Dickson & Tweeddale v. Fowler

Thomas, J., delivered the opinion of the Court. This is a suit on the following promissory note of the appellants in favor of the appellee, which was filed with the declaration in the Court below: ³⁴⁷ “5,000.00. Jan. 5, 1908. “Four mouths after date, we promise to pay to the order of Vm. E. Fowler, Five Thousand Dollars, at The First Rat.

Bank of Baltimore, Md. “Value received with 6% interest. “Dickson & TweeddaeeT In addition to the general issue plea, the defendants filed special pleas in which they charged, first, that the note “was procured by the fraud of the plaintiff,” and, secondly, that the note “was procured by the fraudulent representations of the plaintiff.” These special pleas were traversed by the plaintiff, and the case was tried on issues joined on the general issue plea and on the replications to the special pleas. At the trial the plaintiff offered in evidence the note sued on and rested his case, and the defendants then offered' evidence in support of their pleas. During the tidal the defendants reserved forty-four exceptions to the rulings of the Court on the evidence, but in the view we take of the case it will not be necessary to pass on these exceptions separately. At the conclusion of the testimony offered on behalf of the defendants, the plaintiff filed two motions to strike out certain evidence, and offered four prayers, the defendants objected to the motions and prayers being received at that tin\e, but the Court overruled the objection, and the forty-fifth exception is to this ruling of the Court.

The Court below then stated that he refused the motion to strike out the evidence, and that it was for the plaintiff to say whether he desired to offer any evidence, to which the plaintiff replied that he submitted on the prayers, when the Court further stated' that as the plaintiff did not desire to offer evidence, he would ask for the prayers of the defendant. The defendants then offered seven prayers and filed a special exception to plaintiff’s fourth prayer, and the forty-sixth exception is to the rejection of the defendants’ prayers, the overruling of the special exception to plaintiff’s fourth prayer, and to the ³⁴⁸ granting of the prayers of the plaintiff, instructing the jury,' (1) that “there is no evidence legally sufficient to show that the note was procured by fraud;” (2) that “there is no evidence legally sufficient to show that the note was procured by duress;” (3) that “there is no evidence legally sufficient to show lack or failure of consideration for tbe note;” and (4) “that it is admitted by the pleadings and the testimony of the defendant Tweeddale that the note sued on was executed by the defendants and was delivered to the plaintiff, and that there being no evidence legally sufficient to establish any defense to said note, the verdict of the jury should be for the plaintiff for the sum of $5,000.00 with interest at six per cent., from January 5, 1909, to date.” The defenses relied on by the appellants are fraud, duress and want of consideration; the contention of the appellants, in regard to the last 'defense, being that the note was given for services which the appellee was bound to perform under a previous contract with the appellants. After a careful consideration of the evidence, which covers over a hundred pages of the printed record, we think it fails to establish either of these defenses. William E. Fowler, of Baltimore City, the appellee, who was an agent, of and largely interested in the German Union Insurance Company, and who was dissatisfied with its management and apprehensive of a depreciation of the stock because. of its inefficiency, went to New York in August, 1908, to arrange with the appellants, Robert Dickson, Robert D. Tweeddale and George R. Thomson, co-partners trading as Dickson & Tweeddale, for the purchase by the appellants of a controlling interest in said company.

As the result of the negotiation, the appellee and the appellants entered into the following contract, which was signed by the appellants and appellee but not sealed: “This agreement made this 21st day of August, 1908, by and between Robert Dickson, George R. Thomson and Rob ³⁴⁹ ert Dickson Tweeddale, doing business in the city of New York under the firm name and style of Dickson & Tweed-dale, parties of the first part and W. E. Fowler of Baltimore, Maryland, party of the second part witnesseth that: “Whereas the party of the second part is a large stockholder in the German-Union Insurance Company of Baltimore, and the parties of the first part are desirous of acquiring an interest as stockholders in that company. Now, therefore, in consideration of the premises and of the sum of one dollar ($1.00) lawful money of the United States and other good and valuable consideration by each of the parties hereto to the other in hand paid, the receipt of which is hereby mutually acknowledged and further in consideration of the covenants and conditions hereinafter contained, it is agreed by and between the parties hereto as follows: “1. The party of the first part shall forthwith endeavor to secure options for the purchase of at least (51%) fifty-one per cent of the capital stock of the German-Union Insurance Company of Baltimore at ($15.00) fifteen dollars per share; said options are Jo be taken in the name of George N. Thomson of Larchmont, New York, and to be treated as hereinafter provided. “2. The party of the second part shall hold or control the voting power of at least thirty-seven hundred and fifty (3,750) shares of the stock of said company so secured under said options; such ownership to be continued as hereinafter provided, the balance of the said stock so secured on the said options to be taken by the parties of the first part as here-' inafter provided. “3.

