Calvert Bldg. & Const. Co. v. Winakur

• Decision Date: 20 February 1928
• Docket Number: 4,5.
• Parties: CALVERT BLDG. & CONST. CO. v. WINAKUR ET AL. WALDHAUSER v. WINAKUR ET AL.
• Court: Maryland Court of Appeals

141 A. 355

CALVERT BLDG. & CONST. CO. v. WINAKUR ET AL.

WALDHAUSER v. WINAKUR ET AL.

154 Md. 519

Nos. 4, 5.

Court of Appeals of Maryland

February 20, 1928

Rehearing Denied May 2, 1928.

Appeal from Circuit Court No. 2 of Baltimore City; Robert F Stanton, Judge.

"To be officially reported."

Suits between the Calvert Building & Construction Company and Eleazur Winakur and others, and between John Waldhauser trading as the Clover Dairy, and Eleazur Winakur and others. From the decree, Calvert Building & Construction Company and John Waldhauser, trading as the Clover Dairy, appeal. Affirmed in part, and reversed and remanded in part.

Argued before PATTISON, URNER, ADKINS, OFFUTT, DIGGES, PARKE, and SLOAN, JJ.

Richard S. Culbreth, of Baltimore, for appellant Calvert Building & Construction Co.

John R M. Staum, of Baltimore, for appellant Waldhauser.

Randolph Barton, Jr., and John Watson, Jr., both of Baltimore (Hiram J. Weiskopf, Louis Mitnick, and William R. Price, all of Baltimore, on the briefs), for appellees.

PARKE J.

There are two appeals on this record that present a controversy arising among a former landlord, a mortgagee of goods and chattels, and certain creditors over the proceeds of sale of this personalty which had been owned by one whose relation with each had been, respectively, that of tenant, mortgagor, or debtor. The landlord was the Calvert Building & Construction Company, appellant, which, on August 31, 1921, had leased unto Paul N. De Crette a portion of its premises to be used for a lunchroom and kitchen during a term of five years, beginning on October 1, 1921, at a yearly rental of $7,000, and of a sum to be ascertained by the quantity of electric current consumed on the premises demised at a fixed rate. The definite rental was to be paid in equal monthly payments in advance on the 1st day of every month during the term, and the indefinite rental, which was to be computed on the electric current used, was payable on or before the 10th day of every succeeding month of the demise. The tenant did not prosper, was in debt, fell in arrear with his rent, and in July, 1924, when his arrears of rent were $1,824.95, desired to be relieved of his obligations as tenant. At the landlord's request, the tenant submitted a list of his overdue accounts, and the landlord, in order to afford the tenant an opportunity to pay these debts, agreed to extend the time for the payment of the rent due and to become due until the 1st day of October, 1924, when such rent would aggregate the sum of $3,321.61, estimating the electric current to be consumed at $658.50, which was $121.70 in excess of the amount later found to have been used. The agreement was in writing, and was executed on July 15, 1924, by the landlord and tenant. In addition to the provision for the extension of time for the payment of the monthly installments of rent, the original lease was amended so as to contain the stipulation that:

"All fixtures, appliances, furniture and machinery installed by the lessee shall be the property of the lessor, provided, however, that if at the expiration of the lease by lapse of time or otherwise the rent shall have been paid in full and all the covenants of the lease shall have been performed, said property shall revert to and become the property of the lessee."

The extension of time did not enable the tenant to meet his obligations, and, the full amount of the rent to October 1, 1924, remaining unpaid, the landlord and tenant executed on September 30, 1924, a sealed instrument, which, omitting the formal beginning and ending, was of the following tenor:

"Whereas the said De Crette is indebted to the said corporation in the sum of thirty-three hundred and twenty-one ($3,321) dollars and sixty-one (61) cents for rent due under the lease from said corporation to him of the premises described therein as the basement story of the Calvert Building dated the thirty-first day of August, 1921, and under an agreement between the said parties dated the fifteenth day of July, 1924; and

Whereas the said De Crette desires to surrender said lease and to vacate said premises and to deliver the personal property therein and thereon to said corporation:

Now this agreement witnesseth that the said De Crette does hereby surrender said lease and vacate said premises and deliver said personal property to said corporation, and the said corporation hereby accepts the surrender of said lease, and discharges and releases the said De Crette from the payment of said sum of thirty-three hundred and twenty-one dollars and sixty-one cents."

