Penniman v. Stanley

Lord, J. The questions raised upon this bill of exceptions are to be decided by the construction of the contract executed by the parties. The contract is inartificially drawn, and no important legal principle is involved, but the simple question is, What does the language, which the parties have chosen to use, import ? It is possible that they have used language which does not convey the precise idea which they had in their minds, even if the respective parties had the same idea. There is no suggestion in the bill of exceptions, and none was made at the argument, that any of the language used was technical, or was peculiar to any particular subject, or that any evidence was offered, or was necessary, to indicate that any of the words used were used in other than their ordinary signification. We are therefore to ascertain what is the true meaning of the contract, using the language of it in its ordinary signification. To do this, we necessarily look at the surrounding and attending circumstances, and apply the language to the subject matter. In this view, we are satisfied that the presiding judge rightly permitted reference to the building contract between the plaintiff and the Shelter Island Park Company, he having found as a fact that the present contract had been entered into between the parties as a consideration of the plaintiff’s entering into the contract with that corporation. The defendants were interested in that contract; but, whether interested or not, their contract with the plaintiff was in the nature of a contract of indemnity to the plaintiff in relation to the value of stock which, by such building contract, he was to receive in part payment under such contract, and his entering into that contract was a sufficient consideration on his part to support the undertaking of the defendants in this contract. By the building contract, the plaintiff was to receive, in payment, stock of the corporation to the amount of $15,000 at its par value. It was in reference to a portion of the $15,000, to wit, to $9000 thereof, that the contract sued upon was made. The first question between the parties arises upon the meaning of the phrase used: “ And in consideration of said Penniman agreeing to hold and carry $9000 par value of above men [315] tioned amount of stock, free of expense, (for two years from the date of said stock being issued to him,) to the undersigned, Stanley and Hills, they, said Stanley and Hills, agree to pro rata the loss or gain in the value of said stock, at the expiration oí the two years.” It is to be observed, that, so far as it is a question of fact whether the plaintiff held and carried the stock for two years, the presiding judge has found that fact in favor of the plaintiff 3 and the question for this court to decide is, whether, as matter of law, the presiding judge could properly so find. And we are of opinion that he could. It will be noticed that the agreement nowhere speaks of a certificate of stock; nor does it appear that-any certificates of stock had ever been issued, except the certificate which “ was filled out and torn from the stock book of the company, and handed to him [the plaintiff] by the treasurer.” The phraseology of the first part of the extract quoted is, “ to hold and carry $9000 par value of above mentioned amount of stock, free of expense to said Stanley and Hills from the date of said stock being issued to him.” The parties knew that the plaintiff was to take in payment, under his contract for building the hotel, $15,000 par value of the stock of the Shelter Island Park Company; and in relation to $9000 par value of the said $15,000 amount of stock, the defendants made the agreement declared on. This contract related to the stock, not to the certificate, which might or might not be issued; and the time when the plaintiff should have evidence of his title to the stock, by means of a certificate of it, was wholly an unimportant matter. The agreement rather is that he shall be paid, to that extent, by stock which he will not dispose of to other parties for the space of two years; at the expiration of which time, the defendants were to share with him in the profit or loss upon it. The time when he should become entitled to the stock was to be determined by the building contract, to which the parties to this agreement referred in their contract. The question was, when was the stock his, not when he received evidence of it; and, in entire conformity with the building contract, the time was fixed by the parties to that contract; and we cannot say, as matter of law, that the presiding judge erred in finding the fact that the plaintiff had held the stock two years, simply because, during a [316] veiy large part of that time, he had not in fact a certificate of the stock, when such certificate, for the purposes for which he held the stock, was wholly unnecessary. The fact that he took a certificate when the time was approaching at which he would need it, is not conclusive that the stock had hot long before been held by him. If, however, by the use of the word “ date,” it were necessary to imply that the parties had in contemplation a certificate of stock to be issued, it would do no violence to the letter or the spirit of the contract, to deem the conventional date adopted by the parties to be the true date in the interpretation of the contract. The presiding judge having found that the plaintiff had held the stock for the period of two years, it follows that the present action can be maintained; and the question remains, What is the true measure of damages by reason of the refusal of the defendants to contribute to the loss which the plaintiff says he has suffered on account of the worthlessness of the stock? The presiding judge ruled that, by the true construction of the contract, the plaintiff was entitled to recover only two thirds of the amount of the $9000, to wit, $6000, and found that amount, with interest from the date of the writ, for the plaintiff. The plaintiff contended that he was entitled to recover the whole amount. The defendants contended that, if the presiding judge was right in his construction of the contract, and that the defendants were liable for two thirds the amount of the loss upon the stock, the liability must be a liability in severalty, each for $8000; that no joint liability exists, and, therefore, that no judgment can be entered upon the pleadings. We cannot adopt either of these as the true construction of the contract. The parties have chosen to adopt the words of a dead language with which to express the obligation incurred. In this they are certainly not more felicitous than in the use of the English language. It is evident from the contract that the words “pro rata ” are used as a compound word and as a verb. They agree “ to pro rata ” the loss or gain. It is quite clear that it is a contract of two parts, and not tripartite. The parties are, Penniman, of the one part; Stanley and Hills, of the other part. Penniman is the owner and holder of the stock; the obligation of the parties of the other part is in the nature of a guaranty [317] of the value of the stock. Their obligation is not to indemnify Penniman, nor to make the stock of par value to him. It is “ to pro rata ” the loss or gain, — that is, to divide the loss or gain. It is not to divide between themselves the loss and gain, but to divide it with the party with whom they contract. ' The defendants, as one party, jointly contract with the plaintiff as the other party, and, as joint contractors, they are liable to share proportionately with him in the loss ; and it follows, of course, that it is one half of the loss for which they are jointly liable. In this’ view, the exceptions of the defendants upon the questions of liability and upon the admission of evidence must be overruled, while, upon the measure of damages, the exceptions of the defendants must be Sustained.