Ryan v. McLane

• Decision Date: 06 April 1900
• Citation: 46 A. 340,91 Md. 175
• Parties: RYAN v. McLANE et al.
• Court: Maryland Court of Appeals

46 A. 340

91 Md. 175

RYAN v. McLANE et al.

Court of Appeals of Maryland

April 6, 1900

Appeal from circuit court of Baltimore city; Pere L. Wickes and Henry Stockbridge, Judges.

"To be officially reported."

Bill by Thomas F. Ryan against Louis McLane and others to enforce the specific performance of a contract to sell corporate stock. From a decree sustaining a demurrer to the bill and dismissing the complaint, complainant appeals. Affirmed.

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

Bernard Carter, William L. Marbury, and Elihu Root, for appellant. William A. Fisher, John P. Poe, and J. S. Lemmon, for appellees.

PER CURIAM.

The bill in this case was filed by Thomas F. Ryan, of New York against Louis McLane and others, for the specific performance of an alleged contract, and for an injunction to restrain the defendants from parting with, transferring, or incumbering the possession of any certificates of stock held by them respectively, of the Seaboard Company, a railroad company incorporated and existing under the laws of Virginia and North Carolina. Under powers granted by its charter, this company operates, not only its own line, extending from Portsmouth, Va., to Weldon, N. C., with several branches connected therewith, but it also controls and operates eight other lines of railroad, the names and lengths and termini of which it is not necessary now to mention; but the bill alleges that, by means of the ownership of its own chartered line and the control of the other corporations just referred to, the Seaboard Company practically owns, controls, and operates a railroad nearly a thousand miles in length extending from Norfolk to Atlantic, the total capital stock of which aggregates $6,142,550, and the total bonded debts and rental charges amount to about $16,712,000, while the gross earnings of the whole system for the fiscal year ending June 30, 1898, were officially reported to be $4,011,554.32. In the sixth paragraph of the bill it is alleged that on October 6, 1896, the plaintiff was a stockholder of the Seaboard Company, and had, as was well known to the defendants, entered into contracts to purchase a large amount of such stock; that on the day just mentioned he entered into negotiations with three of the defendants, McLane, Robinson and Watts, for the purchase of a large amount of the shares of stock of the Seaboard Company from the defendants just named, they then and there representing that they were personal stockholders in said company, and also as a committee representing a large amount of stock in said corporation held by others; that the three defendants represented to the plaintiff that the stock in the Seaboard Company owned by themselves, and the associated stockholders for whom they were authorized to act, amounted to upwards of 3,000 shares, of the par value of $100 each, and that they were desirous of making a sale of all such stock in said corporation, reserving also the right to include in such contract a sale of the shares of any stockholders of said Seaboard Company as should join with them, and deposit their stock with said McLane, Robinson, and Watts, prior to October 18, 1896. It was at the same time agreed between the plaintiff and the defendants just mentioned that the plaintiff was to pay $125 per share for all the said stock owned by said defendants, as well as for that owned by the stockholders who were then represented by said defendants, and also for the stock of other stockholders of said company "who should agree to such contract of sale, and deposit their stock for delivery to the plaintiff on or before October 18, 1896." It was further agreed, as alleged, that the plaintiff "should then and there pay the sum of $60,000 earnest money upon such purchase of stock, the same to be forfeited as liquidated damages if the plaintiff should fail to receive, take, and pay for all the stock of the Seaboard Company in such contract of sale." It is alleged in the following paragraph (the seventh) that on the same day on which the above verbal agreement was made the plaintiff and said McLane, Robinson, and Watts, in order to evidence such agreement and contract, entered into a written agreement, a copy of which is filed with, and made a part of, the bill. Inasmuch as the whole object of this litigation appears to be to compel a specific performance of this written contract, we will have to examine it carefully, and for that purpose we will here transcribe it: "Memorandum of understanding and agreement between Louis McLane, Moncure Robinson, and Legh R. Watts, committee, parties of the first part, and Thomas F. Ryan, in behalf of himself and associates, party of the second part. Whereas, the parties of the first part are stockholders in the Seaboard and Roanoke Railroad Company, and