Cline v. Fountain Rock Lime & Brick Co.

Brune, C. J., delivered the opinion of the Court. This is an appeal from a judgment for $7,000 entered upon the verdict of a jury in the Circuit Court for Carroll County in favor of the plaintiff-appellee, Fountain Rock Lime and Brick Co., Inc. (Fountain Rock), against the defendant-appellant, Earl H. Cline. The suit was originally filed in Frederick County, and various preliminary matters were acted upon there. It was removed on suggestion of the defendant and was sent to Carroll County for trial.

The suit was brought on the common counts and on a special count which alleged that the “defendant agreed with the plaintiff to lease the plaintiff’s real estate, plant and equipment and to pay the plaintiff for the same a percentage of profit with a guaranteed minimum amount; that the defendant took possession under the terms of the said oral agreement, of the plaintiff’s property and used it for his own benefit but has never made any payment under his agreement, although the plaintiff has done everything under the contract that it was supposed to do.” In response to an order to furnish the particulars of its claim, the plaintiff filed a bill of particulars which ⁸² asserted claims against the defendant “by terms of an oral contract”: for (1) top soil and clay taken from its property and sold by the defendant without the plaintiff’s permission; (2) a right of way “sold or given to the Frederick County Roads Board without the plaintiff’s knowledge and consent”; (3) rents received by the defendant from the rental of dwellings and not accounted for; (4), (5), (6) and (7) amounts paid by the plaintiff for taxes, interest on mortgages, mortgage principal and insurance for the years 1950 and 1951 “guaranteed by the defendant”; (8) payroll paid by the plaintiff on the defendant’s account for those years; (9) $50 a week “guaranteed by the defendant to the plaintiff” for those .years; (10) damages for breach' of contract to pay items (4)-'•(7) and item (9), “which contract was to run until 1955”; and (11) “special damages for destroying the plaintiff’s good will and causing plaintiff’s business to be destroyed by the defendant’s holding himself out as owner of the plaintiff’s property and receiving contracts and profits on the strength of his representations.” The case was submitted to the jury under instructions, to which the appellant duly excepted, which permitted the jury to award damages for “rent lost” (which seems to go beyond item (3) of the particulars), taxes, interest and insurance (items (4), (5) and (7) of the bill'of particulars) and for the cost of pumping out the plaintiff’s quarry and' for the loss of the plaintiff’s share of the profits on a contract (or subcontract) with a concern known as Conduit and Foundation Company (referred to below as the “Conduit Company”) for rock used as rip-rap for or adjacent to the abutments of a bridge. The item for pumping out the quarry is not readily identifiable with any of the items enumerated in the bill of particulars. The appellee seeks to support the claim for lost profits on the Conduit Company contract as falling within item (11) of-the bill of particulars. The plaintiff’s damage prayer, which was granted, made no specific reference to items (1), (2), (6), (8) or (10) of the bill of particulars.

Testimony as to any damages under items (1) and (2) was inconsequential. Item (10) seems to be essentially a duplication of other items. Testimony was ⁸³ offered in support of items (6) and (8) showing claims of $4,000 on the former and of slightly over $1,500 on the latter. The Pacts.

Some of the facts of the case are fairly clear; others are shrouded in obscurity, which seems to be due in the case of the alleged original understanding between the parties quite as much to vagueness as to conflicts in the testimony. Cline is a general contractor living in Frederick, who is engaged there and elsewhere in the construction business and in heavy hauling and moving. Starting with little education or resources he has built up a substantial and successful business. Fountain Rock is a corporation which owns a twenty-one acre tract in Frederick County upon which is located a limestone quarry.

It is improved by several cottages, stone bins and a lime shed. In 1949 there were on the property a hammermill used for lime and a decrepit stone-crusher. There were also two watercress ponds rented to a third party not directly involved in this controversy, and the property has an abundant supply of water. In 1946, Mr. John W. Quynn became the principal stockholder of Fountain Rock.

He owns 2001 of its 2002 outstanding shares and his son owns the other share. In 1949 Quynn was Secretary, Treasurer and General Manager of Fountain Rock and ran the business. Up to that time he had used the quarry for the production of lime. He had not engaged in the stone business except to the limited extent of selling surplus stone which was a by-product of the lime business.

Fountain Rock was not in a position to enter into the stone business on a competitive basis because it lacked an adequate stone-crusher. It likewise lacked the large platform scales which are necessary for weighing stone. In 1949 Fountain Rock had 300 tons of lime on hand, which was enough to supply its trade for about a year and a half, or possibly longer. A good deal of road construction work was developing in the area, and Quynn wanted to get the benefit of it, but he was in poor health and his Company apparently lacked capital with which to buy the needed equip ⁸⁴ ment.

Quynn would have liked to sell the Fountain Rode quarry at a price satisfactory to himself, or failing that, to find someone who could and would use the Fountain Rock quarry and supply the adequate stone-crushing equipment. Cline was interested in getting stone for the same type of business that Quynn wanted to get into. He and Quynn had known each other for some time and had submitted a joint bid on a project in 1948, and Cline had bought from Fountain Rock surplus stone left over from its lime-kiln operations. Quynn learned in 1948 or 1949 that Cline was negotiating for a small quarry owned by someone else and attempted to sell Cline the Fountain Rock quarry.

