Plaintiff's decedent, Harry J. Daly, was the owner of the controlling interest in a company which operated two Maryland radio stations. In 1967 Daly entered into an agreement to sell his interest to Towson Radio, Inc., a corporation being formed by the defendants, Bright, Eisenhart, Hamilton, and Paisley. The price was $360,000 -- $160,000 in cash and $200,000 in the form of a note.
To obtain the capital required for their purchase, Bright, Eisenhart, Hamilton, and Paisley, arranged for a loan of $350,000 to Towson from the defendant, Fidelity Bank. This obligation was to be secured by the stock of Towson and the pledge of marketable securities worth $100,000. Moreover, repayment was guaranteed by these four defendants and further protected by the subordination of the $200,000 note which Towson gave to Daly. The marketable securities were furnished by the defendant, Pew, in return for an option to purchase Towson stock. Towson's agreement with Pew, which was also signed by Fidelity, provided that if the stock was required to repay the bank, Pew would be subrogated to the bank's rights against Bright, Eisenhart, Hamilton, and Paisley. The sale was finally completed in June, 1968, Daly accepting the note which was subordinated to the loan agreement between Towson and Fidelity. On March 9, 1969, Fidelity made a new loan of $100,000 to Towson. This loan is not senior to the Daly note. Towson defaulted and in October, 1969, Fidelity demanded payment in full and so notified the guarantors and Pew.
Eventually, Towson was sold for $825,000 with Fidelity acting as agent. After various adjustments not in issue, the sale proceeds only cover 66.02% of Towson's outstanding debts. At the time, Towson obligations to Fidelity, including interest, totalled $495,640.98. Of this amount, $380,809.03 was due on the first note and the remainder $114,831.95 was due on the second note. Towson owed Daly n1 $214,666.65 including interest. However, a proportionate reduction caused by insufficient proceeds resulted in the following amounts being available for payment:
For Daly $141,679.98
For Fidelity Bank
First Note ($350,000.) 251,410.12
Second Note ($100,000.) 75,812.05