also represent a large amount of stock in said corporation held by others; and whereas, the said committee, in behalf of themselves and associate stockholders, are desirous of making a sale of all their stock in said corporation, and also the shares of all such other stockholders as join with them prior to October 18, 1896; and whereas, the party of the second part, in behalf of himself and associates, is willing and desirous to purchase all the shares of stock held by said committee as the same may be pooled and deposited prior to said October 18, 1896, on the terms and conditions and for the price hereinafter stated: Therefore, to carry out such intended purchase of said stock, the parties agree together as follows: First. The price which is to be paid for all such pool stock of the Seaboard and Roanoke Railroad Company is one hundred and twenty-five dollars per share. Second. The committee is to declare the amount of all stock deposited with the said pool and embraced in this contract of sale on October 18, 1896. Third. The party of the second part makes this contract to purchase relying on the representation that the railroad companies comprising the Seaboard Air-Line system are free of all floating debt due to any creditor other than some company in that system. Said party of the second part is to have forty days from this date within which to have an examination made into the condition and accounts of said corporation and system, and to determine whether said representation is correct. Fourth. The party of the second part now deposits sixty thousand dollars cash with the committee, and agrees that that sum shall be forfeited and paid as liquidated damages in case he and his associates fail, at the expiration of said forty days, to accept, take over, and fully pay in cash for all such pool stock, at the price of one hundred and twenty-five dollars for each and every share thereof. If such liquidated damages are so forfeited by the second party, said sum shall be paid over by the said committee to the railroad company, and distributed as a dividend among all the holders of common stock. At the expiration of said forty days the party of the second part agrees to purchase and take over from such committee not to exceed one hundred and seventy-five shares of the stock of the Baltimore Steam-Packet Company, and to pay therefor the sum of fifteen hundred dollars cash for each share. Fifth. Simultaneously with the closing of said option by the party of the second part, and the payment in cash for all such pool stock of the Seaboard and Roanoke Railroad Company, less the sixty thousand dollars deposited with the execution of this contract, which is to be treated in that event as a part of the purchase money, and also to pay in cash for the shares of the Baltimore Steam-Packet Company above specified, the committee are to provide, if requested by the second party, the resignation of the president and directors of the Seaboard and Roanoke Railroad Company and of their controlled corporations, and the Baltimore Steam-Packet Company, and procure the nominees of the party of the second part to be elected in their places, so as to give control of said corporation to said second party. Witness the following signatures and seals to this memorandum of agreement, which is executed in triplicate this sixth day of October, A. D. eighteen hundred and ninety-six. Louis McLane. Moncure Robinson. Legh R. Watts. Thomas F. Ryan."

Subsequent to the filing of the bill the plaintiff filed several exhibits in addition to the above agreement, consisting of records of two suits in equity, both brought by him, one in the circuit court of the United States for the district of Maryland, on the 11th of May, 1897, against McLane, Watts, and the executors of Robinson, and the other in the circuit court for the Eastern district of Virginia, on 2d of October, 1897, against the Seaboard & Roanoke Railroad Company and others. We shall have occasion to refer to some of these exhibits presently.

In the seventh paragraph of the bill the plaintiff further alleges that in part performance of said written agreement he paid to the said committee $60,000 in cash, as part of the purchase money for said stock, and that under said written agreement, as construed by him, he agreed and bound himself to purchase, accept, and pay $125 per share for all the shares of stock held by others than the said committee and their associates, who should prior to October 18, 1896, join in said contract of sale on the terms and conditions therein stated, and should deposit their stock with said committee, and that the latter thereby bound themselves to declare on October 18, 1896, the amount of all stock deposited with them and embraced in such contract of sale. It is further alleged that said committee represented that the shares of stock owned by them, and those then associated and represented by them in said contract,...