Dalrymple v. Lauman

Cochran, J., delivered the opinion of this Court: This suit was brought to recover damages from the appellant for not performing the following contract, to purchase certain bonds of the Northern Central Railway Company. “ We, whose names are hereunto written, in case a contract is made between the Northern Central Railway Company and Geo. M. Lauman, Isaac Eckert and J. Hall Pleasants, for the completion of said road between Sunbury and Canton, do severally agree to and with said last named parties, the contractors, to purchase from them the bonds of said Company, which they may obtain under said contract, at the rate of seventy-five per cent, upon the par value thereof, and to the amount for which each hereby subscribes, and to pay the same as follows : ten per cent, upon demand, and ten per cent, thereafter in monthly payments, or, as we may respectively elect the entire amount in cash; this subscription, however, is not to be binding until said [399] bonds to the amount in the aggregate at par of one million of dollars shall he disposed of. ’ ’ The case was brought to this Court on exceptions taken to the rejection of a series of prayers offered by the appellant, and to an instruction given by the Court in lieu of those prayers, and of a rejected prayer offered by the appel-lee, These exceptions present questions which go to the consummation of this agreement, to its construction, and to the appellees’ right to a performance of it upon the proof offered at the trial. It is not essential, however, that our views should he expressed on all of these points, as we have satisfied ourselves that a final determination of the case may he reached by ascertaining the conditions to which the true construction of this undertaking subjected the appel-lees; and we may therefore assume, for all present purposes, without, however, so deciding, that the contract was so far consummated and mutual, as to he effective and binding on both sides. A written contract, according to general rules, should he so construed as to effect the intention of the parties, as it appears from the terms and subject matter of the contract; and where a particular phrase or clause is such, that its meaning may he restricted or enlarged, it should receive the interpretation most consistent with the real purpose of the agreement; so, also, the construction of a condition in a contract will he most favorable to the party entitled to the benefit of it. These rules are too well settled and familiar, to he the subject of discussion, and with this brief reference to them, we proceed to examine the contract presented here. The completion of the Northern Central Railway from Sunbury to Canton, and a sale of such bonds as the Company should issue for that purpose, were the immediate subjects contemplated by the contracting parties; and this paper, on its face, is an agreement with the appellees, if they should contract to complete the road, to purchase the bonds they should receive on that account, to the amounts [400] respectively subscribed for, at the rate of seventy-five per cent, upon tbeir par value. The parties to this undertaking, would have been bound for the respective amounts of the bonds severally designated by them, but for a subsequent condition, upon the construction of which the difficulty here arises, providing that the subscription should not be binding until the par value amount of the bonds disposed of, should reach an aggregate of one million of dollars. The appellant insists that this condition has never been performed, and, consequently, that he never became bound to take the bonds be had thus conditionally subscribed for. The interpretation of this proviso is not altogether free from difficulty, although we think the rights and interests which it was obviously intended to protect and subserve, when fairly considered, show, with some degree of certainty, its true import and purpose. That the completion of the road was to operate, in some sense, as a consideration for the agreement, cannot be disputed. Increasing the facilities of the road, would naturally tend to increase its revenue, and the effect of an increased revenue, in the way of enhancing the value of the bonds, could bave been relied on as a consideration for the agreement to purchase them. But, looking to the present as well as the prospective value of these securities, it will be seen that the parties subscribing for them had an immediate interest in establishing a standard rate at which they should be sold. The intrinsic value of the bonds had not been ascertained, and, from the nature of the case, could not be, otherwise than by some general understanding with the appellees as to the terms upon which they should part with them; and, bearing in mind the circumstances of the appellees, through whose hands the bonds not subscribed for would necessarily find a market, it was all the more reasonable that the parties to this agreement should have contemplated an aggregate of sales, at the price they were to pay, sufficiently large to establish that price as the standard of their value. The duration of the enterprise on which the appellees proposed to enter, the large [401] amount of means they would require to prosecute it, and the uncertain value of the securities from which their means were to he realized, were all matters within the range of prudent consideration; and a state of circumstances might well have heen anticipated, that would compel them to part with the bonds remaining in their hands upon terms that would depreciate the value of those obtained under this contract. While the agreement shows that the parties intended to aid the appellees in their undertaking to complete the road, by purchasing these bonds, it is equally clear, from the condition upon which the subscription was to become binding, that they intended to protect themselves from injury and loss. Had it been their sole purpose to assist the appellees, without regard to contingencies likely to operate adversely to their interests as purchasers of the bonds, that could have been effected without the proviso found in the contract. This clause was inserted for the benefit of the subscribers for the bonds, and looking to the general purposes of the contract, and the peculiar circumstances under which the bonds were to be issued, we infer that it was intended to prescribe the rate as well as the amount of the sales to be made, before the subscription should be binding. The proviso itself, construing it favorably for the subscribers, according to the general rule governing the interpretation of such clauses, tends very strongly to support this view. The bonds subscribed for, were a part of the million to “be disposed of;” in fact, the disposition called for by the proviso, was initiated by this contract, and the expression, that it should not be binding until a million of the bonds should be taken, might well be construed, at least so far as the rate prescribed by the contract is concerned, as one requiring the disposition thus commenced to be continued until the amount specified should be disposed of. This construction seems to be required by purposes plainly inferable from the general scope and character of the contract, and being consistent with the particular language of [402] the proviso, that construction must he adopted as the true one, and the contract allowed to have effect accordingly. This conclusion necessarily decides the case. The proof, contained in the hill of exceptions, shows, as the appellees admit in their brief, that the aggregate par value amount of the bonds disposed of, at the rate prescribed by the contract, did not exceed the sum of $648,000, and, as the condition upon which, according to our construction, the appellant’s liability was made to depend, has never been performed, it follows, as a matter of course, that no judgment should have been rendered against him. The Court below, in its instructions to the jury, gave a different, and, as we think, erroneous construction to the contract, and the judgment will therefore he reversed. (Decided July 12th, 1865.) Judgment reversed.