On March 7, 1944, G. Herbert Wisner (plaintiff) agreed to sell to H.J. McGrath Co. (Company) (defendant) his entire tomato crop grown during the season of 1944 at $28.00 per ton. Clause 12 of the agreement provided that, if Wisner failed to deliver the entirety of his tomato crop, he would be required to pay $300.00 in liquidated damages. Wisner did not deliver his entire crop of tomatoes as required. In response, the Company deducted $300.00 from its payment to Wisner. Wisner brought suit in the Circuit Court for Baltimore County, seeking the balance of $300.00. The Company made a special plea of set-off. Wisner filed a demurrer to the special plea, which was sustained. The case was then removed to the Superior Court for Baltimore City, and a judgment was entered for Wisner in the amount of $300.00. The Company appealed, arguing that its plea of set-off was proper because Clause 12 of the agreement provided for liquidated damages and did not constitute a penalty.