England," says Chancellor Rutledge, "land was not liable for general debts in the hands of the heir, his rights being specially favored and guarded, but since in this country real and personal estate is in the hands of the heir equally liable for debts, it would be absurd to talk of the creditor having an equitable lien on the land;" and he declares that no such lien had been recognized in the courts of South Carolina for sixty years then past. 16

"Some of the courts," says Chief Justice Crozier, in Simpson v. Mundee, 3 Kan. 182, "regard the lien as a resulting trust, others as an equitable mortgage, and others still as a compound of both. Very 12 3 Pom. Eq. Jur., § 1251.

manifestly it has none of the attributes of either. It does not arise out of the contract of the parties, nor does it result from the operation of law. It is the mere creature of equity, breathed into existence independently of the original intention of the parties, and entirely without their aid. It is said that this impalpable entity, this protean quality, this ethereal essence which no man can graphically describe, and of which but few have anything like a clear conception, is a part of the law of this State which this court is bound to enforce; that we adopted it from the mother country; that it has been woven into the web of our legal polity, and is ineradicable except by action of the legislature." Such, however, he declares is not the melancholy fact.

"If any third person," says Chief Justice Gray, in Ahrend v. Odiorne, 118 Mass. 261, "has acquired rights in .the land conveyed, there is no reason why equity, any more than the common law, should interfere to defeat them. It is worthy of note that the doctrine is condemned without exception by the leading writers on elementary law and equity jurisprudence ;17 that the lien is criticised and deplored by many of the courts that feel constrained by force of precedent to sustain it;18 and that in the earliest case in which the rule is declared to be fully established Lord Eldon takes occasion, doubting its soundness, to express regret that it has been adopted, declaring that "it would have been better at once to have held that the lien should exist in no case, and the vendor should suffer the consequences of his want of caution; or to have laid down the rule the other way so distinctly that a purchaser might be able to know without the judgment of the court in what cases it would or would not exist."'19 Certainly it is not usual that apologies are made for the birth or christening of a child that is lawfully and properly begotten into the world. The courts imply the lien on the assumption that the parties in

17 See the references to Kent. Storv and Adams' Ea

9720

all cases intend to reserve it where they do not by express act evince the contrary intention; but this implication, says Chief Justice Gibson, of Pennsylvania, "is in almost every case inconsistent with the truth of the fact, and in all instances, without exception, in contradiction of the express terms of the contract, which purports to be a conveyance of everything that can pass.' "Were it held to be a part of our law," says the Kansas court, "the great majority would not understand it, and but few could; and it would introduce into our legal polity an element of discord." The truth of this can easily be verified by reference to the decisions on the subject. Thus, the lien is held by an almost equal weight of authority to be assignable21 and to be a personal equity which cannot be assigned.22 It is declared to be a specific lien, arising out of the contract of sale, and attaching to the property from that date,23 and it is held to be but a floating equity that does not attach to the property until bill filed to enforce it.24 It is extinguished by limitation where the debt is barred, and it is not affected by such extinguishment of the debt;25

Kauffelt v. Bower, 7 Serg. & Rawl. 64.

21 White v. Downs, 40 Tex. 226, 232; Dalton v. Rainey, 75 Tex. 516; Levy v. Wilkinson, 57 Ala. 259; Honore v. Blakewell, 6 B. Mon. 67.

Zwingle v. Wilkinson, 94 Tenn. 246; Dayhuff v. Dayhuff, 81 Ill. 499; Rogers v. James, 33 Ark. 777; White v. Williams, 1 Paige, 502; Howard v. Peyton, 34 Minn. 529; Brush v. Kinsley, 14 Ohio, 20; Iglehart V. Armiger, 1 Bland. Chan. 519, 524; Tarlton v. Buckner, 28 Ark. 66; Pillow v. Helm, 67 Tenn. (7 Baxt.) 545. The prevailing rule is that where the deed is absolute in terms and silent as to the lien, the implied lien in favor of the vendor is not assignable; but where the lien is expressly reserved by the terms of the deed, it is in the nature of a mortgage, and will pass by assignment of the debt. Davis v. Hamilton, 50 Miss. 213; Stratton v. Gold, 40 Miss. 768; Markoe v. Andras, 67 Ill. 34; Elder v. Jones, 85 Ill. 384; Dingley v. Bank, 57 Cal. 469; Osborne v. Rogers, 69 Tenn. (1 Lea) 217.

