LEGAL PHASES OF COOPERATIVE ASSOCIATIONS 67 
although the term used by the parties has been held to have some 
weight. 73 
In a certain case the defendant hired a yacht for four months for 
$10,000 and agreed, in the event he failed to return it, to pay $75,000, 
which was stated to be the value of the yacht for the purpose of 
the contract. The yacht was destroyed, and suit was brought for 
the recovery of the $75,000. The Supreme Court affirmed a judg- 
ment for this amount, and in doing so, said in part : 
Whether a particular stipulation to pay a sum of money is to be treated as 
a penalty or as an agreed acertainment of damages, is to be determined by the 
contract, fairly construed, it being the duty of the court always, where the 
damages are uncertain and have been liquidated by an agreement, to enforce 
the contract. 74 
In 1904 an agreement was entered into for the erection of two 
laboratory buildings for the Department of Agriculture in Wash- 
ington. The contract called for the completion of the buildings in 
30 months, and for a delay of 101 days beyond the contract period 
the Government deducted $200 a day, the amount stipulated in the 
contract as liquidated damages, a total of $20,200. Later, suit was 
brought against the Government for the recovery of this amount. 
In holding that no recovery could be had, the Supreme Court of the 
United States said : 75 
* * * Courts will endeavor, by a construction of the agreement which the 
parties have made, to ascertain what their intention was when they inserted 
such a stipulation for payment, of a designated sum or upon a designated basis, 
for a breach of a covenant of their contract, precisely as they seek for the 
intention of the parties in other respects. When that intention is clearly 
ascertainable from the writing, effect will be given to the provision, as freely 
as to any other, where the damages are uncertain in nature or amount or are 
difficult of ascertainment or where the amount stipulated for is not so extrava- 
gant, or disproportionate to the amount of property loss, as to show that com- 
pensation was not the object aimed at or as to imply fraud, mistake, circum- 
vention, or oppression. There is no sound reason why persons competent and 
free to contract may not agree upon this subject as fully as upon any other, 
or why their agreement, when fairly and understanding^ entered into with 
a view to just compensation for the anticipated loss, should not be enforced. 
The foregoing quotation expresses the common law relative to 
liquidated damages. 
In a number of cases involving cooperative associations, the courts 
have found that at common law they were entitled to liquidated 
damages. 76 On the other hand, in a number of cases it was held 
that at common law provisions in by-laws or contracts providing for 
the payment by members of stipulated sums in the event they failed 
to market their products or livestock through the association were 
unlawful as they were deemed to be in restraint of trade. 77 
73 Tayloe v. T. & S. Sandiford, 7 Wheat. 13. 
74 Sun Printing and Publishing Ass'n v. Moore, 183 U. S. 642. 
715 Wise, Trustee in Bankruptcy of Stannard, v. United States, 249 XL S. 861. 
7 « Tobacco Growers' Co-op. Ass'n v. Jones, 185 N. C. 265, 117 S. E. 174. 33 A. L. R. 
231 ; Ex parte Baldwin County Producers' Corporation, 203 Ala. 345, 83 So. 69 ; Wash- 
ington Co-op. Egg & Poultry Ass'n v. Taylor, 122 Wash. 466, 210 P. 806 ; Bullville Milk 
Producers' Ass'n v. Armstrong, 178 N. Y. S. 612 ; Castorland Milk & Cheese Co. v. Shantz, 
179 N. Y. S. 131 ; Manchester Dairy System, Inc., v. Hayward, 82 N. H. 193. 132 A. 
12 ; Potter v. Dark Tobacco Growers' Co-op. Ass'n 201 Ky. 441, 257 S. W. 33 ; Elephant 
Butte Alfalfa Ass'n v. Rouault, N. M. , 262 P. 185. 
77 Reeves v. Decorah Farmers' Co-op. Soc, 160 Iowa 194, 140 N. W. 844, 44 L. R. A. 
(N. S.) 1104; Ludowese v. Farmers Mut. Co-op. Co., 164 Iowa 197, 145 N. W. 475; Burns 
v. Wray Farmers' Grain Co., 65 Colo. 425, 176 P. 487 ; Atkinson v. Colorado Wheat 
Growers? Ass'n 77 Colo. 559, 238 P. 1117 ; Colorado Wheat Growers' Ass'n v. Thede, 
80 Colo. 529, 253 P. 30: Georgia Fruit Exchange v. Turnipseed, 9 Ala. App. 123, 62 
So. 542. 