The said options shall be secured by the party of the second part within sixty (60) days of the date of the execution of this agreement; said options, when obtained', to be deposited with the Baltimore Trust & Guaranty Company of Baltimore, or the First National Bank of Baltimore, or the Drovers & Mechanics National Bank of Baltimore; and the parties of the first part on being notified in writing by ³⁵⁰ the party of the second part that options on the required number of shares have been secured, shall name a date on which payment for their portion of said stock shall be made, which shall be within fifteen days thereafter unless the condition of the money market in New York City is abnormal.’7 By the fourth paragraph of the contract, the parties agreed that “If these aforesaid options be exercised by the parties hereto, and the control of the said German-Union Insurance Company be thereby acquired by them,” they would forthwith execute an agreement that neither party should dispose of his or their stock within certain periods without the consent of the other, without the stock having been first offered to the other party at its book value. The other paragraphs of the contract provided for a change of the domicile of the company, for the appointment of general agents, etc. The contract makes no provision for payment for the services to be rendered by the appellee in. securing the options on the fifty-one per cent, of the stock, but it appears from the testimony of Mr. Dickson and Mr. Tweed'dale that the matter was fully discussed during the negotiations leading up to the execution of the contract; that the appellee stated that he would be able to secure the options at $12.00 or $12.50, and that they agreed that the appellants should take the stock at $15.00 per share, and that the appellee should receive the difference for his services in securing the options. And Mr. E. Williard Smith, who was an employe of the appellants, was present during most of the conversations between the appellants and the appellee prior to the execution of the contract of August 21, 1908, and who represented the appellants from the 15th of October to the 30th of November in the subsequent transactions in Baltimore looking to securing the control of the company, when asked by appellants’ counsel if he had “ever heard of any arrangement to pay Mr. 'Eowler any compensation by way of money for his services or for any services,” said: “I was under the impression that Mr. Fowler’s remuneration was to ³⁵¹ consist principally of general agency appointments for the German-Union Company and for other companies then controlled by Dickson & Tweeddale. The question of money payment was to my mind more or less open to be dealt with according to developments.” In answer to the further question : “Was there any amount stipulated for as for services ?” He replied: “At the time the agreement was drawn up there was some conversation about a cash payment, but I d'o not think any amount was definitely decided on.” It is therefore, apparent that at the time the contract was executed, it was understood that the appellee was to receive something for his services in securing the options in addition to the general agency appointments provided for in the written contract.

Mr. Tweeddale states that after the execution of the contract of August 21st, Mr. Fowler advised the appellants from time to time that he was proceeding under the contract; that about October 1st Mr. Fowler telephoned him to come to Baltimore; that when he reached Baltimore, Mr. Fowler informed him that he had been endeavoring to secure the options and had employed Wm. A. Beed & Company, brokers, to assist him; that they had tried to secure the options at less than $15.00 per share, but had been unable to do so, and that it would be necessary to pay in addition to the $15.00 per share “a brokerage of one-eighth of one per cent.,” and that Mr. Fowler then introduced him to Mr. Wm. Crawford, of the firm of Wm. A. Beed & Company, and that Mr. Crawford then proceeded to assist Mr. Fowler in securing the options.

