Gaither v. Stockbridge

• Decision Date: 23 June 1887
• Citation: 10 A. 309,67 Md. 222
• Parties: GAITHER v. STOCKBRIDGE, RECEIVER.
• Court: Maryland Court of Appeals

10 A. 309

67 Md. 222

GAITHER v. STOCKBRIDGE, RECEIVER.

Court of Appeals of Maryland

June 23, 1887

For majority opinion, see 9 A. 632.

BRYAN J., (dissenting.)

I shall consider the questions which are discussed in the opinion of the majority of the court. My meaning will be made clearer by a statement of the material facts of the case. The Bank of Monroe filed a general creditors' bill against the Duffy Malt Whiskey Company of Baltimore City, a body corporate and politic. The bill alleged that the defendant was utterly insolvent, and prayed that a receiver might be appointed to take charge of its assets, and wind up its business, and make distribution among its creditors, under the order and direction of the court. It also prayed for an injunction; and also that the affairs of the corporation might be closed up under the direction of the court. On the twelfth of November, 1886, the court appointed Henry Stockbridge, Esq., receiver, with the power and authority to take charge and possession of the goods, wares, and merchandise, books, papers, and effects of or belonging to the defendant, and to collect the outstanding debts due to the defendant; and the defendant was required to yield up and deliver to the receiver its goods, wares merchandise, books, papers, and effects. The court also ordered an injunction, according to the prayer of the bill which was to this effect: that the officers, agents employes, and attorneys of said body corporate, and each of them, should, by the order of the court, be enjoined and restrained from the further prosecution or conduct of the business of the Duffy Malt Whiskey Company, or interference in any form therein. The defendant had leased from Thomas H. Gaither a warehouse in the city of Baltimore, for the term of five years, commencing on the first day of December, 1885, and was possessed of the unexpired portion of this term at the time the receiver was appointed. By leave of the court, Gaither became a party complainant in the cause. There were certain proceedings in reference to this lease which do not concern the present question, and need not therefore be stated; it being my purpose to mention only the matters which bear on this controversy.

On the twentieth of November, 1886, the receiver filed a petition in which he stated that there was in his hands a considerable quantity of goods in the warehouse which had been the place of business of the Duffy Malt Whiskey Company, and that their preservation and protection in said place was attended with great inconvenience and expense, and that he had advertised them for sale on the premises on the twenty-second day of November, and he prayed for an order authorizing the sale according to the advertisement. The court passed the order, and the sale was made. On the first day of December, Gaither filed a petition praying that the quarterly installment of rent which fell due on that day should be paid to him out of the proceeds of the sale of the goods. On the same day the receiver filed a petition, in which he stated that after his appointment the defendant delivered to him the keys and possession of the warehouse, and that he had disposed of the assets of the defendant contained in said warehouse; and that after the sale, to-wit, on the twenty-ninth day of November, and again on the thirtieth of the month, he had tendered to the solicitor of the lessor the keys and possession of the warehouse; but that he declined to receive them. He therefore prayed the court to pass an order authorizing him to deposit the keys in court, subject to the order of the lessor, or to the direction of the court. The order was passed by the court. The possession of the receiver spoken of in his petition is shown by the evidence to have been of this kind; he received from the defendant a key of the warehouse, and placed a watchman in charge of the goods, who remained on the premises until the sale, and, with the assistance of another person, who was also employed by the receiver, arranged them for sale. The sale was made on the twentieth day of November, in the warehouse, where the goods had remained ever since the appointment of the receiver. The keys of the warehouse, and the control of it, were retained by the receiver until the twenty-ninth day of the month. On that day the keys and possession of the warehouse were, as stated in the receiver's petition, tendered to the solicitor of the landlord, and were by him refused. The court refused to order the payment of the rent, and dismissed the landlord's petition. This appeal is from the court's order It will be seen that the court ousted the defendant from the possession and control of all its property, and assumed the administration of it for the benefit of the creditors of the insolvent corporation. The receiver was the chosen officer of the court to execute its orders. By these orders the goods and chattels of the defendant were sold, and the leasehold property was occupied for the purpose of keeping and preserving the goods and chattels, and was used as a place of sale. This use and occupation of the premises continued from the twelfth of November until the twenty-ninth of the same month. The same entire and absolute dominion was exerted over both species of property; and the amotion of the defendant's possession, and the deprivation of his title, was complete in both instances. All the property was in the control and custody of the court, to be dealt with and disposed of according to the requirements of the law. In the distribution of the funds arising from this property, most certainly the court would be obliged to respect and maintain the rights of the claimants as they existed under the law. It is therefore of great importance to ascertain the legal effect and consequences of the action of the receiver in entering upon, using, and occupying the leasehold property. The court, having power to take possession of this property, or abstain from any interference with it, elects to use it in the manner already mentioned. Do any rights arise from such a transaction in favor of the landlord? This court has not left in doubt its opinion on the question.

