Continental Oil Co. v. Horsey

• Decision Date: 10 January 1939
• Docket Number: 67.
• Citation: 3 A.2d 476,175 Md. 609
• Parties: CONTINENTAL OIL CO. v. HORSEY et al.
• Court: Maryland Court of Appeals

3 A.2d 476

175 Md. 609

CONTINENTAL OIL CO. v. HORSEY et al.

No. 67.

Court of Appeals of Maryland

January 10, 1939

Appeal from Circuit Court, Queen Anne's County; Wam. Mason Shehan, Thomas J. Keating and J. Owen Knotts, Judges.

Action by Continental Oil Company against T. Clayton Horsey and G Clifton Cohee on a contract of guaranty given by defendants to plaintiff. From a judgment in favor of the defendants, the plaintiff appeals.

Judgment reversed and cause remanded for new trial.

Edward T. Miller, of Easton, for appellant.

J DeWeese Carter, of Denton (Thomas J. Keating, Jr., of Centerville, on the brief), for appellees.

Argued before BOND, C.J., and OFFUTT, PARKE, SLOAN, MITCHELL, and JOHNSON, JJ.

PARKE Judge.

The question on this appeal is raised by a demurrer to the declaration in the action brought by the Continental Oil Company, plaintiff, against T. Clayton Horsey and G. Clifton Cohee, defendants, on a contract of guaranty given by the defendants to the plaintiff. The court at nisi prius sustained the demurrer and entered a judgment on the ruling against the plaintiff which has appealed.

The action was begun on April 4, 1938. There is but one count which declares on a contract whose terms of guaranty are contained in a letter dated March 15, 1934, and addressed to the plaintiff and signed by the defendants and delivered to the plaintiff. After its receipt and in consideration of the promises therein made, the plaintiff employed one William E Cohee to handle the sale of the plaintiff's petroleum products, and other goods, wares and merchandise on a commission basis during the period from March 19, 1934, to March 26, 1937.

The entire letter is duly set forth in the declaration. Omitting the wholly formal address and signatures, the body of the letter is of the following content and form:

'In consideration of your having agreed to appoint Mr. William E. Cohee of Denton, Maryland, as your commission representative at Denton, Maryland, to handle the sale of your petroleum products, and other goods, wares, and merchandise, on a commission basis;

'Now, therefore, we, the undersigned, guarantee to you any sum of money which may become due on account of stock shortage, cash shortage, or any form of shortage that might occur due to the fault of William E. Cohee.

'It is understood that our liabilities hereunder shall not exceed the sum of one thousand dollars ($1,000.00), for which this obligation shall be a continuing guarantee, subject to the right of cancellation by the guarantors by giving the Company thirty days notice in writing.'

After the incorporation of this agreement and the allegation that it was the inducement and consideration for the employment of William E. Cohee as above stated, the declaration alleges that when the period of employment ended on March 26, 1937, 'there was a shortage of cash due from the said William E. Cohee to the plaintiff in the amount of $666.21, which said shortage was admitted and acknowledged by the said William E. Cohee, and which is still due and unpaid unto the plaintiff.'

The further allegations are that the defendants had not exercised the right of cancellation reserved in the contract, and that the defendants were each given written notice of the shortage on March 29, 1937, and that, although demand had been made upon them, the defendants had failed and refused to pay the shortage.

The declaration is asserted to be defective in not alleging (a) that the cash shortage charged is due to the fault of William E. Cohee; and (b) that the plaintiff had taken steps to enforce the collection of the claim for the cash shortage against its defaulting agent, and had exhausted its remedy against him but the debt remained unpaid.

(a) The first point taken is based upon a misconception of the meaning of the contract. A shortage is the amount by which anything is deficient or short; a deficiency; deficit. Funk & Wagnall's New Standard Dictionary; Century Dictionary Webster's Unabridged Dictionary. It is a word of general signification, and it may include both a deficiency which may be without personal fault or one which may be the result of fault or crime. 58 C.J. 699, 700, and cases cited; 8 C.J. 465. The guaranty, however, in the instant case is not general since it is not for every form of shortage. Again, it is not universal with reference to every shortage of a particular kind, as it would have been if the shortage provided for had been only those that might occur and be due to the fault of William E. Cohee. Instead of so agreeing, the parties to the contract have been selective and specific, since the guarantors have agreed to guarantee to the employer any sum of money which may become due from its employee to the employer for certain kinds of shortages, which are aptly described in terms and gain in certainty of definition by the contrast of their ascribed qualities. See Hooper v. Hooper, 81 Md. 155, 169-172, 31 A. 508, 48 Am.St.Rep. 496. The first form is 'stock shortage', which is limited to the sum of money due on account of a deficiency or shortage in the petroleum products, goods, wares and merchandise which should be in the possession of the agent or employee on a commission basis; and this liability is absolute and without reference to any question of fault on the part of the agent. The second is 'cash shortage,' which is confined to shortage or deficiency in cash that is due to his employer and which the agent or employee has failed to pay. Again, this liability is absolute and without dependence upon any quality of fault. The third and final form, in contradistinction with...