The effect of this surrender and release was to end the relation of landlord and tenant and to put the corporation in full possession of the premises and of the personal property, but, in order that the former landlord might have the advantage of a going business in its effort to secure a new tenant, the appellant, as the owner of the premises, entered into a written agreement under seal with De Crette on October 1, 1924, whereby the owner employed De Crette on that date to conduct, as the agent of the corporate owner, the cafeteria business on the same premises. De Crette's compensation was to be a sum equal to the net profits of the business, and it was expressly provided that, in the ascertainment of such net profits, the business was not to be charged with the expense of either rent or light. De Crette was to render a weekly statement of the business, which was stated to be temporary in nature, and could be terminated at the option of either party by giving the other party notice of ten days in writing. The agreement further set forth that the corporation assumed "no liability for any debt which the said De Crette may have previously contracted in the cafeteria business previously conducted by him on said premises on his own account," but that these would be paid by De Crette with as little delay as possible.

The corporate owner was thereby enabled in the early part of November, 1924, to conclude its negotiations of about two months with prospective tenants, and to lease the premises to them for a term of five years from January 15, 1925, and to sell to the new tenants the chattels which it had obtained from De Crette for the sum of $4,000. On November 13, 1924, the corporation gave the prescribed written notice to De Crette, who elected to terminate his agency on November 15, 1924, and the cafeteria was closed on that day, and on November 17th the new lease was executed. After the execution of this lease, but on the same day, the corporation received a letter from H. J. Weiskopf, which was dated and mailed on Saturday, November 15th, notifying the corporation that he had that day been appointed by decree of the circuit court No. 2 of Baltimore city trustee to sell under mortgage foreclosure the chattels formerly owned by De Crette, but then in the possession of the corporation, and that, unless the mortgage indebtedness be paid on or before the 30th of November, 1924, the property would be advertised for sale. The proceedings referred to were to foreclose a mortgage on the chattels mentioned that had been given by De Crette on March 6, 1924, to Eleazur Winakur to secure a purporting indebtedness of $5,000. The principal amount was payable in 51 weekly installments of $75 each, and the residue of $1,175 at the expiration of 52 weeks from the date of the mortgage.

The mortgage contained a covenant of the mortgagor to pay to the landlord of the premises, where the chattels were located the monthly installment of rent by the third of every month. In case of default in the payment of the mortgage debt and of the rental, the mortgagor assented to the passage of a decree for the sale of the property mortgaged in accordance with the Acts of 1898, c. 123,§§ 720-732. This mortgage was duly executed and recorded within a day from its date, and, while this put the corporation on constructive notice, it did not have actual notice of this chattel mortgage until the receipt of the letter of the trustee on the early afternoon of November 17th. As soon as the corporation received the letter, it began negotiations with the trustee to whom the court had decreed the immediate surrender of the chattels, and obtained his consent to wait for 30 days from November 18th before proceeding further with the foreclosure proceedings. The chattels meanwhile remained in the possession of the corporation, which, on November 25th distrained the chattels for rent in arrear to November 1, 1924. This action created a situation where the chattels were at once claimed by the corporation under its distress for rent, and by the trustee for their sale under the foreclosure proceedings, and by the new tenants as purchasers from the corporation. Under these circumstances, it was agreed on November 27th that the corporation would indemnify the new tenants from loss, and that the chattels would be sold by the trustee, and the conflicting claims of the corporation and the mortgagee would be asserted against the proceeds of such sale. On December 13th the trustee reported the sale of the chattels to the corporation for $2,700. The sale was duly ratified on January 10, 1925, after it had been objected to on the ground of inadequacy of price, and the account of the auditor distributed the sum of $2,300 to the mortgagee in full payment of his mortgage claim, and the residue of the net proceeds of sale, amounting to $224, was distributed to the Calvert Building & Construction Company of Baltimore city. The latter excepted to the ratification of the auditor's account on the ground that the entire net proceeds of $2,524 should have been distributed to it as rent in arrear. De Crette and J. L. Appleby & Co., a judgment creditor, excepted to the...