Cushman v. Richards

Hoar, J. The contract must be construed according to the relation of the parties, and the facts existing at the time, with reference to which it was made. The defendants purchased o. [233] the plaintiff eight shares of the stock of the Attleborough Bank The parties disagreed as to their value, because the bank held a mortgage from which the vendor believed a considerable sum would be eventually realized, but which the purchasers thought of little value. It was finally agreed that the defendants would purchase the stock at par, and would give a written agreement to account to the plaintiff for one half of the proceeds or avails of the mortgage. There can be no doubt that this contract imports an obligation to pay, and that this is included in the phrase “ to account.” But the question remains, “ the proceeds or avails ” to whom ? Obviously, as it seems to us, “ the proceeds or avails ” to the defendants, as the owners of the shares. The value of the shares was the subject of the contract. There is no evidence that, without any reference to the value of the mortgage, the shares would have been worth par. But the defendants were willing to give and the plaintiff to take that price, with an addition of one half the avails of the mortgage. The amount due on the mortgage was many times larger than the par value of these eight shares. Whatever might be recovered on it, the defendants could derive no benefit beyond their proportion of eight one-thousandths, as owners of so much stock. The proceeds or avails to the bank, or to the other shareholders, were not, and would not become, the property of the defendants, to account for or dispose of. The parties must be understood as contracting for something in which they had an interest. According to the plaintiff’s view, the transaction would not be such a contract, but a kind of wager as to the amount to be recovered by the bank. The superior court adopted the more just and rational construction; and the plaintiff has no good ground of exception. Exceptions overruled.