Campbell v. Burnett

• Decision Date: 08 April 1913
• Parties: CAMPBELL et al. v. BURNETT et al.
• Court: Maryland Court of Appeals

87 A. 894

120 Md. 214

CAMPBELL et al. v. BURNETT et al.

Court of Appeals of Maryland

April 8, 1913

Appeal from Circuit Court of Baltimore City; Carroll T. Bond, Judge.

Bill in equity by Clara Campbell and another against Paul M. Burnett and another, receivers, and others. From a decree sustaining a demurrer to the bill and dismissing the bill, complainants appeal. Reversed and remanded.

Argued before BOYD, C.J., and BRISCOE, THOMAS, PATTISON, URNER, and CONSTABLE, JJ.

David Ash and Charles J. Wiener, both of Baltimore, for appellants.

C Baker Clotworthy, of Baltimore, for appellees.

PATTISON J.

The appellants, plaintiffs below, filed their bill in the circuit court for Baltimore city against the appellees, in which the facts alleged are substantially as follows:

Clara Campbell, one of the plaintiffs, in the year 1899, loaned unto her husband, J. Vernon Campbell, diamonds and jewelry belonging to her of the value of about $2,000, to be used by him as collateral security in obtaining a loan of that amount. Subsequently the loan was obtained from one Edward J Codd, individually, who at such time was conducting a business under the firm name of E. J. Codd & Co. and to him the jewelry was accordingly delivered to secure the payment of said loan. Thereafter Campbell made payments on said indebtedness from time to time, when in 1906 the amount owing upon the loan had been reduced to the sum of $1,087.65. In or before the year last named, the E. J. Codd Company was or had been incorporated, and the greater part of its stock was held and owned by the said Edward J. Codd, who was "practically the sole proprietor" of said company. At this time J. Vernon Campbell, the owner of certain patent rights purchased by him at the dissolution of the firm of Campbell-Zell Company, of which he had been the president "entered into an agreement with the said E. J. Codd Company, whereby the said J. Vernon Campbell turned over to and employed the said E. J. Codd Company to do the repair work upon Camphell-Zell boilers, as orders for the same might be received from time to time from the users of said boilers, which had been manufactured by the said Campbell-Zell Company under letters patent" aforesaid. And pursuant to this agreement the said J. Vernon Campbell turned over to the said E. J. Codd Company "all his drawings, price lists, list of users, and other valuable data and information relating to said repair business, with the understanding and upon the express agreement with the said E. J. Codd Company that, after the deduction of the actual cost of labor and material used in making such repairs, the balance of the prices and charges obtained for the same should be equally divided between the said E. J. Codd Company and the said J. Vernon Campbell, and that the portion or share of the profits thus arising and belonging to him, the said J. Vernon Campbell, should be paid over to the said Edward J. Codd during his lifetime, and after his death to his executors aforesaid, to be credited and paid on account of the aforesaid loan and the interest thereon, until such time as the said payments should have fully satisfied and paid the same; and that thereupon the collateral security aforesaid should be released from said debt and returned to the complainant, Clara Campbell, and that then and thenceforth the said profits, so far as they belong to the said J. Vernon Campbell, should be paid to him or to his assigns in cash."

The repair business during the existence of the said Campbell-Zell Company was large and lucrative, and continued so when thereafter conducted by J. Vernon Campbell individually, yielding to him, as the bill alleges, an annual net profit of from $4,000 to $6,000. Thereafter, during the year 1906, J. Vernon Campbell assigned all his right, title, and interest in the agreement to Carroll F. Campbell, one of the plaintiffs, notice of which assignment was at the time given to the company "and accepted by it," and the agreement continued and remained in full force and effect between the company and the assignee.

In 1908 Edward J. Codd died, and William C. Codd and Frank L. Mohler, his executors, conveyed and assigned the debt owing to him by Campbell unto the said company. But upon Campbell's protesting against the delivery of the jewelry to the company, it was agreed that the same should be held by Mohler, one of the executors, until such time as the share of the profits accruing, as aforesaid, to Campbell or his assignee should be sufficient to pay off said debt in full, with interest thereon, whereupon the jewelry was to be returned to Clara Campbell, and all subsequently earned profits were to be accounted for and turned over to Clara F. Campbell in cash. In 1910 Paul M. Burnett and Wm. H. Buck were appointed receivers for said company, who continued the business of said company, and in doing so, continued the repair work in pursuance of the alleged agreement.

