Collateral Security Bank v. Fowler

• Decision Date: 03 June 1875
• Citation: Collateral Security Bank v. Fowler, 42 Md. 393 (Md. 1875)
• Parties: THE COLLATERAL SECURITY BANK v. ROBERT FOWLER, Trustee, use of ISAAC S. GEORGE, Assignee in Bankruptcy of ISAAC M. DENSON, &c.
• Court: Maryland Court of Appeals

42 Md. 393

THE COLLATERAL SECURITY BANK v. ROBERT FOWLER, Trustee, use of ISAAC S. GEORGE, Assignee in Bankruptcy of ISAAC M. DENSON, &c.

Court of Appeals of Maryland

June 3, 1875

APPEAL from the Circuit Court of Baltimore City.

The case is stated in the opinion of the Court.

The cause was argued before BARTOL, C.J., STEWART, BOWIE, GRASON ALVEY and ROBINSON, J.

Isidor Rayner and S. Teackle Wallis, for the appellant.

Sebastian Brown, for the appellee, Isaac S. George.

William A. Fisher, for the People's Gas Company of Baltimore.

BOWIE J., delivered the opinion of the Court.

The question presented by the present appeal is, whether an assignee in bankruptcy, can intervene by supplemental bill, in a cause, previously begun by a conventional trustee, in the Circuit Court of Baltimore City, to recover certain certificates of stock belonging to the debtor, and who was declared a bankrupt pending the suit, or the assignee must file an original bill, in the nature of a supplemental bill, to effect this object.

The leading facts developed by the record are as follows:

On the 11th of September, 1873, the late Robert Fowler, as assignee of Denson & Quincy of that city, filed in the Circuit Court of Baltimore, his bill of complaint, alleging that his assignors, being partners, as such, and as individuals, conveyed all their assets to the complainant, by a certain deed of trust, for the purposes therein mentioned.

That Denson held in his own right, two certificates of stock, in "The People's Gas Company," viz: one for fifty shares, numbered 2242, and another for fifty shares, numbered 2246, which (as the complainant charged,) had come to the possession of Benjamin F. Ullman, President of "The Collateral Security Bank," purporting to be assigned by Denson, but not in fact so assigned, or authorized by him to be assigned, and were presented by Ullman, "to The People's Gas Company," for cancellation, and renewal; and being so cancelled, two other certificates, of fifty shares each, were delivered by the People's Gas Company to the said Ullman, as President as aforesaid in lieu of the original certificates, and he still holds the same. It was further alleged, the original certificates were delivered to the bank by Quincy, without the authority or signature of Denson, or his assent, or ratification, and without consideration.

The bill further charged that the new certificates were void, and ought to be delivered up for cancellation, and others issued to the complainant, or in the name of "Isaac M. Denson," as of the original dates.

"The Gas Company," "The Collateral Security Bank" and "Isaac M. Denson," were made defendants, and the prayer for relief was, that the certificates issued to Ullman, as President, might be cancelled, and others issued to the complainant, or Denson, for the use of the complainant, and for other and further relief. ""The People's Gas Company" and "The Collateral Security Bank," filed answers denying the material allegations of the bill. Denson answered, admitting them and consenting to the decree, as prayed.

This case was afterwards by order of the complainant's solicitors, entered to the use of Isaac S. George, assignee of Denson & Quincy, and the cause being so entitled, on the 9th of May, 1874, there was filed in the Court, a paper entitled:

"The supplemental bill of Isaac S. George, assignee in bankruptcy of Isaac M. Denson, and also of Denson & Quincy, to whose use was entered the suit of Robert Fowler, trustee of Denson & Quincy against the said defendants now pending in said Court."

Annexed to this was an application in writing, for leave to file the same, and for an order requiring the defendants to answer, whereupon, the Court passed an order granting the leave and commanding the defendants to answer by a day certain.

This bill recapitulates the proceedings previously had under the original bill, recites substantially its allegations; the answers of the several defendants, are referred to, and made a part of the bill; and by way of supplement, it is alleged that since the filing of the original bill, Messrs. Denson & Quincy, were duly declared bankrupts, and the complainant appointed assignee of the firm, and of each of its members, and by virtue of an assignment, executed in pursuance of the Bankrupt Act, the property of the firm, as well as that of its several members, as individuals, was transferred to the complainant, assignee in bankruptcy.

Therefore it was proper the suit should be prosecuted in the name of the complainant and accordingly the same had been assigned to his use.

It further alleged, that Robert Fowler, had since departed this life intestate, and Messrs. John H. and David Fowler, were appointed his administrators, and praying process against them and the former defendants, prayed for the same relief as prayed for in the original bill, and such other and further relief as the Court might think he was in equity entitled to.

The Collateral Security Bank appeared by counsel, and demurred generally, concluding with the usual prayer, craving judgment whether they are compelled to answer.

The case being submitted on demurrer, the same was overruled, whence this appeal.

The appellant assigns no cause of exception to any particular allegation or averment of the bill, but relies solely on the objection that the cause cannot be continued by the complainant by a supplemental bill, but should have been renewed by an " original bill in the nature of a supplemental bill," there being no privity of title between the complainant in the original bill and the present complainant, the appellee.

The objection, if judged by the difference in the terms, would seem to be more nominal than real, but the rights of the parties in the two modes of proceeding being essentially different, the question involved is of much practical importance.

"The distinction, (says Daniel,) may at first sight appear artificial, but it is attended by a considerable difference in its practical results; for in those cases in which a supplemental bill only is filed, if there has been no decree, the suit may proceed after the supplemental bill has been filed, in the same manner as if the original plaintiff had continued such, except that the defendants must answer the supplemental bill, and either admit or put in issue the title of the new plaintiff; but in the case of an original bill in the nature of a supplemental bill, the whole case is open; 'a new defence may be made, the pleadings and depositions cannot be made use of in the same manner as if filed or taken in the same cause, and the decree, if any has been obtained, is no otherwise of advantage than as it may be an inducement to the Court to make a similar decree.' " 3 Danl. Ch. Prac., 1666, 1667.

In the case of a supplemental suit, the benefit of the original decree is given the new plaintiff, and he is entitled to stand in the place of the original plaintiff, and have the benefit of the proceedings on the original bill.

The same learned author says: "Notwithstanding this essential difference between the modes of proceeding and effect of 'a supplemental bill' and 'an original bill in the nature of a supplemental bill,' there does not seem to be any general rule deducible from the authority determining the cases in which the transmission of interest of the sole plaintiff renders the one or the other form of proceeding applicable." Ibid., 1667.

The rule, which seems according to the decisions sometimes almost arbitrary, varies according to different writers. The test as to the application of the rule in case of a sole plaintiff, would seem to be whether the change of interest in the subject-matter was such by deed or operation of law as to render the bill or proceedings only defective, or whether it was so entire as to abate the suit; in the first instance a supplemental bill only is necessary; in the second, an original bill in the nature of a supplemental bill is required.

"If any property or right in litigation vested in a plaintiff, is transmitted to another by deed or operation of law, the person to whom it is transmitted is entitled to supply the defects of the suit, if it become defective merely, and to continue it, or at least to have the benefit of it, if abated." * * * * "Supplemental bills are necessary, 1st, in respect of some defect in the original bill, or in some of the proceedings upon it: or, 2dly, In respect of new evidence discovered, or of some event occurring subsequent to the filing of the bill, which gives a new interest in the matter in dispute to a person who is not a party to the bill."

"Though a supplemental bill, properly so called, is a bill brought in respect of new matter...