Syllabus.

tion will not, in our judgment, bear such a construction nor permit the application of that rule. The doctrine of Richey, Exr., v. Johnson, 30 Ohio St., 288; Sinton v. Boyd, 19 Ohio St., 30; Hamilton v. Rodgers, 38 Ohio St., 242; and not that of Linton v. Laycock, supra, is applicable to and decisive of this case.

The judgment of the circuit court is reversed and that of the court of common pleas is affirmed.

Reversed.

CREW, C. J., SPEAR, SHAUCK and PRICE, JJ.,

concur.

DOAN V. ROGAN.

Written contract to form partnership-To be succeeded by corporation-General conduct of corporation set forth-Contract does not lack consideration-And is enforceable, when-Stipulation for liquidated damages for breach-Not construed as penalty, when.

1. A contract in writing by which the parties agree to form a present partnership for the establishment of a mercantile business, to be succeeded afterward by a corporation of which the parties are to be directors, and the general conduct of which is set forth in the agreement, one of the parties to furnish the capital and devote a portion of his time to the conduct of the business, and the other to give his entire and undivided attention to the business for a period of three years, and to receive a fixed salary therefor, also to share in the profits, but to be protected by the one who is to furnish the capital from any liability for debts incurred, is not invalid as lacking consideration or mutuality, but is an enforceable contract.

2. Whether a stipulation providing for liquidated damages for the breach of a contract is to be construed as liquidated damages or as a penalty depends upon the intention of the parties

Statement of the Case.

to be gathered from the entire instrument. While courts will not construe contracts in a way authorizing recovery for liquidated damages simply because the parties have used that term in the agreement, yet, where parties to a contract otherwise valid have in terms provided that the damages of the injured party by a breach on the part of the other of some particular stipulation, or for a total breach, shall be a certain sum specified as liquidated damages, and it is apparent that damages from such breach would be uncertain as to amount and difficult of proof, and the contract taken as a whole is not so manifestly unreasonable and disproportionate as to justify the conclusion that it does not truly express the intention of the parties, but is consistent with the conclusion that it was their intention that damages in the amount stated should follow such breach, courts should give effect to the will of the parties as so expressed and enforce that part of the agreement the same as any other.

(No. 10655-Decided February 2, 1909.)

ERROR to the Circuit Court of Cuyahoga county.

Action below was to recover damages for breach of the following contract:

"This Agreement by and between Michael J. Rogan, Seth H. Doan, Dudley J. Mahon and Conrad Roth, witnesseth:

"First. That it is hereby mutually agreed between the parties hereto that a corporation shall be organized under the laws of Ohio for the purpose of carrying on in Cleveland, Ohio, a retail clothing business. That said company shall have a capital stock of thirteen thousand dollars ($13,000.00) divided into thirteen hundred shares of ten dollars ($10.00) each, the name of the same to be The Rogan Clothing Company.

"Second. That it is understood and agreed between the parties hereto that the said Michael J. Rogan is to pay to such corporation when formed

Statement of the Case.

the sum of five thousand dollars ($5,000.00) in cash and to receive therefor 500 shares of the paid up capital stock of said company. That to each of the other parties to this agreement there is to be issued one share of the capital stock of said company.

"Third. That in said corporation it is hereby agreed that each of the parties hereto are to be directors and that said Michael J. Rogan is to be the president of said corporation, Seth H. Doan, the treasurer and general manager, Dudley J. Mahon, the secretary, and Conrad Roth the vicepresident.

"Fourth. That during the first year said Michael J. Rogan as such president is to draw no salary, but during such time as he is in Cleveland attending to the business of said company his necessary expenses are to be paid by the company.

"Fifth. That said Seth H. Doan as such treasurer and general manager is to receive the sum of thirty-five dollars ($35.00) per week and the sum of four hundred dollars ($400.00) as a bonus at the end of the year. That said Dudley J. Mahon and Conrad Roth as the secretary and vice-president of said company are to each receive the sum of twenty-seven and 50-100 dollars ($27.50) per week, said salaries to commence August 1, 1903.

"Sixth. That at the expiration of every six months a complete inventory is to be taken, based on the market value of the goods at the time of the taking said inventory and any profits are to be divided into four equal parts and shares of the said capital stock are to be issued said four persons to the extent of the said profits, and the same

Statement of the Case.

course is to be followed until all the remaining stock, to-wit, the said seven hundred and ninetyseven (797) shares have been issued. And after said stock is paid up, the profits are to be divided into four equal parts and paid to the four parties to this agreement by way of dividends for the period of three years from this date.

"Seventh. That upon the final dissolution of the temporary partnership hereby formed, or the final distribution of the assets of the corporation to be formed, and in the determination of all profits and dividends, the said five thousand dollars ($5,000.00) paid by Michael J. Rogan is to be treated as if it were a liability of the partnership or corporation, although the same is not in fact to be really a debt, but merely a first charge on the assets after the real debts have been paid. But interest on said sum is to be paid by the partnership to said Michael J. Rogan at the rate of six (6) per cent. per annum, and when said five hundred (500) shares of stock are issued to him for said sum he is to be paid six (6) per cent. per annum by said corporation, but is to receive by reason of said five hundred (500) shares no further share in the profits, whatsoever, for the period of three years from this date.

"That the said Michael J. Rogan hereby guarantees to protect said Seth H. Doan, Dudley J. Mahon and Conrad Roth from any liability for any debts incurred by the said corporation in the purchase of goods, it being mutually understood and agreed that no goods are to be purchased or debts incurred without the written consent of Michael J. Rogan, and that no note, draft, check or writing

Statement of the Case.

of said parties or the said corporation is to have any validity whatsoever until the same has been countersigned by said Michael J. Rogan.

"That all checks, drafts, notes and instruments are to be executed for said corporation by said Seth H. Doan, its treasurer, and then countersigned by said Michael J. Rogan, the president.

"Eighth. That said Michael J. Rogan as such president is to have the power to discharge any officer or employe of the company for just cause.

"Ninth. That said Seth H. Doan, Dudley J. Mahon and Conrad Roth are to give their entire and undivided attention to the business of the company and to faithfully discharge their duties. That said Seth H. Doan is to perform the work usually done by a general manager and to exercise the usual authority of said officer. That each of said persons during the period of three years from this date will give all of their time to said business and engage in no other occupation or business. enterprise whatsoever.

"Tenth. That neither of the parties hereto, or any member of the company shall sell any goods upon credit. That if any goods are so sold the same are to be at once charged against the individual making the sale and he is to settle for the same within thirty days from the time of the sale.

"Eleventh. That if any delay should occur in the formation of the corporation above referred to, in the meantime this agreement from its execution shall be considered as creating a partnership between the parties hereto, the same to continue upon the terms above provided for the period of at least three years.