Hennighausen v. Tischer

• Court: Maryland Supreme Court
• Writing for the Court: Bowie, J., delivered the opinion of the court.
• Citation: Hennighausen v. Tischer, 50 Md. 583 (Md. 1879)
• Decision Date: 28 February 1879
• Parties: HENNIGHAUSEN AND WOLFF, Receivers v. AUGUST TISCHER.

50 Md. 583

HENNIGHAUSEN AND WOLFF, Receivers v. AUGUST TISCHER.

Court of Appeals of Maryland

February 28, 1879

Appeal from the Circuit Court of Baltimore City.

The facts of the case are stated in the opinion of the court.

The cause was argued before BARTOL, C.J., BOWIE, BRENT and MILLER, JJ.

H C. A. Smith and Alexander Wolff, for the appellants.

It is not competent for a jury to allow a party the value of his stock as a set-off, though they believe from the evidence that there will be a surplus after the payment of all the liabilities of the bank. Whittington v. Bank, 5 H. & J. 498; Hall v. Ins. Co. 5 Gill, 484, etc.

If stock is purchased with a knowledge of the insolvency of the corporation, such purchaser is in the same condition as the stockholder. Angell & Ames on Corp. sec. 581; James v Woodruff, 10 Paige, 541, and 2 Denio, 574; Hall v Ins. Co. 5 Gill, 484.

These claims were not due and payable at the time the affairs of the association were placed in the hands of receivers.

In a plea of set-off, the defendant should have alleged that the debt was due the assignor before the assignment. Dilley v. Roman, 17 Md. 337; Milburn v Guyther, 8 Gill, 93.

There has not been a legal, regular transfer of these claims on the books of the association as provided for in the by-laws of said association. Bank v. Laird, 2 Wheat. 390; Milburn v. Guyther, 8 Gill, 93; Marborough Man. Co. v. Smith, 2 Conn. 579.

Thomas R. Clendenin and Abraham Sharp, for the appellee.

The only question to be decided by this court is, whether the appellee is entitled to receive credit for and to set-off against the mortgage debt, the books of deposit purchased by him, and receive from the receivers a release of said mortgage. The owners of said books, prior to the assignment thereof to the appellee, withdrew the said amounts credited upon the same, in accordance with the constitution of said association. That the amounts represented by these books were so withdrawn, is not contradicted by any testimony in this cause. The owners, by virtue of said withdrawals, became creditors of said association, and could sue and obtain judgments for the same. Gaehle's Piano Co. v. Berg, 45 Md. 113, 117. Nor is it contradicted that these claims, after the withdrawal, were assigned to the mortgagor for value. The appointment of receivers did not affect his right to have such claims considered in reduction or settlement of the claim made against him.

Between the mortgagor and mortgagee there were mutual debits and credits, and, in such a case, the amount due by either party is only the balance after an accounting had between them. 2 Story's Eq. secs. 1438-1443; Dowler v. Cushwa, 27 Md. 354; Barbour on Set-off, 54.

By the premature dissolution of the association, the contract of the mortgage was at an end, and his liability is to be ascertained in the ordinary way; that is, as if the transaction had been between individuals, and not protected by the statutes in favor of building associations. Windsor v. Bandel, 40 Md. 172, 177.

It is the universal rule in bankruptcy, and insolvency of all kinds, that the true amount to be recovered by the assignee is the balance found after adjusting claims of each against the other. Dowler v. Cushwa, 27 Md. 354; Marshall v. Cooper, 43 Md. 46; High on Receivers, 163; Barbour on Set-off, 190; Smith v. Gaslight Co. 31 Md. 12; Penniman v. Loney, 40 Md. 471.

Bowie J., delivered the opinion of the court.

The appellee being a shareholder in the West Saratoga Building Association, on or about the 7th of November, 1875, executed and delivered to that institution, a mortgage, which was duly recorded among the Land Records of Baltimore City.

The appellants, some time afterward, by a decree of the Circuit Court of Baltimore City, in a cause therein depending between Joseph Litz, et al. v. West Saratoga Building & Savings Institution were appointed receivers of said association, with power, among other things, to release mortgages to it, and make distribution of the assets among its creditors.

The appellee, on the 5th of February, 1877, filed his petition in the Circuit Court, in the above entitled cause, alleging the execution and delivery of the mortgage, that he had since complied with all the conditions stipulated for in the same, and made such other payments as entitled him to have the same released; that the petitioner is a creditor of the corporation, by virtue of certain claims held by him against it, which should be credited on said mortgage, and which, if so applied, were more than enough to pay off said mortgage.

The petitioner charges that he had applied to the receivers to release his said mortgage, but they denied the right of the petitioner to the credits claimed, and to a release, and claimed there was a balance due them on the mortgage, etc.

The answer of the respondents admits the execution of the mortgage by the petitioner, to secure the payment of the dues, interest, and fines incident to a loan of eight hundred dollars, which he received from the association, until the loan shall have been fully repaid; and it admits that the petitioner has paid by way of weekly dues a part of his said mortgage debt; but denies that he has fully discharged the same. They disclaim all knowledge of petitioner's claims marked Exhibits A. T., No. 1 and 2, but say, if the petitioner, as a member of the association, has paid any money on unredeemed shares of stock of the association held by him, or purchased amounts from other members of the association, which said members had paid in on their respective unredeemed shares, he may file said claims with those of other creditors, but cannot claim the benefit of such payments or purchases as credits on his mortgage.

The respondents allege, they have reason to believe, the assets of the association will not be sufficient to pay the judgments against it, and the promissory notes passed by it, so that the members who are holders of unredeemed shares, are not creditors, but debtors to the judgment creditors and note holders.

The petition, exhibits and answer were referred by order of the court, to the auditor, to state an account between the petitioner and receivers, as to their respective claims.

In pursuance of which order, accounts A and B, were stated and filed by the auditor, together with certain depositions taken before him by the parties, in support of their respective pretensions.

In connection with and in addition to which, the parties by their counsel, agree that Exhibits A. T., No. 1, and A. T. No. 2, may be taken and used as evidence in this court, as if...