Chicora Fertilizer Co. of Charleston, S.C., v. Dunan

• Court: Maryland Supreme Court
• Writing for the Court: MCSHERRY, C.J.
• Citation: Chicora Fertilizer Co. of Charleston, S.C., v. Dunan, 46 A. 347, 91 Md. 144 (Md. 1900)
• Decision Date: 20 April 1900
• Parties: CHICORA FERTILIZER CO. OF CHARLESTON, S. C., et al. v. DUNAN et al.

46 A. 347

91 Md. 144

CHICORA FERTILIZER CO. OF CHARLESTON, S. C., et al. v. DUNAN et al.

Court of Appeals of Maryland

April 20, 1900

Appeal from circuit court No. 2 of Baltimore city; Pere L. Wickes Judge.

"To be officially reported."

Bill by Perle P. Dunan and another against the Chicora Fertilizer Company of Charleston, S. C., and another. From a decree in favor of plaintiffs, defendants appeal. Affirmed.

Pearce J., dissenting.

Argued before MCSHERRY, C.J., and PAGE, PEARCE, FOWLER, BOYD, JONES and BRISCOE, JJ.

George Whitelock and Frank G. Turner, for appellants. Thomas M. Lanahan and Frank Gosnell, for appellees.

MCSHERRY C.J.

This proceeding was commenced by a bill in equity to procure the specific performance of an agreement proposed on the 3d and accepted on the 5th day of December, 1898, and thus concluded between Dunan, one of the plaintiffs, and the Chicora Fertilizer Company, through Wagener, its treasurer and agent. The decree of the circuit court of Baltimore city was in favor of the plaintiffs, and the defendants have appealed. The facts which it is necessary to state, in order that the legal questions involved may be properly presented, are disclosed by the pleadings and the evidence, and are as follows: Dunan was indebted to the Chicora Company in a considerable sum for fertilizers purchased by him from it. When his payments fell due he was unable to meet them, and on June 22, 1898, a written agreement, under seal, was entered into between him and the company whereby the sum of $5,089.98, part of the total indebtedness, was to become payable December 1, 1898, and the residue at later periods, which will be stated in a moment. As security for the payment of the first-named sum, Dunan delivered to the company bills receivable--promissory notes owing to him--aggregating $4,872.32; and these were to be collected by the company and applied to Dunan's indebtedness. The remaining indebtedness, amounting to $6,088.62, was made payable in equal installments, to fall due on the 1st day of January, February, March, April, and May, 1899. As collateral security for this sum, Dunan transferred to the company 221 shares of the capital stock of the Rasin Fertilizer Company and a claim of $3,333.33 which he held against the Chesapeake Guano Company. This stock had, however, been previously hypothecated to several banks for $5,800 due by Dunan to the banks. The Chicora Company paid this indebtedness, and accordingly took the stock as collateral for the $6,088.62 due to the company and for the $5,800 advanced by it to liberate the stock from the antecedent pledge to the banks. The Chicora Company, therefore, held the stock as collateral for $11,888.62; but this stock, by the terms of the agreement, was not to be sold by the company before May 1, 1899. With the first part of the indebtedness practically settled by the transferred bills receivable, and not included in the $11,888.62, which formed the basis of the adjustment finally made, and with no portion of the other indebtedness, which was secured by the pledge of the Rasin Company's stock, yet due, Dunan met Wagener, by appointment, on December 3, 1898, in New York. At that interview this is what transpired, according to Dunan's testimony: "I met Mr. Wagener at the appointed time, and told him that I had a friend who would be willing to lend me $9,000 in full payment for the amount due him of $11,888.62, and that was the best settlement I could make for some time to come. I told him that I was trying to get on my feet, and would appreciate the settlement. He said he could not accept it, and after some thought made me a proposition back of a difference on the account of $2,000. I asked him if he would hold the proposition open until the 5th day of December, until I could submit the same, as I did not have the authority to accept that settlement, which he agreed to. Then I left him." Wagener's version of what took place is as follows: "I think he wanted me to reduce the account between twenty-five hundred and three thousand dollars on the whole claim. I finally agreed that, if he could arrange with his friend or friends to settle the claim within $2,000, I was willing to lose $2,000 on the business to help him out." The proposition of