In the opinion in Horwitz v. Davis, 16 Md. 313, we find this passage: "A majority of the court concur in the judgment pronounced in Dorrance v. Jones, and refer to and adopt the reasoning and authorities on which it is based." It is well to look at this case, which was so emphatically approved. One Jones, in November, 1853, demised a certain storehouse to King, for the term of a year; and on the fourth day of February, 1854, King made an assignment of all his property to Dorrance for the benefit of creditors. Dorrance went into the store to take possession of the stock of goods belonging to King, and to dispose of the same. He sold most of the goods on the premises by auction, on the tenth of February. Before the thirteenth of February he tendered the key of the store to the landlord's agent, who refused to receive it. He made no further use of the store, which remained unoccupied until the expiration of the term. The question in the case was whether Dorrance was liable for the payment of the rent. The court said: "The assignment in this case was a general one, for the benefit of creditors, and conveyed to the assignee all property whatsoever of the assignor. It was accepted by the assignee; and although, under these circumstances merely, he may not have been bound as the assignee of the lease, he was certainly so bound, if he elected to accept the interest of the assignor, and to enter under it. Carter v. Hammett, 12 Barb. 253; Bourdillon v. Dalton, 1 Esp. 233; Copeland v. Stephens, 1 Barn. & Ald. 593. Conceding that the acceptance of the assignment would not be sufficient, the only question is whether taking possession of the store, for the purpose of selling the goods assigned, and actually selling them therein, amounted in law to such acceptance. In Welch v. Myers, 4 Camp. 368, it was held by Lord ELLENBOROUGH that the allowing of the bankrupt's cows to remain on the farm for two days, and ordering them to be milked there, was an adoption of the demise, so as to make the assignees the tenants of the lessor. In Clark v. Hume, Ryan & M. 207, ABBOTT, C.J., held that the assignee elected to accept the lease by using the premises for the benefit of the creditors. These cases establish the position that taking possession of the leasehold estate, and holding it for the benefit of the creditors, though forever so short a time, by virtue of the assignment, is the true test. We do not mean to say by this that, if the assignee entered only for the purpose of obtaining possession of the goods, it would be an acceptance; for that would in no just sense be taking possession of the premises. But certainly, if the assignee took possession of the store in order to use it, as the evidence shows it was used, as a place to sell the goods, it falls directly within the principle of the cases we have cited; and, if that was the object, it is entirely immaterial how long the possession was retained, as, when once the election was made, the assignee could not recede from it. Hanson v. Stevenson, 1 Barn. & Ald. 305." Dorrance v. Jones, 27 Ala. 630.

After this exposition of the law, which has been declared by this court to be correct in point of reasoning and authority, it would be useless to make citations from decided cases. But it may be said that this doctrine is fully sustained by the decisions.

Lord LYNDHURST in Ansell v. Robson, 2 Cromp. & J. 609,...