Knabe v. Bowles

Boyd, C. J., delivered the opinion of the Court. This is an appeal from a judgment in an action in covenant, whereby the 'appellants sought to recover damages from the appellee for breach of a contract under seal. The action was instituted by Ernest J. Knabe, Jr., and William Knabe, and on the same day marked to the use of the National City Bank of Baltimore. The declaration alleges that the appellants, the Knabes. entered into a contract, under seal, with the appellee, whereby the appellants sold and agreed to deliver, and the appellee purchased, not less than three thousand, one hundred and forty-five and, if possible, three thousand five hundred shares of the capital stock of the United Surety Company of Baltimore, at a price of fifty-nine dollars per share; that the appellee in part performed his contract by accepting and ⁴⁷⁷ paying for three thousand three hundred and twenty-eight shares, but had refused to fully complete his contract by accepting the remaining one hundred and sixty-seven shares, although the appellants were at all times able, ready and willing to deliver the said one hundred and sixty-seven shares, in accordance with the terms of the contract.

The appellee pleaded performance, and also filed special pleas, which, in substance, alleged that the appellants were not at all times able-, ready and willing to deliver the 167 shares of stock, but, on the contrary, the appellants had declined to deliver the same, because of the fact that they had previously sold these same 167 shares to other persons, for a sum in excess of fifty-nine dollars a share, who however had refused to take the stock, and that the appellants had brought suit against them and had to retain the stock to await the outcome of that suit; and that the appellee had accepted and paid the appellants for three thousand three hundred and twenty-eight shares in full performance of liis obligations under the contract; and that the appellants and the appellee had agreed, subsequent to signing of tbe agreement sued upon, that the amount of stock to he delivered thereunder should be three thousand three hundred and twenty-eight. The appellants joined issue upon .the plea of performance and filed replications which traversed the special pleas. The case was tried before the Court, sitting as a jury, and at the Conclusion of the testimony for the appellants the appellee offered a prayer that under the pleadings there was no evidence sufficient to entitle the plaintiffs to recover. During the examination of witnesses, testimony as to an agreement between the parties as to the time of delivery of the one hundred and sixty-seven shares, had been admitted subject to exception.

A motion was made to strike; out all oral testimony of the plaintiffs’ witnesses, which tended to modify, vary, change or extend the terms of the written contract sued upon. The Court granted both the motion to strike out the testimony and the prayer instructing a verdict ⁴⁷⁸ for the defendant. From the judgment entered upon the verdict this appeal was taken. The main question arises upon whether the lower Court was correct in its ruling in striking out the testimony admitted subject to exception.

If the testimony offered sought to establish a new agreement different from the sealed instrument sued upon, or if it were offered to vary, extend, enlarge or contradict the terms of the written contract, then, unquestionably, under all the authorities, it was inadmissible. The suit being in covenant the plaintiffs had to stand by the terms of instrument which they set up. If they wanted to rely upon a new 'and independent contract, the suit should have been in assumpsit. Watchman v. Crook, 5 G. & J. 239 ; Franklin Ins.

Co. v. Hamill, 5 Md. 170 ; Rice v. Forsythe, 41 Md. 389 ; Kribs v. Jones, 44 Md. 396 ; Balto. Perm. B. & L. S. v. Smith, 54 Md. 187 ; Orem v. Keelty, 85 Md. 337 ; Kendrick v. Warren Bros., 110 Md. 47 . But the contention of the appellants is, that the testimony rejected by the Court did not tend to vary, extend or contradict the terms of the sealed instrument, but was offered as to a point upon which the contract was silent,- — that of time of delivery.

It is very often a matter of some nicety to determine whether, in a particular case, the parol evidence offered falls within the general rule, and few subjects have given rise to more difficult and perplexing questions for decision. It will be necessary, therefore, to examine in some detail the contract and the evidence offered and admitted, as well as that excluded. It appears, from the testimony, that the Knabes were possessed of the majority of the capital stock of the United Surety Company, and that the corporation, in the year 1910, was in financial difficulties. All of the stock owned by the Knabes was deposited in various banks of Mew York, Philadelphia and Baltimore as collateral for loans amounting, in some instances, to one hundred and twenty-five dollars per share.

One hundred and sixty-seven shares, then hypothe ⁴⁷⁹ cated with, the entire holding, had been sold to a New York firm at a price of one hundred and fifty dollars per share, and a suit was then pending to compel the purchaser to comply with its purchase. After numerous conferences, the Knabes, on the 16th of April, 1910, entered into a written contract with the appellee for the sale and purchase of not less than 3145 and, if possible, 3500 shares of this stock. At the time of signing the contract, a statement was given the appellee, showing the amount of the holdings of the Knabes, where deposited and the amount for which each block was pledged. The entire holdings, including the one hundred and sixty-seven shares, appears therefrom, to have been three thousand four hundred and ninety shares.

The contract is herewith set out in full: “It is hereby agreed by and between Ernest J. Knabe, Jr., and William Knabe, of the first part, and Thomas II. Bowles, of the second part, as follows: “1. Ernest J. Knabe, Jr., and William Knabe do hereby sell and agree to deliver to Thomas U. Bowles not less than three thousand one hundred and forty-five shares (3,145), and if possible three thousand five hundred (3,500) shares of the capital stock of the United Surety Company at the price of fifty-nine dollars ($59) per share. “2. The said Thomas H. Bowles agrees to purchase and does hereby purchase said stock at said price, his undertaking in this regard being subject to a satisfactory examination of the outstanding risks of the Company, said examination to he begun on Saturday, April 16th, 1910, and concluded as soon thereafter as possible, but in no event later than May 1st, 1910. “3.

It is agreed that the sale to the said Knabe brothers of certain ‘non-admitted assets,’ as per resolution appearing on the minutes of the Executive Committee of tlie United Surety Company, shall remain in full force and effect with the following exceptions, to wit: The said Messrs. Knabe shall he relieved from the payment of the deferred payment of $25,000 there ⁴⁸⁰ in provided for, and after the repayment to them of any balance dne on the $75,000 paid on account of the purchase of said ‘non-admitted assets,’ with interest, they shall be entitled to receive one-third (-J) of any amount that may be realized by the Company out of said ‘non-admitted assets’ over and above the original $75,000 with interest up to $25,000, as their share; the management and control of said assets to be in the Company exclusively. “It is further agreed that if the United Surety Company shall realize from the demand notes receivable now owing to it a sum in excess of twenty-three thousand five.hundred dollars ($23,500), then three-fifths (■§■) of such excess shall be paid to the Knabes as and when received.* “It is understood that the stock of the said Knabes is pledged with certain banking institutions, and said Bowles agrees to accept delivery of said stock on the orders of said Knabes to the said banking institutions, directing them to deliver the same upon the payment of fifty-nine dollars ($59) a share, such orders being accepted in writing by said banking institutions. And said Knabes do agree that they and their coxmsel will use their utmost endeavors to procure the delivery of said stock on the above terms. “As a part of this agreement, the said Ernest J. Knabe, Jr., and William Knabe have placed their resignations as directors in the hands of O. E. Hershey, and have given to Stuart S. Janney and O. E. Hershey, jointly, an irrevocable proxy to vote the stock herein referred to pending the transfer of the said stock to the name of Bowles or his assignee. “Witness the hands and seals of the parties hereto this 16th day of April, 1910. “Ernest J. Knabe, Jr. (Seal) “Wm. Knabe.

(Seal) “Thomas H. Bowles. (Seal) “Test: O. E. Hershey.” ⁴⁸¹ Lt will be noticed that tlie contract contains no provision as to the time the stock was to be delivered.