O'Ferrall v. De Luxe Sign Co.

• Decision Date: 11 March 1930
• Docket Number: 9.
• Parties: O'FERRALL ET AL. v. DE LUXE SIGN CO. ET AL.
• Court: Maryland Court of Appeals

149 A. 290

158 Md. 544

O'FERRALL ET AL. v. DE LUXE SIGN CO. ET AL.

No. 9.

Court of Appeals of Maryland

March 11, 1930

Appeal from Baltimore City Court; Robert F. Stanton, Judge.

Action by Alfred J. O'Ferrall, assignee of A. Gower Lawrence and another, against the De Luxe Sign Company and others. Judgment for defendants, and plaintiffs appeal.

Reversed and remanded.

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

J Morfit Mullen and Walter H. Buck, both of Baltimore, for appellants.

William D. Macmillan, of Baltimore (Semmes, Bowen & Semmes, of Baltimore, on the brief), for appellees.

URNER J.

In this action on the common counts, and on the alleged award of an arbitrator, the plaintiff seeks to recover the amount which he claims to have been owing to his assignor for financial and other services rendered in a sign business to which the corporate defendants succeeded and the liabilities of which the corporation and its codefendant organizers are supposed to have assumed. The assignor, who, for convenience, will be called the plaintiff, was connected with the business from September 1, 1926, to March 6, 1928. For a time he received stated weekly compensation, but this was changed to a commission of 10 per cent. on the funds provided by him for the financial needs of the business, which was conducted by a partnership composed of Wesley A. Grant and George J. Jolliffe, two of the defendants, trading as the De Luxe Sign Company. On March 6, 1928, the plaintiff was notified that his services would no longer be required in the business and that the amount due him on account of his advancements and commissions was to be ascertained as the basis of a settlement with him in view of his retirement and of the fact that a new financial interest was being enlisted in the enterprise. That interest consisted of financial and personal assistance provided by the defendant W. Brewer Joyce, who joined with Grant and Jolliffe in the incorporation of the business, on March 31, 1928, under the same name which the preexisting partnership had borne. In the interval between the 6th and 31st of March, an accountant employed by Mr. Joyce examined the books of the firm, for the period prior to March 6th and presented the results of his investigation at a meeting, on March 31st, at which Mr. Lawrence, the plaintiff, Mr. O'Ferrall, his attorney, Mr. Grant, Mr. Jolliffe, and Mr. Stockbridge, attorney for Mr. Joyce, were present. The statement submitted by the accountant relating to the period before March 6th, was supplemented by one which he and the plaintiff prepared, at the meeting, to cover the intervening time to March 31st. It is agreed that the account books of the firm were unsatisfactory, and the amounts reported at the meeting as being due the plaintiff were evidently regarded as tentative. The results of the conference were stated in a letter dated March 31st, from Mr. Stockbridge to Mr. O'Ferrall, materially as follows:

"On behalf of certain clients, I am writing you as attorney for A. Gower Lawrence, to confirm the transaction made by us today.

We have formed a corporation known as 'De Luxe Sign Company, Inc.,' and taken over the business heretofore conducted by Wesley A. Grant and George J. Jolliffe under the same name. Mr. Lawrence has assigned to this corporation all accounts receivable, and other claims he might have against the firm called 'De Luxe Sign Company.' He has also delivered to me for cancellation, notes of Grant and Jolliffe, which are all the notes obtained from them by him, aggregating approximately $1,700.00.

The corporation will pay to Mr. Lawrence the amount due to him by the firm, which consists of $2,015.19, representing the amount due, exclusive of commissions, on March 6th, 1928; the sum of $1,500.00 in settlement of all claims for commissions and compensation of any kind; a sum believed to be $391.73, representing the cash adjustment arising from transactions of the firm from March 6, 1928, to March 30, 1928. These sums, other than the commission item, are to be verified by the Corporation between this date and April 10th, 1928.

Of the amount so to be paid, $1,500.00 is paid today; balance to be paid by the Corporation on or before April 10th, 1928.

Mr. Lawrence is to sign and deliver to me the attached letter to the Baltimore Trust Company."

The attached letter to the Baltimore Trust Company, subsequently signed by the plaintiff, requested the trust company to give the bearer of the letter any desired information with respect to the plaintiff's checking and loan accounts as "agent"; his banking transactions for the firm having been carried on under that designation. By an assignment executed by the plaintiff individually, he transferred to the De Luxe Sign Company, Incorporated, all the accounts receivable of the firm which he held as collateral security for his advancements. In his capacity as "agent" he separately assigned to the corporation all accounts receivable at any time transferred to him by the firm, and all other claims which he might have against the De Luxe Sign Company, except in regard to his former interest in certain machinery.

The subsequent investigation of the plaintiff's accounts with the partnership led to the conclusion on his part that the amount due him was much more, and on the part of the defendants that it was considerably less, than the total of the figures stated in the letter of March 31st, from which we have quoted. There was apparently no effort on either side to complete the further examination of the accounts within the ten-day period specified in the letter. On April 17th the plaintiff received a check from the corporation for $1,300. About a month later Mr. O'Ferrall sent to Mr. Stockbridge an itemized statement prepared by the plaintiff, showing a balance due him of $2,430.34 after all prior payments had been credited. This was followed on May 24th by a letter from Mr. O'Ferrall transmitting to Mr. Stockbridge a statement showing an additional indebtedness of $683.11, which the plaintiff claimed to be due. On July 6th Mr. Stockbridge sent to Mr. O'Ferrall for the plaintiff a check of the De Luxe Sign Company for $231.77, which its accountant reported to be the balance due the plaintiff on account of the settlement; the plaintiff being allowed to accept and use the check without prejudice. That payment was $875.15 less than the amount which would have been owing to him at that time if the figures tentatively stated in the letter of March 31st had been correct. A dispute between the parties as to the amount rightfully payable to the plaintiff was the occasion of further discussion and correspondence, which continued for two months, and culminated on September 10th in a written agreement between the plaintiff and Messrs. Grant and Jolliffe that Mr. Wilmer E. Black, a certified accountant, should "make an inspection of the accounts" between the plaintiff and the De Luxe Sign Company, and that "all the parties to the transaction shall be finally concluded by Mr. Black's determination." It was stipulated that Mr. Black should "examine the accounts to be furnished by the undersigned and any vouchers or evidence as to any disputed items, and also the books of the Company, and any and all other books or sources of information that he may deem desirable." Mr. Black's son, Robert Black, also a certified accountant, was substituted for his father, as the arbitrator, by oral agreement of the parties on September 15th. The arbitrator proceeded with his investigation, and on February 28, 1929, submitted an oral report, which is the subject of controversy as to its purpose and effect. It is asserted by the plaintiff that the report was a decision in favor of the substantial correctness of his claim for a balance of $2,879.53, while the defendants contend that the arbitration was never completed and that it produced no final award.

The trial in the court below resulted in a verdict and judgment for the defendants, and the plaintiff has appealed. The main question presented by the exceptions in the record is whether the trial court properly ruled that the plaintiff's right of recovery was limited by the letter of March 31, 1928, and could not in any event exceed the unpaid but disputed balance of the amounts therein stated. That restriction was imposed by the granting of...