Bridges v. Miller Rubber Co. of New York

• Decision Date: 27 January 1926
• Docket Number: 109.
• Citation: 132 A. 271,150 Md. 1
• Parties: BRIDGES v. MILLER RUBBER CO. OF NEW YORK.
• Court: Maryland Court of Appeals

132 A. 271

150 Md. 1

BRIDGES v. MILLER RUBBER CO. OF NEW YORK.

No. 109.

Court of Appeals of Maryland

January 27, 1926

Appeal from Circuit Court of Baltimore City; George A. Solter Judge.

Suit by John S. Bridges against the Miller Rubber Company of New York. From a decree dismissing the bill, plaintiff appeals. Affirmed.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, PARKE, and WALSH, JJ.

Randolph Barton, Jr., and Forrest Bramble, both of Baltimore (Barton Wilmer, Ambler & Barton, and F. Fulton Bramble, all of Baltimore, on the brief), for appellant.

Edgar Allan Poe, of Baltimore (Bartlett, Poe & Claggett, of Baltimore, on the brief), for appellee.

WALSH J.

The question to be determined in this appeal is whether John S. Bridges, the appellant, is liable to the Miller Rubber Company of New York, the appellee, to the extent of $30,000 on two bonds of $15,000 each, signed by him, and dated, respectively, January 1, 1920, and January 1, 1922, as contended by the appellee, or whether, as contended by the appellant, he is only liable to the extent of $15,000, on the theory that the second bond was simply a renewal or continuation of the first bond, and also on the theory that the second bond was void because the appellee failed to disclose certain facts to the appellant at the time he signed it. The practically undisputed facts of the case are that, prior to January 1, 1920, G. R. Schumann, a son-in-law of the appellant, and R. Cator Robinson, were partners trading as the Star Sales Company, which company was engaged in the tire business in Baltimore city, and handled, among others, the products of the appellee. The Star Sales Company bought direct from the appellee, and the payment for these purchases was guaranteed by the appellant. In December, 1919, the appellant, under this guaranty, was compelled to pay the appellee $5,888.24, which sum, however, was repaid to him early in 1920 from the proceeds of the sale of the business and assets of the Star Sales Company.

On January 1, 1920, G. R. Schumann and R. Cator Robinson, hereinafter called the agents, entered into a two-year contract with the appellee to handle its products exclusively in Baltimore city and in certain surrounding territory in Maryland, Virginia, West Virginia, and Delaware. Under the terms of this contract, the tires, tubes, and other articles to be sold by the agents were sent to them on consignment, title being retained by the appellee, the agents assumed all the expenses of the agency, such as rent, clerk hire, and other overhead, guaranteed the payment of all accounts within 30 days from the date the goods were sold, and were to be paid as full compensation for their services the difference between the list price of the goods and the prices at which they were actually sold. In addition, the contract provided that the agents should make a full daily report to the appellee of all sales, should deposit in a designated bank in the name of the appellee all money received from such sales, or on account, and send duplicate deposit slips to the appellee and should also, on the first day of each month, make a complete report to the appellee showing all stock on hand, all accounts receivable, and the total of accounts whose collection was considered doubtful because of the bankruptcy or insolvency of the debtors. The contract also provided that the agents should furnish a surety bond in the penalty of $15,000, conditioned upon the faithful performance of the contract, and guaranteeing the payment of all accounts for goods sold by the agents. This bond, which was dated January 1, 1920, was signed by the appellant, John S. Bridges, as surety, and, after providing for the faithful performance of the contract of even date, which contract was attached to and made a part of the bond, it continued as follows:

"It is agreed by and between the parties hereto that the liability of the surety on this bond shall not become absolute as to any account for goods sold by said Schumann & Robinson, of Baltimore, Md., under said contract, unless said account or any part thereof shall remain unpaid for 30 days after the maturity thereof (the terms of sale to be 30 days net), and said surety consents to any extensions of time of payment, or extensions of credit that may be given by said Schumann & Robinson or said the Miller Rubber Company of New York, to any customer of it, and waives notice of any default on the part of said Schumann & Robinson, of Baltimore, Md., in collecting and accounting for the proceeds of any sales, and waives all notice of nonpayment of any and all customer's accounts at maturity."

