Blankman v. Hospelhorn

• Decision Date: 13 December 1939
• Docket Number: 53.
• Citation: 9 A.2d 831,177 Md. 442
• Parties: BLANKMAN v. HOSPELHORN.
• Court: Maryland Court of Appeals

9 A.2d 831

177 Md. 442

BLANKMAN v. HOSPELHORN.

No. 53.

Court of Appeals of Maryland

December 13, 1939

Appeal from Superior Court of Baltimore City; Joseph N. Ulman Judge.

Suit by John D. Hospelhorn, receiver of the Baltimore Trust Company against Meyer Blankman to recover the amount of the defendant's statutory liability on 200 shares of stock of the trust company. From a judgment overruling a demurrer, the defendant appeals.

Judgment affirmed.

Edward L. Parlett and Lester H. Crowther, both of Baltimore, for appellant.

Alexander Armstrong, of Baltimore (Arthur W. Machen and J. Purdon Wright, both of Baltimore, on the brief), for appellee.

Argued before BOND, C.J., and OFFUTT, SLOAN, MITCHELL, SHEHAN, JOHNSON, and DELAPLAINE, JJ.

MITCHELL Judge.

This is an appeal by the defendant from a judgment of the Superior Court of Baltimore City in favor of the receiver of the Baltimore Trust Company for $2,420, representing the statutory liability on 200 shares of stock of said company. The suit was originally instituted in the Court of Common Pleas of Baltimore City, in which court a demurrer to the declaration was overruled. Thereafter, upon the suggestion of the defendant, the case was removed to the Superior Court and, a jury trial being waived, was submitted to that court.

It appears from the record that prior to the institution of the instant case the receiver brought suit in the Court of Common Pleas against the defendant in this case and a certain Wilmer P. Smith, based upon a statutory liability with respect to the same certificates of stock mentioned herein. The declaration in the former case sets forth the due appointment and qualification of the plaintiff as receiver of the Baltimore Trust Company in the Circuit Court No. 2 of Baltimore City, and the passage on November 13, 1935, of a decree of said court whereby the said receiver was clothed with full power and authority to liquidate all the assets of the said company at the time of his appointment, and to collect, under the direction of said court, the statutory liability of the stockholders; which liability, by the decree of said court, was assessed at the sum of $10 per share on all the capital stock of said company, the same being its par value; said assessment being adjudged by said court to be necessary to meet the statutory liability of stockholders to creditors, and the receiver being authorized and directed by said decree to collect from said stockholders severally, and to institute such proceedings as might be necessary in the premises; and thereupon alleges that on September 11, 1931, 200 shares of the stock of the Baltimore Trust Company were purchased for the account of the defendant Meyer Blankman by the brokerage firm of J. Harmanus Fisher & Sons; that at the time of said purchase the said shares of stock were registered in the name of the defendant Wilmer P Smith, said Wilmer P. Smith at that time being an employee of the said Fisher & Sons; that upon receipt of said shares of stock by the brokerage firm the same were delivered, placed and put into the possession of said Blankman, and were intended to become and did become the property of the latter defendant; that on the 4th day of March, 1933, the defendants Smith and Blankman were the holders and owners of said shares of stock, of the par value of $10 per share, and ever since had continued to hold and own the same.

To that declaration a demurrer was interposed by the defendant Meyer Blankman, the substantial issue raised by the demurrer being that the declaration was defective because of a misjoinder of the defendants Blankman and Smith. The trial court having sustained the demurrer, and the plaintiff having declined to amend the declaration, upon appeal the action of the lower court was affirmed; this court holding that the allegations of the declaration did not show any ground upon which there could be a joinder of the two defendants. Hospelhorn v. Blankman, 174 Md. 277, 198 A. 598.

Following that decision the receiver voluntarily dismissed the proceeding as to Smith; and thereupon the present suit was filed against Blankman alone, the allegations of the new declaration being substantially the same as those contained in the declaration filed in the former suit, with the amplification that on October 17, 1931, the defendant reimbursed Fisher & Sons for the purchase price paid by them for said stock, together with commissions on said purchase; that on said date Fisher & Sons delivered to the defendant two certificates representing the 200 shares of stock, the same being endorsed by Smith in blank; and that the defendant became and was the true owner of the stock and has so remained continuously, notwithstanding that the defendant never caused the same to be transferred on the books of the company from the name of Smith to his own.

Briefly, the grounds for the demurrer to the above declaration are as follows: (a) That it fails to allege any facts which give the plaintiff a cause of action against the defendant; (b) that it fails to allege an agency between Smith, the record or registered owner of the shares of stock, and the defendant; (c) that it fails to allege facts to show that the defendant had any interest in or ownership of the stock; (d) because it appears on the face of the declaration that the defendant is not the record or registered owner of the stock, and (e) that the subject matter in controversy is res judicata.

At the trial below the plaintiff offered testimony tending to support the allegations of the declaration. The defendant offered in evidence the record from the Court of Common Pleas and the record from the Court of Appeals in the previous case, contending that the questions involved in the case then on trial were res judicata by reason of the decision in the former case; and upon objection that these records failed to show a final decision upon the merits of the former controversy, the same were rejected. The defendant in the instant case offered no further evidence; and the exceptions bring before us for review the rulings of the court in (a) excluding the above evidence, and (b) rejecting the five prayers offered by the defendant.

Section 72 of Article 11 of the Maryland Code, under which the liability of the defendant is claimed, and which was in force at the time of the above mentioned purchase of stock, provides: 'Stockholders of every bank and trust company shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of every such corporation, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such stock. * * * and the liability of such stockholders shall be an asset of the corporation for the benefit ratably of all the depositors and creditors of any such corporation, if necessary to pay the debts of such corporation.'

It is urged by the appellant that under this section a suit to enforce the statutory liability against the stockholders of an involved bank or trust company can only be directed against registered stockholders, and for that reason the liability cannot be enforced against the appellant, because the stock which is the subject of this suit is registered on the books of the Baltimore Trust Company in the name of the said Wilmer P. Smith; and based upon this contention, the appellant submits that the trial court was in error in overruling his demurrer.

Due to an unprecedented economic crisis which reached its climax in this country in 1933, questions relating to the liability of stockholders in...