McReynolds's Appeal

66 Pa. 102, 1870 Pa. LEXIS 284

• Court: Supreme Court of Pennsylvania
• Decided: May 25, 1870
• Status: Published

Opinion

The opinion of the court was delivered, July 7th 1870, by

Sharswood, J.

— These are appeals by both parties from the final decree of the Court of Common Pleas of Lancaster county upon bill, answer, proofs and *he report of a master in equity.

The decision of the master as to the effect of the settlement by M. N. Angelí appears to have been acquiesced in by Mr. Maltby. The point has not been made and discussed here, and we give no opinion upon it. I mention this to preclude any inference which might be drawn from its being passed' sub silentio. For myself, I am unable to see that, when it is expressly agreed that the accounts of a copartnership or joint undertaking shall be audited by a person named, “ whose decision shall be final and conclusive,” the reference does not include every question of law and fact necessary to the ascertainment of the balance — which is the evident object of the audit. Let that pass, however.

The first, and most important, question is as to the construction of the contract of June 2d 1862. That instrument is drawn with the care and skill of a lawyer, and leaves scarce a loop to hang a doubt upon. The consideration of the agreement by Maltby to admit Kase to a participation in his contract with the Reading and Columbia Railroad Company was his furnishing one-fifth of the cash capital of $150,000 required for the execution of the said contract, or in that proportion of such cash capital as may be actually required and used not exceeding $150,000, and Kase agreed “ to pay up the balance of the cash to be paid as aforesaid in instalments not exceeding 10 per cent, thereof monthly, as the same may be required by the said Caleb S. Maltby or his legal representatives.” It is very clear, that by the word “required,” as here used, is meant “ called for,” and this is confirmed when we turn to another clause of the contract, in which it was agreed that Maltby was to “ have exclusive control of the work while in progress;” was to negotiate, sell and transfer the stock and bonds which he might receive from the railroad company, “ whenever, in his judgment, it is expedient so to do, and in such amounts, and at such prices, as he may deem expedient.” “It being the intention of the said party of the second part that the said Maltby shall have the same control over the execution of the work, and stock and bonds, so far as the prosecution of the said work may require, their sale or other disposition, as he would have had had these presents never been executed.” The substance of the agreement evidently was that, so far as his interest was concerned, Ease constituted Maltby his attorney in fact, with the .amplest powers and discretion to act in the matter as he should deem best. Whether he might have carried through the contract with less cash capital; whether it would have been better to have disposed of stock and bonds; whether it was right to assent to the sale by the company of a part of the bonds; — were all matters within the scope of the discretionary powers which Ease had agreed to intrust to Maltby. He cannot now question their exercise, except on the ground of a want of good faith, which is not and cannot be pretended. The fact that Maltby himself paid up in cash, as called in, to the cashier appointed by the parties, not only his proportion of the capital required, but that portion which Ease refused to pay, would of itself be conclusive of that question. Nor is there anything in the suggestion that the call of September 25th 1862 for five monthly instalments was premature and unauthorized. By the terms of the contract, the monthly instalments were to be due and payable at the same times as those from Robert Crane, under contract between said Caleb S. Maltby and him, dated April 10th 1862. It is evident that on the 25th of September 1862 there were then past due five instalments, dating from April 10th. Nor can it be supposed that the intention of the parties was that the money could be called for only in separate monthly instalments. The nature of the works precludes such an idea, and there is nothing in the language of the instruments which demands it. “ In instalments not exceeding 10 per cent, thereof monthly, as the same may be required.” The rate was fixed to be ten per cent, monthly, but the instalments were to be as the same might be called for by Maltby. These considerations dispose of the appeal of the complainants, which is accordingly dismissed.

The remaining question is raised by the appeal of Mr. Maltby. He was a partner of W. G. Case in a firm of Maltby & Case, iron-masters, who had made a verbal contract to supply all the iron necessary to fulfil the contract with the Reading and Columbia Railroad Company at $45 per ton. They did so during that year in which, by its terms, the road was to be completed. Mr. Maltby procured an extension of time, and then his partner, Mr. Case, refused to go on supplying the iron on the original terms, the depreciation of the currency having caused an advance in the meantime of the price of iron to $70 or $72 a ton, alleging that he was bound only for the year. Mr. Maltby consulted the other parties interested in the work, and with their approbation, except Mr. Kase, a new contract was made for the supply of' all the iron which might be needed until the road was finished at $64 a ton, which would be about equal in gold to the original sum stipulated. The master below reported that this new arrangement was made in entire good faith on the part of Mr. Maltby. The learned court below admit that if it had been made with a firm in which Mr. Maltby was not interested it would have been unimpeachable. But they thought that, inasmuch as he was a member of the firm, it could not be sustained. We conceive, however, that the master was perfectly right in the view which he took of the question. “ Does the fact that the contractor was at the same time buyer and a member of the selling firm, affect the question ? Only so far as it may require the clearer exhibition of good faith on his part. But in this, as in every other act of the defendant, no charge of bad faith is or can be imputed.” It is evident that Maltby personally made nothing by this new arrangement. His interest in the contract greatly preponderated over his interest in the firm, and we are now, as in the other questions in the cause, not to overlook the fact that Kase had agreed that Maltby was to make such sub-contracts and employ such parties as he might deem proper, and to have the same control over the execution of the work as if he had been the only party interested. Under such ample powers, the exercise of his discretion could only be questioned by his associates in the enterprise on the ground of bad faith. We think, therefore, that the court below erred in sustaining the 8th and 9th exceptions of the complainants to the master’s report, and in decreeing that Maltby should have credit for the iron furnished subsequent to the new contract only at the rate of $45 per ton.

Appeal of the complainants, John MeReynolds and Hugh W. MeReynolds, dismissed with costs.

Appeal of Caleb S. Maltby sustained, and decree reversed, and ordered that the records be remitted to the court below, that a final decree may then be entered in conformity with this opinion, the costs of this appeal to be allowed as a credit in the account with the appellee.