Upon the expiration of the two-year period, namely, on January 1, 1922, a new contract was entered into between the agents and the appellee for another period of two years. This contract made several changes in the territory covered, and also contained a new clause providing for the advancement of money by the appellee to the agents, and its repayment upon the demand of the former. Otherwise the two contracts were substantially the same. This contract was sent to the agents on December 17, 1921, with the following letter:

"Gentlemen: We are inclosing herewith a new contract, which upon execution will become effective January 1, 1922. Kindly execute the contract, and have the bond signed by yourself as principal and Mr. Bridges as surety, or such surety as you may elect, and whom you know will prove acceptable to this company. Your immediate attention to this matter, in view of the early expiration date of your present contract, will be appreciated."

On December 27, 1921, the agents replied to this letter as follows:

"Subject--New Contract.

We are just in receipt of the above, but note that you have not filled same in. As we would like very much to have this instrument in as definite form as possible before submitting it to Mr. Bridges or any other surety, we thought it best to get in communication with you at once with reference to the term of it. As the contract which is about to expire was drawn for two years, we would like to make the new one for the same period, and trust that this will be satisfactory to your company. As we feel here that the turning point is now past, and we are about to see some real business, we believe that a contract for this length of time would be the most equitable one for all concerned. We would appreciate your advices with reference to this question so that we may fill out the bond and contract and have same executed and returned to you without any undue delay."

And on January 10, 1922, they wrote as follows:

"Subject--Contract.

Just as soon as Mr. Bridges returns to Baltimore, we will have our contract duly executed and returned to you immediately. He is now attending the automobile show in New York, and is expected back within the next few days. We are sorry of this delay, but will endeavor to get this through to you just as soon as possible."

Shortly afterwards this bond, the penalty of which was $15,000, and the terms of which were practically identical with those in the bond of January 1, 1920, was executed by the agents as principals and the appellant as surety, and delivered to the appellee.

In December, 1922, R. Cator Robinson decided to withdraw from the firm of Schumann & Robinson, and in March, 1923, after he had withdrawn, a new contract was entered into between G. R. Schumann, the remaining partner, and the appellee. This contract was substantially similar to the preceding contracts heretofore mentioned, but no bond was ever executed in connection with it; Schumann having undertaken but failed to deposit certain collateral in lieu of a bond.

In December, 1923, the indebtedness of the old firm of Schumann & Robinson, the agents, to the appellee amounted to over $100,000, and during that month the appellee discovered that a great part of that indebtedness was the result of misappropriations. The appellee thereupon notified the appellant of the situation, G. R. Schumann admitted the misappropriations, and, after a full statement of the appellee's losses had been submitted to the appellant, demand was made upon him for $30,000, the full penalty of both bonds. Mr. Bridges declined to pay this amount, and, when suit at law was entered against him on the bonds in the superior court of Baltimore city, he filed his bill of complaint in this case, alleging that the bond of January 1, 1922, was simply a renewal of the bond of January 1, 1920, and was so understood by the parties to it, and asking that, if the bonds as executed appeared to be separate and distinct obligations, they be reformed so as to express this actual intention of the parties. The bill further asked for a discovery of the books, papers, accounts, correspondence, and other matters showing the course of dealing and state of accounts between Schumann & Robinson and the Miller Rubber Company, for the enjoining of the pending suit at law between the parties, the determination by the court of the amount, if any, which Bridges owed the Miller Rubber Company, and for other relief.

The answer of the Miller Rubber Company denied that it was the intention of the parties that the bond of January 1, 1922 was a renewal of the bond of January 1, 1920, but alleged that each bond was a separate obligation, covering different contracts, and different periods of time, stated that all matters covering its transactions with Schumann & Robinson had been offered for inspection to the attorneys for Mr. Bridges, and agreed to have the question of his indebtedness as surety determined by the equity court in which the bill was filed. Testimony was taken in open court, and, after a full hearing, the learned court below found that Mr. Bridges was indebted to...