Mr. Smith states that he was sent to Baltimore about the middle of October to represent the appellants in taking over the stock of the German-Union Insurance Company that had been arranged for; that it was then understood that sufficient options had been lodged with Wm. A. Beed & Co. to warrant the appellants “to go ahead with the purchase, and arrangements had been made for the day following” his “arrival for several of the principal directors ³⁵² to turn in their stock to Reed & Co. and receive payment therefor;” that the Southern Insurance Company advanced $80,000.00 for this purchase; that shortly after this purchase, he took up with Mr. Fowler the matter of the stock which he was to control and discovered that some of it was hypothecated and some of it was held by Mr. Fowler’s agents, and that he advised the appellant that he “did not think that Mr. Fowler could procure the voting power on the amount of stock originally stated in the contract and suggested they make some re-arrangement with him,” and that he thinks in view of this development an arrangement was made between the appellants and the appellee whereby the latter agreed to relinquish a certain share of the general agency territory which he was to have had under the original contract. It further appears from the testimony of Mr. Tweeddale that by the 20th of October, that is, within the sixty days, with the stock that had been purchased, they had secured options on fifty-one per cent, of the stock; and that stock to the value of $15,000.00 was purchased by the Southern Insurance Company. It further appears that all of the options and shares of stock had been secured through the efforts of Wm.

A. Reed & Co. and Mr. Fowler; that Mr. Fowler “did not profit” by any of the transactions; that he and Reed & Co. continued, at the request of the appellants, to secure options until about the 1st of November, some of which the appellants took up through Reed &. Co. and some they never took up at all; that as late as December 5th the appellants wrote Mr. Fowler requesting him to secure one hundred shares more of the stock; that the failure of the appellants to take up all of the options was not due to the condition of the money market, and that after the appellants got control of the company, they did not enter, into the agreement referred to in the fourth paragraph of the contract of August 21. The testimony relied on by the appellants is the following testimony of Mr. Tweeddale, who, after stating that he came to Baltimore about the Ith of October, says: “Some few days ³⁵³ subsequent to that time, Mr. Fowler invited me to his room one evening and informed rue he had been offered a sum of money by the opposing faction in the German-Union Fire Insurance Company to turn the stock that he owned or controlled to them and thereby defeat us in our attempt to get control. He said he told them he would give them an answer the next day.

He stated that they had offered him $18,-000.00 and to take his stock at $15.00 per share. He asked me what it was worth to us. I told him we were paying $15.00 a share, the figure specified in the contract, which was all the stock was worth and that was all that we would pay.” Mr. Tweeddale states that several days later, he sent to New York for Mr. Willard Smith, and then says: “After Mr. Smith arrived', I decided to return to New York and leave him in charge. I was in Mr. Fowler’s room a day or two before I was leaving for New York, possibly the day before.

I cannot fix the date of this transaction, I am now speaking of definitely, I should say around October 20th. I was in Mr. Fowler’s room in the Hotel Rennert, with Mr. Fowler, Mr. Willard Smith and Mr. Grant Stockham. About eleven o’clock that evening I left the room, and Mr. Fowler followed me to the elevator, and when I was standing at the. elevator he told me, he asked me when I would return from New York. I told him I would return in a day or two, in two or three days, anyway.

He told me he wanted me to bring back with me $10,000 and that- he wanted the money, that he didn’t want any check. I asked him, what for ? He said, well, if you don’t the deal is all off, and I will sell my stock to the other side. I said, why didn’t you tell me this before.

If you had made this demand of me sometime back I would simply have returned to New Yor*k and called the deal off. But, I said, you have taken me by the throat. You know I have put out a large amount of money. You know that I cannot go backwards.

And I suppose that is why you make the demand you do at this time. But, I said, I have a ³⁵⁴ contract with yon, and we are going to live np to that contract. He said, that is only a gentleman’s agreement. I said, you won’t get ten cents.

Mr. Fowler said he was going to faint, and leaned up against the wall, and attempted to He down on the hall floor of the hotel. I assisted him to his room, and Mr. Willard Smith and Mr. Grant Stockham got some ice water, and put him on the bed, and I left the room and returned to New York the next day or the day following. * * * I returned to Baltimore several days later, possibly two or three days later, and the subject of this demand