This effort was not successful, but the negotiations led to some sort of agreement with regard to Cline’s using stone from the Fountain Rock quarry. Quynn asserts that Cline told him in 1949 that if he (Quynn) would hold on to the quarry, which was losing money, until the end of the year, then early in 1950 when Cline would not be so busy, he would put in a stone crusher at Fountain Rock and they would go in business together, which Quynn understood to be on a “fifty-fifty” basis. This is now described vas a joint adventure agreement between Cline and Fountain Rock. A partnership was evidently the kind of thing which Quynn had in mind, but he believed that because Fountain Rock was a corporation it could not be a partner.

At this point obscurity descends over the facts. The precise terms of the joint adventure agreement are not shown. Quynn claims that Cline and Fountain Rock were to divide the profits evenly, but no basis is shown upon which the profits were to be computed. The one contract upon which Fountain Rock bases a claim was the contract between Cline and Conduit for rip-rap.

What elements of cost were to be considered before arriving at the amount of the profit is not shown. Not only is nothing said as to determining Cline’s hauling costs and any overhead expenses attributable to this job, but it is not clear upon what basis the stone from the Fountain Rock quarry was to be furnished. Actual practice seems to have been that Cline paid for all stone which he took from Fountain Rock for other jobs. In the events which occurred no stone ⁸⁵ whatever from Fountain Rock was actually used on the Conduit contract.

In connection with another contract for stone in the performance of which Cline did use Fountain Rock stone, Quynn protested against the low price at which the stone was billed to Cline’s customer, but did not make any claim for profits on the rental of equipment owned by Cline, though (according to Quynn) Cline justified the low price of stone by the handsome return he was getting through the rental of equipment on that job. Whatever the understanding between Fountain Rock and Cline may have been, Cline did purchase and install scales for weighing rock on the Fountain Rock property early in 1950. He patched up the decrepit stone crusher, but never installed a new one. Cline seems to have taken over general control of the Fountain Rock quarry.

He put some of his own employees in one or two of the Fountain Rock dwellings, and one of the residences was moved, with Quynn’s knowledge and consent, to a concrete foundation put in by Cline and was used as an office in connection with the newly installed scales. Insofar as quarrying was concerned, some of the old Fountain Rock employees continued to work at it and remained subject to Quynn’s orders; but at times, at least, in order to speed up operations, Cline’s men engaged in quarrying work. Some few of Fountain Rock’s employees became employees of Cline after having been laid off by Fountain Rock. At some time apparently in the spring of 1950, difficulties which Cline was having with regard to his federal income taxes became acute.

News of these difficulties reached Quynn, who became much concerned or even alarmed over them and over any possible repercussions affecting Fountain Rock. As a result, he reached the conclusion that a lease of the Fountain Rock property to Cline was desirable. He claimed that this was necessary to save Cline or to pull him out of a hole. Just how it could have done so is not shown.

Such a lease was prepared by Fountain Rock’s counsel, and according to Quynn it was revised to meet an objection raised by Cline on the ⁸⁶ ground that it did not protect Cline’s right to remove any equipment which he might install. The proposed lease was dated “this ...... day of May, 1950,” and was to run for a term of five-years. Its most significant terms, so far as this case is concerned, were (1) that Cline should operate Fountain Rock’s real estate, plant and equipment as a stone-crushing business; (2) that Cline should pay Fountain Rock 5% of the selling price of stone at the plant; (3) that Cline would “guarantee” that cash payments to Fountain Rock would be sufficient to cover taxes, interest on mortgages and notes, mortgage principal, insurance and $50 a week besides. Perhaps still more significant is the fact that the proposed lease did not even mention any profit-sharing arrangement of any kind.

Quynn testified that he submitted the proposed lease to Cline, that Cline agreed to all of its provisions and said he would sign it, but that he kept putting it off and never did sign it. Cline agrees that he never signed'any agreement; in other respects his testimony differs from Quynn’s. Although the Conduit Company rip-rap work was in prospect as early as 1949, the contract was not awarded until August 15, 1950. Quynn claims to have been very helpful to Cline in connection with this contract, but the extent of his help seems very dubious.

Quynn was sitting in Cline’s office one day when the Conduit Company’s superintendent stopped in' to talk about it. Cline was out and Quynn talked with him. Quynn later obtained specifications for the work from the State Roads Commission. In June, 1950, a month or more after the proposed lease had been drafted, Quynn figured out a basis for bidding on the Conduit job.

Cline seems to have made little, if any, use of Quynn’s estimate, submitted a higher bid than Quynn recommended and got the contract. Under the specifications the rip-rap was measured in place and was paid for on that basis. It was not necessary to weigh the stone, so the scales which Cline had installed would not actually have been required if the stone had come from Fountain Rock. For causes for which neither Quynn nor Cline was responsible actual work on the Conduit Company contract did ⁸⁷ not begin until about May, 1951.

Quynn, by that time, had wearied of Cline’s delay in the signing of the proposed lease, and when Cline again postponed it, saying that he would sign it that night, Quynn took the paper back. This was within a few days of the date when installation of the rip-rap was to begin. Cline then arranged to get the requisite stone from another quarry and did so. Cline says that this was because Quynn would not allow him to take stone from Fountain Rock unless he first signed the agreement.

Quynn contended, on the basis of the testimony of a former employee of Cline, that Cline’s purpose was to avoid having to carry out his agreement with Quynn and to get Quynn into