Mitchell v. Wedderburn ( 1887 )

Robinson, J.,

delivered the opinion of the Court.

This is an action to recover damages for the breach of a contract in writing,‘by the terms of which the, plaintiff, Mrs. Mitchell, alleges she sold 260 shares of stock of the Ceres Manufacturing Company to the defendant, Mrs. Wedderburn, for the sum of $18,000.

The stock was to be paid for in “The Geres Super-phosphate,” ■ a fertilizer manufactured by the company, at a valuation of twenty-two dollars per ton, not more than four hundred tons to be delivered to Mrs. Mitchell in any one year.

The sixth clause provides, that upon the payment of the whole purchase money, the stock was to be “transferred to Mrs. Wedderburn to be retired by the Ceres Manufacturing Company in accordance with, law,” and further that “all the terms, of this contract are hereby declared and intended to be subject to the rights of the creditors of the Ceres Manufacturing Company of Baltimore City, and of no effect to alter the status of the parties hereto with respect to said creditors as regards the respective interest of said parties in the assets of said company.”

To this action, the defendants pleaded, that the contract sued on, as appears from the terms thereof, was part of a plan proposed between the plaintiff, Mrs. Mitchell, and the defendant, Mrs. Wedderburn, they being the holders of the majority of the stock of the Ceres Manufacturing Company, by which Mrs. Mitchell was to sell her stock to the company through Mrs. Wedderburn, and when paid for, to be retired for the benefit of the remaining stockholders, all parties to the transaction believing at the time, that the stock could be paid for in fertilizers belonging to the company, without impairing the rights or interests of its creditors, but that the contract was made upon the express condition, as appears from its terms, that if it should turn out, that the delivery of the fertilizer in the payment of stock impaired in any manner the rights of the creditors of the company, then the contract was to be void and of no effect.

The plea further alleges, that after a partial delivery of the fertilizers under the contract, it became plain and apparent to all the parties thereto, that the further delivery could not be made in justice to the'rights of creditors, and thereupon the contract was with the consent of the plaintiff abandoned.

To this plea the defendants filed a general demurrer, and as special demurrers for defects in matter of form are no longer allowed by the Code, the only question under the general demurrer is, whether this plea sets forth a substantial defence to the action ? How if we reject all unnecessary verbiage and all unnecessary matter as mere surplusage, the defence set up by the plea, is that the contract sued on is by its terms a sale of Mrs. Mitchell’s stock to the Ceres Company, to be paid for in a fertilizer manufactured by the company, subject however to the express condition, that if the delivery of the fertilizer in payment of the stock should affect the rights and interests of its creditors, then the contract was to be void and of no effect, a condition which in fact did happen. In short, that the contract became inoperative and void, because of the happening of a dependent condition. So whatever objection there may be to the plea for defects in matter of form, it does set forth substantially a good ground of defence, and this being so, the demurrer was properly overruled.

We come then to the construction of the contract itself, for upon this depends the right of the plaintiffs to maintain this action. And here we must admit there is some difficulty in finding out precisely what the parties meant, because the different clauses in the contract are utterly inconsistent with each other. The first part of the contract is in terms an out an out sale of the stock by Mrs. Mitchell to Mrs. Wedderburn, and yet this is inconsistent with the sixth and other clauses. The sixth provides, that upon the payment of the whole purchase money the stock was to be transferred to Mrs. Wedderburn, to be retired however for the benefit of the company. If the sale was in fact made to her, then the stock on the payment of the purchase money belonged to her, and we are at a loss to understand why it was to be retired for the benefit of the other stockholders. Then again it provides that “all the terms of this contract are hereby declared and intended to be subject to the rights of the creditors of the Ceres Manufacturing Company, and of no effect to alter the status of the parties,” &c.

• In other words, if it should happen that the payment of the purchase money in fertilizers belonging to the company impaired the rights of its creditors, then the contract was to he void. Nowif the sale was made to Mrs. Wedderburn, how could the payment of the purchase money by her in a fertilizer manufactured by the Ceres Company affect injuriously the rights of its creditors? She would be obliged to buy the fertilizer, and instead of its fertilizer, the company would have the money as assets for its creditors.

The contract is drawn in a bungling manner, but, as we construe it, the stock was not sold to Mrs. Wedderburn individually, but through her to the Ceres Company,' to be paid for in the fertilizer of the company, and if it should turn out that the delivery of the fertilizer in payment of the purchase money, interfered in any manner with the rights of the creditors, then it was to be void and of no effect. And that it was so understood is plain from the subsequent acts and conduct of the parties. The contract was made September 1st, and from that time until the 4th November, more than a thousand dollars worth of fertilizer was delivered by the company under it. In the early part of November, however, the Board of Directors, of which Mr. Mitchell, the husband and agent of the plaintiff, was a member and its President, determined that the further delivery of fertilizer to Mrs. Mitchell, could not be made without impairing the rights of the creditors of the company, and thereupon, with the assent and acquiescence of all parties, the contract was abafidoned. Maryland Ins. Co. vs. Bossiere, 9 Gill & J., 155; Abrams vs. Sheehan, 40 Md., 457 ; Scarlett vs. Stein, 40 Md., 525 ; Citizens Ins. Co. vs. Doll, 35 Md., 107; Topliff vs. Topliff, 122 U. S., 121.

(Decided 16th December, 1887.)

Such then being the construction of the contract, and the condition on which it was to become inoperative and void having happened, there was no ground at least on which Mrs. Wedderburn could be held personally liable under it.

Judgment affirmed,