The bill then charges that it is shown by a partial and superficial examination of the books of the company that the profits to which Carroll F. Campbell, assignee, is entitled under the agreement aforesaid are more than sufficient to liquidate said indebtedness in full, and that the surplus, amounting to more than $1,200, is owing unto the assignee, and that Clara Campbell is entitled to have the jewelry returned to her. "On the contrary, the E. J. Codd Company and its receivers pretend that there remains due to it and to them, on account of said loan, a balance of several hundred dollars," although neither the said company nor its receivers have ever rendered "a full and fair accounting of the business aforesaid," or of its profits to which the said J. Vernon Campbell or his assignee, Carroll F. Campbell, or either of them, are entitled.

The bill also alleges that exorbitant and improper charges, not warranted by said agreement, appearing upon the books of the company as overhead charges, amounting to $366 per annum, for upwards of four years, when in each of said years the total net profits credited to the plaintiff did not exceed the sum of $110, have been made against the profits to which the assignee is entitled, in violation of the express understanding between the original parties to the agreement. These charges, it seems, were not made until after the expiration of the first year, and were then made without the knowledge and consent of the said J. Vernon Campbell or either of the plaintiffs, although claimed by the defendant receivers to have been properly made under the agreement.

The bill then prays: First. For the appointment of a receiver to "take over and hold the jewelry" mentioned in the bill pending these proceedings. Second. That Burnett and Buck, receivers of the E. J. Codd Company, be required to render to the plaintiffs a full, accurate, detailed, and true account of the work done under the agreement aforesaid from the date of the agreement in July, 1906, to and including the date on which the receivers sold the plant and property of the company, etc., "setting forth in detail therein: First, the prices charged for such repairs; second, the actual cost of the labor required thereon; and, third, the actual cost of the material used thereon, and all the sums and amounts credited from time to time on the aforesaid debt due Edward J. Codd by J. Vernon Campbell and the interest calculated upon said debt." Third. "That if said accounting shall show the liquidation and payment in full of said debt and interest, the said jewelry may be decreed to be surrendered to the complainant Clara Campbell." Fourth. "And also that if it shall appear therefrom that a balance over and above the payment of said debt and interest is due on account of and by reason of said profits, a decree may be passed directing the receivers aforesaid to pay the same to the said Carroll F. Campbell out of any funds of said E. J. Codd Company remaining and being in their hands." Fifth. For general relief. To this bill the executors of Edward J. Codd filed their answer, in which they admit that the jewelry pledged by J. Vernon Campbell to E. J. Codd, in his lifetime, as collateral security for the loan mentioned in the bill, has come into their possession as executors. In it, however, they allege they have no interest, but have been unable, with safety to themselves, to surrender it because of the claims of both the plaintiffs and the receivers. In their answer they "tender themselves ready and willing to surrender said jewelry to any person whom this court may designate."

Burnett and Buck, the receivers of the E. J. Codd Company, demurred to the bill: "First, because more than three years have elapsed since the transactions complained of in the years 1906, 1907, and 1908; second, that the alleged agreement of July, 1906, sought to be described in the bill of complaint, was not to be performed within a year, and was not in writing, and therefore of no effect under the statute of frauds; third, that the plaintiffs have not stated in their bill such a case as entitles them to any relief in equity as against these defendants." The court below sustained the demurrer and dismissed the bill. It is from the order of court sustaining the demurrer and dismissing the bill that this appeal is taken.

We will consider the grounds of the demurrer in their reverse order.

1. It is to the last of the objections in support of the demurrer that the appellees devote most of their brief, and take the position, as expressed therein, that "the bill in effect asks the court to enforce the agreement or understanding of 1906 by decreeing that the E. J. Codd Company had no right under the agreement, to make the overhead charges as part of the expense account for the repair work on the Campbell-Zell...