David Reus Permanent Loan & Savings Co. v. Conrad
| Decision Date | 17 May 1905 |
| Citation | 60 A. 737,101 Md. 224 |
| Parties | DAVID REUS PERMANENT LOAN & SAVINGS CO. OF BALTIMORE CITY v. CONRAD. |
| Court | Maryland Court of Appeals |
Appeal from Circuit Court of Baltimore City; J. Upshur Dennis Judge.
Action by the David Reus Permanent Loan & Savings Company of Baltimore City against J. Fred. Conrad, Jr., administrator with the will annexed of Peter T. Miller, deceased. From a judgment for defendant, plaintiff appeals. Affirmed.
Argued before McSHERRY, C.J., and FOWLER, BRISCOE, PEARCE SCHMUCKER, and JONES, JJ.
Harry M. Benzinger and Thomas Mackenzie, for appellant.
J Fred. Conrad, Jr., and W. Frank Tucker, for appellee.
The appellant in this case is a corporation of the class known as building or homestead associations, organized under the general incorporation law for the purpose, as expressed in its articles of incorporation in evidence, of "advancing money for the purchase of houses and lands and for the improvement of premises, dwelling houses," etc "and also to advance money on approved security by mortgage to members or others." The charter bears date the 13th of February, 1872, and provides for the management of the affairs of the corporation by a board of nine directors. Peter T. Miller was one of the incorporators, and subsequently became one of the directors and the president of the board. He was the original defendant in the case below but, having died during its pendency, his administrator became the party defendant below, and is the appellee here. The case originated in a bill in equity filed on the 10th of January, 1903, in the circuit court of Baltimore City by the appellant against the said Miller to obtain from him an account of, and payment over to the appellant of, certain moneys, which it was alleged had been intrusted to him for investment, and which had been lost to the appellant by reason of his acceptance as security for the same of a mortgage upon property, the title to which he knew to be defective. The bill is voluminous, but the material averments may be briefly stated. After alleging that the duties of the president of the appellant consisted of "a general superintendence and control over all the affairs of the corporation, the execution of all orders of the board of directors which may be committed to him and the carrying into effect all measures which the board of directors may adopt in the management of the affairs of said corporation," and that Peter Miller was elected president of the corporation, the bill states that in the year 1881 one Mrs. Osborne applied to the appellant for a loan of $1,000, and offered as security for the loan of said amount a mortgage on certain leasehold property held by her, and situated on McMechen street, in the city of Baltimore; that after an investigation by the appellant, through a committee, as to the sufficiency of the security offered, it was decided to make the loan subject to final approval and the passing of the title to said property by the appellant's solicitor; that it subsequently developed that in the year 1879 Mrs. Osborne had mortgaged the property, which she offered to the appellant as security for the loan applied for, to the Monumental Fire Insurance Company of Baltimore, to secure a loan to her by that corporation of $3,200; that this mortgage had been paid off with the proceeds of property which her husband had conveyed in fraud of creditors; that at the time of the application to the appellant for the loan of the $1,000 there was pending a suit brought by certain creditors of her husband, who was then deceased, having for its object, among other things, the sale of the said McMechen street property "to satisfy the equitable lien" of the suing creditors; that the solicitor of the appellant, in investigating the title to the said McMechen street property, discovered the pendency of the said creditors' suit, and, being unwilling to pass or approve the title of said property, so reported to the defendant Peter T. Miller, as was the uniform custom and practice in such matters, stating to said Miller that he would decline to pass or approve the title; that the said Miller, "who had previously been trusted with the money to effect the said loan, as was the custom and practice in such cases, thereupon took upon himself, without the knowledge or consent of the plaintiff (appellant), the responsibility of consummating said loan of $1,000, and paying the money to said Mrs. Osborne, and accepting her mortgage therefor as security, and placed the same on record," and received therefor his fee of $1.50, as provided in appellant's bylaws; that in the year 1884 the said Mrs. Osborne applied for a further loan of $300 upon the same property as security, and, upon investigation of the title thereto by the then solicitor for the appellant, it was found that the said creditors' suit was still pending; that the said solicitor reported this to the said Peter T. Miller, "and declined to pass the title," but the said Miller accepted the said property as security, and made the loan applied for, placed the mortgage on record, and received his fee of $1.50 for his services; "that it was the uniform practice and custom of long sanction by the board of directors for the solicitor to make his report in the matter of examination of titles to property offered for mortgage security to the president of the board, and not to the board of directors or to the meetings thereof," and that the defendant Miller never reported the fact to the board of directors, nor to any of them, that the title to the property thus offered as security for the loan authorized by the board of directors had been "found defective or had been turned down by the respective solicitors, nor that the equity proceeding" in the said creditors' suit "was hanging as a lis pendens over said property." It is then charged "that by management, by maneuvering, by trickery, and with artifice and fraud, the defendant Miller concealed from and kept the said body corporate (appellant), and the board of directors thereof, and the members thereof, ignorant of the true and actual state of facts and circumstances under which the said loans were made to Alice Osborne, and the said two sums of one thousand and three hundred dollars, respectively, paid to her, and especially that the title to said property had not been approved first by the said corporation solicitor, Abraham Sharp, Esq., and afterwards by Frederick Leist, its succeeding solicitor, but had been actually rejected by them." The bill further alleges that, default having been made by Mrs. Osborne in the mortgages given to secure the loans to her, the same were foreclosed, and the appellant became the purchaser of the mortgaged property, and was afterwards made a party to the pending creditors' suit, wherein it was finally decided and decreed that the said property was liable to the creditors of the husband of the said Mrs. Osborne for moneys appropriated by her, which property belonged...
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