First Nat. Bank of Baltimore v. Lindenstruth

• Decision Date: 14 March 1894
• Citation: 79 Md. 136,28 A. 807
• Parties: FIRST NAT. BANK OF BALTIMORE v. LINDENSTRUTH et al.
• Court: Maryland Court of Appeals

28 A. 807

79 Md. 136

FIRST NAT. BANK OF BALTIMORE

v. LINDENSTRUTH et al.

Court of Appeals of Maryland.

March 14, 1894.

Appeal from circuit court of Baltimore city.

Bill by the First National Bank of Baltimore against August M. Lindenstruth and another for the appointment of a receiver for property alleged to have been conveyed by defendant Lindenstruth to his codefendant in fraud of creditors, and asking that the property be sold and distributed under the direction of court From a judgment for defendants, plaintiff appeals. Affirmed.

Argued before ROBINSON, C. J., and BRYAN, BRISCOE, McSHERRY, FOWLER, ROBERTS, PAGE, and BOYD, JJ.

J. Alex. Preston and Alex. Preston, for appellant.

Peter J. Campbell, C. D. McFarland, and Thos. C. Weeks, for appellees.

McSHERRY, J. On August 20, 1890, Lindenstruth borrowed $5,500 in cash from the George Bauernschmidt Brewing Company, of Baltimore, and at the same time, and to secure the repayment of the loan, executed and delivered to the lender a mortgage conveying both real and personal property, and likewise all of the mortgagor's "stock in trade, such as whiskies, brandies, wines, liquors of any sort and description." Among other things, the mortgage contained the following provision: "And it is hereby expressly understood that all stock and goods hereby granted shall be held liable for the said sum of five thousand five hundred dollars, and the interest thereon, until paid, and that all stock of goods replaced after the sale of any or all of the stock, goods, merchandise, and other property hereby granted shall be substituted for those hereby granted and the debt hereby secured shall be a lien upon all of said stock or goods now on hand, or substituted for the stock, goods, and other property granted." In November, 1892, the First National Bank of Baltimore obtained a judgment against Lindenstruth upon a cause of action which existed prior to the execution of the mortgage. A ft. fa. was issued on this judgment, and was returned nulla bona, and shortly thereafter the bank filed a bill of complaint in circuit court No. 2 of Baltimore city, alleging that Lindenstruth was largely indebted; that he was without the means to pay his debts, apart from the property covered by the mortgage; that the conveyance was made to hinder, delay, and defraud his creditors,—and that it contained provisions which were utterly void. Later on, an amended bill was filed, charging, in addition to the averments of the original bill, that the mortgage had in fact hindered, delayed, and prevented the plaintiff from collecting its judgment, and, further, that the property was more than sufficient to pay the mortgage debt and the plaintiff's claim. It also charged that some of the goods and stock conveyed by the mortgage had been sold, and replaced by other goods and stock, and that these latter had been so mixed and intermingled with those covered by the mortgage that they could not be identified, or distinguished from the goods and stock originally transferred by the mortgage. The relief prayed was that the mortgage might be set aside, that a receiver might be appointed, that the mortgaged property might be sold, and that the claim of the plaintiff might be paid after the debt secured by the mortgage had been first satisfied. There was likewise a prayer for general relief. A demurrer was interposed to the amended bill, but was overruled, and the answers previously filed to the original bill were adopted as answers to the amended bill. Testimony was taken, and upon final hearing the court dismissed the bill of complaint, with costs; and from that decree this appeal was taken.

The testimony shows, beyond a cavil or a doubt, that the cash was actually loaned by the brewing company to Lindenstruth, in absolute good faith, when the mortgage was executed, and there is nothing whatever in the record even suggestive of a suspicion that the mortgagor and mortgagee combined or confederated to defraud any creditor of Lindenstruth. Indeed, it was not pretended, in the discussion at the bar, that there was any evidence of actual fraud, apart from that which, it was insisted, the provisions of the mortgage disclosed. These provisions are the ones we have already quoted, and they are relied on as sufficient to condemn and avoid the instrument.

It is quite true courts of high authority have held that a mortgage conveying a stock in trade, and containing an express covenant, or accompanied by an independent agreement, permitting the mortgagor to remain in possession for the purpose of selling the mortgaged arti...