Berg v. Plitt

Citation12 A.2d 609,178 Md. 155
Decision Date18 April 1940
Docket Number18,19.
PartiesBERG v. PLITT. SAME v. H. KLAFF & CO., Inc.
CourtCourt of Appeals of Maryland

Reargument Denied May 22, 1940.

See 13 A.2d 364.

Appeals from Baltimore City Court; Samuel K. Dennis, Judge.

Actions by Clarence M. Plitt, assignee of Joseph Brenner and another individually and as copartners, trading as Joseph Brenner & Son, and by H. Klaff & Co., Incorporated, against Samuel J Berg, individually and trading as Berg Brothers Company, to recover money paid to defendant under a contract which defendant failed to perform. From judgments for plaintiffs defendant appeals.


Daniel S. Sullivan, Jr., and Randolph Barton, Jr., both of Baltimore (Sidney B. Needle, of Baltimore, on the brief), for appellant.

Edward L. Ward, of Baltimore (Emanuel Gorfine and Irvin Davision, both of Baltimore, on the brief), for appellees.


OFFUTT, Judge.

The trustee in bankruptcy of the Geiser Manufacturing Company gave notice by advertisement that the assets of the bankrupt including real and personal property would be sold at public auction on the premises at Waynesboro, Pennsylvania, on July 7th, 1938. Learning of the sale, a group of junk and scrap iron dealers formed a pool and agreed themselves that one member of the pool should bid on the personal property, that if he succeeded in buying it he would them offer his bargain at a private auction limited to members of the group, and that if at that auction the bargain were sold at a higher price than that bid at the public auction the excess would be divided equally among the group.

Among the members of the group were Samuel J. Berg, the appellant in this case, Joseph and Nathan Brenner, trading as Joseph Brenner & Son, Clarence Plitt, H. Klaff & Co., Incorporated, and Max Bailis, representing Max Bailis & Sons. Bailis at the public auction bought the machinery and personal property of the bankrupt exclusive of 'inventory and repair parts' for $40,300 and the trustee so reported the sale. After the sale the members of the group met in a hotel in Waynesboro and the right which Bailis had secured of taking the property at $40,300, which for convenience is referred to as the bargain, was offered for sale to any member of the group who might bid for it.

Samuel J. Berg, trading as Berg Brothers Company, acting for himself, for Joseph Brenner & Son, and for H. Klaff & Co., Incorporated, was the highest bidder at $3,300, and the bargain was sold to him for that price. Under an agreement between them Berg, Klaff & Co., and Brenner & Son each had a one-third interest in the bargain, and the Brenners and the Klaff Company each paid to Berg $2,000 to reimburse him for a cash deposit of $6,045 which he had paid to the trustee, and to Klaff & Co. which acted as treasurer for the pool, the Brenners and Berg each paid $1,100 which was one third of the amount bid at the private auction for the bargain. Subsequently the Brenners assigned their one third interest in the bargain to Clarence M. Plitt.

Through various mesne proceedings Berg, with the consent of the trustee, was substituted for Max Bailis as purchaser of the bankrupt's property.

Exceptions to the sale were overruled and the sale to Berg as substituted purchaser finally ratified and confirmed, whereupon the trustee demanded that Berg complete the transaction by paying the balance of the purchase money and taking title to the property.

After some delay the trustee peremptorily set the office of the bankrupt at Waynesboro and January 31st 1939, as the place and time for final settlement and so notified Berg, the substituted purchaser, and he in turn notified Plitt and Klaff, and instructed them each to be present 'prepared with certified check'. Berg then telegraphed the trustee that he would be present to discuss matters preliminary to final action. At the place and time appointed Berg, Klaff, Louis M. Silberstein, attorney for Berg, Klaff and Plitt, the trustee, and Sidney B. Needle, an attorney representing Berg, were all present. The trustee tendered Berg a paper purporting to be a bill of sale for the property sold to him by the trustee, and demanded the balance due on the sale. Berg refused to complete the purchase, and thereafter the court ordered that the deposit be retained by the trustee as liquidated damages, and the property resold.