Dunan having been met by this counter proposition from Wagener, Dunan returned to Baltimore, and conferred with Mr. Lanahan, who was to furnish the $9,000 already alluded to; and Dunan was finally authorized by Mr. Lanahan to telegraph Wagener accepting the proposal to abate the $2,000, and naming the 14th day of December as the time for payment. The telegram is in these words: "My party accepts our transaction; will pay over money Wednesday, December 14th, for the two accounts, net nine thousand eight hundred and eighty-eight, less number of empty bags now on hand your works at five cents. This is agreeable to your proposition." On the same day Wagener wrote in reply: "Your two telegrams are to hand, and I will attend to the matter when I reach Charleston. I will leave here on Friday. Send me to Charleston a memorandum of bags. I presume you wish me to draw with securities attached to draft." This is the agreement which the Chicora Company afterwards refused to carry out, and it is to procure a decree requiring it to be specifically performed that the pending bill was passed.

The first question which arises is whether this contract is valid and binding. Before, however, discussing that question, the reasons assigned by the Chicora Company for its nonperformance of the agreement will be stated, and thus a connected narration of the facts will be preserved. When this agreement of June 3d and 5th was made, negotiations were pending, and had been pending some while before, between the Rasin Company, through Dunan, and the Virginia & Carolina Chemical Company, for the purchase by the latter of the real estate and factory of the former; and on December 2d Dunan submitted to the board of directors of the Rasin Company a proposition for that purchase. A meeting of the Rasin Company stockholders was called to assemble on the 12th of December to consider the proposal. Dunan was not aware when he made the agreement of December 3d and 5th that this meeting had been called. He did not know whether the sale would be consummated or not. When the Rasin Company stock owned by Dunan was pledged to the Chicora Company, it was worth, as was supposed, something over $30 a share, though Mr. Lanahan had told Wagener prior to the pledge being made that the stock was worth considerably more, and Wagener considered it good collateral. On December 12th the proposal of sale was accepted by the stockholders of the Rasin Company, and a price was obtained which made the stock worth $62 a share when the Rasin Company went into liquidation. Dunan's stock having been transferred to Wagener, the Chicora Company received, after the liquidation commenced, a dividend of $30 per share on February 3, 1899, and, as there were 221 shares, it got in cash $6,630. This sum, with the value of the bags belonging to Dunan and in the company's possession, made $6,752.65. Deducting the $2,000 allowed by the agreement of December 3d and 5th from the total indebtedness of $11,888.62 leaves $9,888.62, and subtracting from that the $6,752.65 just named makes the amount due by Dunan $3,125.97. This sum the plaintiffs tendered themselves ready to pay or to bring into court to be paid to the Chicora Company. Because the Rasin stock became more valuable, by reason of the sale of the Rasin Company's property, than it was when pledged, the Chicora Company refused to carry out the agreement of December 3d and 5th to abate $2,000 of its claim against Dunan; and it is alleged that the failure of Dunan to communicate to Wagener, when that agreement was made, the fact that a proposal to purchase the Rasin Company property had been submitted, was such a concealment of a material circumstance, which ought to have been disclosed, as to render the agreement for an abatement null and void. And this is the second legal question brought up by the record. Something was suggested in the argument about Dunan having received a commission amounting to nearly $6,000 for effecting the sale of the Rasin Company's property, and it was contended that he ought, also, to have apprised Wagener of that; but we need only observe in relation to that subject that no part of that commission went to Dunan, because the whole of it was applied to the payment of a debt which he owed to another person. The commissions relieved him from that debt, but did not put him in funds, and of funds he was apparently greatly in need. It is perfectly true that the interposition of a court in granting relief by the enforcement of a contract is not a matter ex debito justitiae, but is one of sound judicial discretion, controlled by established principles of equity. To warrant the court's interference, the terms of the contract must be fair at the time it was made, for it is immaterial that it has become less beneficial to one of the parties by force of subsequent circumstances, unless the change is due to the fault of the party seeking to enforce it. Cochran v. Pascault, 54 Md. 18. It must be founded on an adequate consideration, and must be made under circumstances which favorably commend it. In every case the question must be whether the exercise of the power of the court is demanded to subserve the ends of justice, and, unless the court is satisfied that the agreement is right in all respects, it refuses to interfere.

We come, then, to consider the two questions already mentioned viz. whether the agreement of December 3d and 5th was valid, because founded on a sufficient consideration, and whether the silence of Dunan--his failure to...