Newbold v. Hayward

Briscoe, J., delivered the opinion of the Court. The pleadings in this case are voluminous, but as the questions presented by the appeal arise upon the rulings of the Court on the prayers, we deem it unimportant to set them out in full, but shall refer to them in so far as it may be necessary for the purposes of this decision. The suit was brought by the appellant against the appellees to recover for the breach of an alleged contract whereby the ²⁴⁸ latter was to deliver to the former certain shares of the capital stock of the City and Suburban Railway Company of Washington under an alleged contract of guarantee given by them ■to the Baltimore Trust and Guarantee Company. The basis of the action is the alleged guaranty, as contained in the following letters : Baltimore, August 25, 1898.

Mr. N. P. Bond, My Dear Sir: — As I understand it Hayward, Parr, Scott .and yourself guarantee to the Davidson Co., that the amount of the bonds underwritten by them will complete the city and " suburban enterprise in Washington, in conformity with the ■ contract with them, and should it fail to do so, then you four 'gentleman are to make it good. To the extent of 1-5 which ' would be my proportion I am willing to accept the same' risk ' they do ;' of course if there aré others in this guarantee it lessens my responsibility and pay in like proportion of whatever • we.get for this guarantee, it being distinctly understood that . for assuming such risk adequate compensation be allowed us. Please communicate this to the gentlemen interested. Respectfully, D. M. Newbold.

Baltimore, September 24, 1898. D. M. Newbold, Esq., Baltimore, Dear Mr. Newbold: — Referring to your letter of August 25, 1898, addressed to Mr. Bond, I beg to say that it is understood that you assume the same- liability as any one of the guarantors, and that you shall share equally with them any 'compensation which may be allowed them for entering' into the contract of guarantee. Yours truly, T. J. Hayward, For Guarantors. Briefly stated, the facts out of which the controversy arose . are as follows : On or about the nth day of October, 1897, a corporation was formed in the city of Baltimore, called the Baltimore -Security and Trust Company, the appellant and appellees being the principal stockholders.

The object and purpose of its incorporation was to purchase an option on the Columbia and • Maryland Railway. Shortly after the incorporation it pur ²⁴⁹ chased this railway, which at the time included a majority of the capital stock of the City and Suburban Railway of Washington. Subsequently, the stock of the security company was increased and the Baltimore Trust and Guarantee Company, a corporation of the city of Baltimore, purchased the bonds of the City and Suburban Railway under an agreement and guarantee, on the part of certain directors of the Security Company that the proceeds of the bonds would be sufficient to convert certain street horse car railways of the City and Suburban Road into electric roads. The enterprise proved very successful and shortly afterwards, a stock dividend of four and a-half . dollars in stock of the City and Suburban Railway for each dollar paid into the Security and Trading Company was distributed among the holders of the stock of the Security Com.pany, after the payment for certain services rendered to the company.

The appellant contends: (i) That he was equally liable as guarantor to the Baltimore Trust and Guarantee Company and .that under the contract, he was entitled to share in the compensation and profits. ■ (2) That the guarantors entered into a contract with him, to share the reponsibility of the guaranty and in consideration thereof promised to pay him, and (3) That the defendants have been paid by the Security Company for their services but have refused to pay him. The appellees on the other hand contend, as stated in their brief, that they never received any compensation for the guaranty and that a resolution was introduced by the plaintiff and voted for by him at the directors and stockholders meeting, under the terms of which the guarantors were required to release the Security Company from all liability, which the majority of the guarantors were unwilling to do, and that the guarantors were not entitled to compensation, and they deny the liability claimed by the appellant.