In connection with the litigation growing out of the exceptions to the trustee's sale, Plitt and Klaff deemed it expedient to employ an attorney to aid in securing a ratification of the sale to Berg, and they employed Louis M. Silberstein. Silberstein said that he was also employed by Berg, but Berg denied that, and it is undisputed that while Plitt and Klaff each paid one third of his fee Berg has paid him nothing.

After Berg had finally refused to complete his purchase at the bankrupt's sale, Plitt and Klaff and Co., Incorporated, brought these actions to recover from him the $2,000 and the $1,100 respectively which each of them had paid to him to reimburse him for the money which he had advanced for each of them for the cash deposit, and for the price paid to Klaff as treasurer for the pool for the purchase of Berg's interest in the bargain.

The trial of the case resulted in a verdict and judgment for the plaintiff in each case, for $3,516.67 in Plitt's case, and $3,379.17 in Klaff & Co.'s case, and from those judgments these appeals were taken.

The judgment in the Plitt case included the $2,000, the $1,100 and one third of the attorney's fee, $416,67, and that in the Klaff case the same three items less $137.50 being the proportionate share of each member of the pool in the $3,300 bonus which Klaff & Co. held as treasurer for the pool.

The record in each case submits fourteen exceptions, of which thirteen relate to questions of evidence and one to the rulings on the prayers.

Comprehension of the significance of these exceptions may be aided by a brief statement of the conflicting theories of the parties as to their respective rights under the several transactions from which these actions arise.

The plaintiffs contend that they and Berg, the appellant, entered into a valid agreement under which Berg bought from Brenner & Son the bankrupt's property for the joint account of all three, that each was to pay one third of the purchase price which Bailis & Sons had bid for it, and one third of the bonus which Berg had paid for the bargain, that they each paid Berg one third of the cash deposit required of him by the trustee, one third of the bonus which he had paid to the pool, and one third of the fees charged by the lawyer for his services rendered in opposing exceptions to the sale, that Berg as the substituted purchaser was alone authorized to complete the sale to him, that he wrongfully and without any valid excuse refused to complete, and that in consequence it was vacated, that thereupon he became obliged to restore to them the money which they had paid him in reliance upon his undertaking to complete the sale, and to reimburse them for money paid for legal services in procuring the ratification of the sale to him.

The defendant on the other hand contends that the agreement between members of the pool that the bankrupt's property was to be bid in by one member for the account of the others tended to suppress bidding at the sale, was against public policy and void, and that any contract based on rights derived from that agreement fell with it, but that apart from that that Berg did not wilfully or wrongfully refuse to complete the sale, that the bill of sale tendered him by the trustee was for less goods than he bought, and that he was justified in refusing to accept it, since he was under no obligation to go ahead with the sale and pay the balance of the purchase price unless and until the trustee tendered him a bill of sale for all the property which he bought, and he also contended that as he did not employ the lawyer he was not obliged to pay him.

The first six exceptions relate to the admission in evidence of testimony tending to prove that Berg had joined Plitt and Klaff in employing Silberstein as an attorney to represent them in defending the sale to Berg, that Plitt and Klaff each paid him one third of his fee of $1,250, but that Berg had paid him nothing. These exceptions were not argued in this court, in the absence of any damage prayer are unimportant and will be treated as abandoned. Rules of the Court of Appeals, Rule 37, sub-section 4.

In the course of the examination of Louis M. Silberstein, a witness for the plaintiffs, he referred to the meeting at the bankrupt's office in Waynesboro on January 31st 1939, and said that a discussion occurred there which 'consumed * * * practically the whole afternoon.' He was then asked on cross examination, 'There was a lot of discussion there amongst the buyers as to what they had gotten and had not?' An objection to that question was sustained. That ruling appears to be free from error. The so called question embodied in the seventh exception was in form a statement of fact and not a question at all. But apart from that there is nothing in the statement to indicate that it referred to any transaction in which any party to these cases was interested.

The eighth and ninth exceptions refer to the action of the court in admitting in evidence an order of the United States District Court of the Middle District of Pennsylvania directing the trustee to retain as liquidated damages the sum of $6,045 paid by Berg to him as a cash deposit on account of the sale. The order was unquestionably relevant to the issues in the case, and while it does not appear that the exhibit was properly...

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