OK - the highest stress will occur at contact point sledge hammer/L shaped connection assuming it is a small area. But as the contact point is pretty strong it will just be deformed. Other highly stressed area is the sledge hammer handle! Maybe it will break?
Deformation of the L shaped connection, or breaking it, may also produce the funny effect that the sledge hammer slips off and continues displacing somewhere else? Hitting the person holding the handle?
You know, releasing and applying energy on a structure to produce a force that should, e.g. damage the structure, is not so easy. If something breaks or deforms, the force may slip off and the energy is applied somewhere else. Happens in every scale.