23 Joiner v. Perkins, 59 Tex. 301; White v. Downs, 40 Tex. 226, 231. This is the general rule.

24 Green v. DeMoss, 10 Humph. 371; Gilman v. Brown, 1 Mason, 191, 221.

25 Lien not barred: McPherson v. Johnson, 69 Tex. 487; Bizzell v. Nix, 60 Ala. 281; Railway v. Trimble, 31 Md. 99; Hale v. Baker, 60 Tex. 668. Lien held barred: Rindge v. Oliphint, 62 Tex. 682; Pitschi v. Anderson, 49 Tex. 1; Trotter v. Erwin, 27 Miss. 772. As to limitations the same distinctions are made by some of the courts between the purely implied lien and the lien reserved by express terms in the deed, which obtains with reference to the assignability of the lien, the implied lien being barred by limitation with the debt, while the express lien is not barred. Compare the Texas cases cited above.

a mortgage back by the grantor, destroys it,26 and such mortgage gives it only additional strength;27 it will prevail against the lien of a judgment creditor, and it will not so prevail;28 it is based purely upon the intention of the parties, 29 and it exists entirely independent of such intention.30 These instances will suffice to illustrate the nature and extent of the conflict upon this subject. The rule that when the purchase money debt is barred by limitation the implied vendor's lien is also extinguished, prevails in the larger number of the States, including Texas, but the courts of this commonwealth at an early day successfully inaugurated in favor of the vendor of land whose debt is secured by a lien reserved in the deed, or by purchase money mortgage, what is in practical effect an exemption from the statutes of limitation, and this by a judicial construction fully as ingenious and far-fetched as the original one, which out of airy nothing constructed the implied lien and gave it a local habitation and a name. In one of the early cases the debt due for the land was barred by the statute, and the court, revolting at the injustice of giving the vendee a judgment for land which he had not paid for, and which he refused to pay for by pleading limitation against the debt, declared that such a judgment would involve consequences too monstrous to be tolerated, and sanctioned by no principles of law or justice. So, it was deter26 Hannah v. Davis, 112 Mo. 599; Winner v. Lippincott, 124 Mo. 28 S. W. Rep. 998; Richards v. McPherson, 74 Ind. 158, 162; Gaylord v. Knapp, 15 Hun, 87; Wells v. Harter, 56 Cal. 342.

31

27 Dunlap v. Wright, 11 Tex. 597; DeBruhl v. Maas, 54 Tex. 464; DeForest v. Holum, 38 Wis. 516; Armstrong v. Ross, 20 N. J. Eq. 110; Noos v. Ewing, 17 Ohio St. 500.

28 Held to prevail in Senter v. Lambeth, 59 Tex. 260; Cook v. Banker, 50 N. Y. 655; Allen v. Loring, 34 Iowa, 499; Dawson v. Ins. Co., 27 Minn. 411. Held not to prevail in Gordon v. Rixley, 76 Va. 694; Aldredge v. Dunn, 7 Blackf. 249; Walton v. Hargroves, 42 Miss. 18.

29 "The vendor's lien upon a sale of real estate is based upon an implied agreement, and the circumstances of the sale must show a case where it was the intention of the parties that the sale was made and credit given the purchaser in reliance upon the lien." Champlin, J., in Richards v. Shingle, 74 Mich. 57, 62. 30 "The vendor's lien, although sometimes placed upon the footing of an express agreement or assent, is now held to be independent of such consideration." Ray, J., in Bennett v. Shipley, 82 Mo. 448, 453, quoting from Pratt v. Clark, 57 Mo. 191. See also Joiner v. Perkins. 59 Tex. 201; Shall v. Biscoe, 18 Ark. 142, 157.

31 Dunlap v. Wright, 11 Tex. 600. It is not made to