Hospelhorn v. Poe

• Decision Date: 21 April 1938
• Docket Number: 21.
• Citation: 198 A. 582,174 Md. 242
• Parties: HOSPELHORN v. POE.
• Court: Maryland Court of Appeals

198 A. 582

174 Md. 242

HOSPELHORN v. POE.

No. 21.

Court of Appeals of Maryland

April 21, 1938

Appeal from Baltimore City Court of Common Pleas; Samuel K. Dennis Judge.

Action by John D. Hospelhorn, receiver of the Baltmore Trust Company, against Philip L. Poe, trading as Philip L. Poe & Co., and another, for a stock assessment made against stock of a trust company which was in process of liquidation. From a judgment in favor of Philip L. Poe after the court had held the declaration bad on demurrer, the receiver appeals.

Reversed and remanded.

J Purdon Wright and Arthur W. Machen, both of Baltimore (Alexander Armstrong of Baltimore, on the brief), for appellant.

G William Peppler and Ralph Robinson, both of Baltimore, for appellees.

Argued before BOND, C.J., and OFFUTT, PARKE, SLOAN, MITCHELL, SHEHAN, and JOHNSON, JJ.

PARKE Judge.

The action against Philip L. Poe, individually, and trading as Philip L. Poe & Co., and J. Emory Cockey, who was not summoned, proceeded to a judgment in favor of Philip L. Poe, after the court had held the declaration bad on demurrer. The appeal is by the receiver. The questions on this appeal and those on three other appeals now pending on the current docket are so similar that, in order to prevent repetition, the various questions will be discussed in this opinion, but appropriate judgments will be entered separately in every case. Hospelhorn v. Boyce, Md., 198 A. 597; Hospelhorn v. Boyce, Md., 198 A. 598; Martin v. Hospelhorn, Md., 198 A. 599.

Pursuant to section 9 of article 11 of the Code of Public General Laws of Maryland, as amended by Acts 1933, c. 529, § 1, the bank commissioner of the state of Maryland duly took possession on January 5, 1935, of the property, assets, and business of the Baltimore Trust Company, a banking and trust company which was duly incorporated under the laws of the stat of Maryland. On the same day a suit was begun in the name of the state of Maryland against the trust company for the purpose of having a court of equity assume jurisdiction of the property and business of the institution and direct and supervise its liquidation. In proper course, jurisdiction was taken and a receiver appointed with power and authority to take charge and possession of the books, papers, property, and effects of every kind, and to collect the outstanding debts due. The receiver proceeded in the discharge of these duties. On November 13, 1935, the chancellor passed an order empowering the receiver to convert all the assets of the trust company, and, specifically, to collect, under the direction of the court, all the statutory liability of its stockholders, and to make distribution of the funds received among its creditors. Later, on November 13, 1935, the chancellor, who acted in accordance with the provisions of section 72 of article 11 of the Code, passed a decree whereby it was adjudged that an assessment of the full par value of $10 a share on all the capital stock of the trust company was necessary to meet the statutory liability of the company to its creditors, and that such an assessment was levied and imposed, and the receiver was authorized and directed to demand and collect from the stockholders severally the said sum of $10 for every share of stock held by them, and, if not so paid, to take and institute such proceedings and suits against any and all parties liable.

Before all these times and things, the bank commissioner of the state of Maryland had, on March 4, 1933, pursuant to the provisions of chapter 46 of the Acts of the General Assembly of Maryland, passed in 1933, which is known as the Emergency Banking Law, taken custody, control, and management of the Baltimore Trust Company, and until the appointment of the receiver, had retained his office, duties, and powers as commissioner in respect of said trust company for the period of one year from the passage of said statute and a part of the second additional year under an estension made with the approval of the Geovernor and the Attorney General.

Against this common background of admitted facts, the several appeals present these particular allegations, which are required by the pleadings to be taken as true.

1. With respect to the first appeal on the docket, it is charged that on March 4, 1933, Philip L. Poe, trading as Philip L. Poe & Co., was the owner and registered holder of 100 shares of the capital stock of the trust company, which was part of a block of 115 shares for which two certificates of stock had been issued, and that the said defendant as such trader continued to hold these shares until January 15, 1934, when said 100 shares were transferred of record from the said trader to the said J. Emory Cockey, who has ever since continued to hold said shares of stock.

The defendant, individually and as he traded, pleaded the general issue pleas and later, on demand, furnished a bill of particulars of his defense. In this bill of particulars it is set forth that before November 13, 1935, when the trust company was decreed to be insolvent, the defendant had sold, in good faith, the 100 shares of stock mentioned in the pleadings to Edward D. Allen & Co., members of the Baltimore Stock Exchange, and that on this date the shares of stock were owned by J. Emory Cockey, and were so registered on the books of the trust company, and that the defendant was neither the shareholder of record nor the transferee. The plaintiff then demurred to the pleas, which, mounting to the first error in pleading, caused the court to consider the legal sufficiency of the declaration and, as a result, to hold the declaration bad.

2. In regard to the second appeal on the docket, which concerns an action against the banking and brokerage house of Stein Bros. & Boyce, it is averred in the first count of the declaration that a copartnership trading as stock brokers and investment bankers, under the firm name of Stein Bros. & Boyce, had a certain clerk in its employ who acted as agent for the said copartnership as its undisclosed principal, and, in all things so done, under its direction and control, and an implied contract or obligation by said principal to hold said agent harmless against any liabilities incurred by him in the course of his employment. In the course of his employment and for the benefit of his principal, and without any knowledge on his part of the beneficial ownership thereof other than that of his principal, the agent had registered on March 4, 1933, 665 shares of the capital stock of the said trust company in the name of the agent, and on the 15th of March, 1933, these shares of stock were transferred of record from registration in the name of the said agent to the Wortendyke Corporation, a foreign corporation which was not engaged in business in the state of Maryland, and had its offices in the city of New York, and which is now in course of liquidation. The defendants demurred to this count of the declaration. The demurrer was sustained and judgment was rendered, and appeal taken by the plaintiff.

[ 174 Md. 251]3. In reference to the third appeal on this docket, which is from a judgment on a receiver's action against Wilmer P. Smith and Meyer Blankman, the declaration alleges that on September 11, 1931, 200 shares of the capital stock of the Baltimore Trust Company were bought for the account of Meyer Blankman by the brokerage firm of J. Harmanus Fisher & Sons and the shares of said stock were registered in the name of one Wilmer P. Smith, an employee of the brokerage firm, and, upon the receipt of said shares of stock by the brokerage firm, they were placed in the possession of the said Blankman, and were intended and did become the property of the said Blankman, and that on the 4th day of March, 1933, and ever thereafter the said shares of stock so remained registered in the name of the said Smith with the ownership as aforesaid, and the possession of the said certificates of stock so issued in the name of Smith, assigned in blank by him, and held by the said Blankman. The defendant Blankman demurred to the declaration. The demurrer was sustained, and judgment entered in favor of the defendant, and the receiver has appealed.

4. The fourth appeal on this docket is from a judgment in an action by the receiver against Glenn L. Martin. The plaintiff alleges that on March 27, 1933, the defendant was the holder and owner of 965 shares of the capital stock of the trust company and has continued to hold and own the shares until the bringing of the action. The defendant pleaded the general issue pleas. The third plea was 'for partial defense on equitable grounds' and the fourth plea was a 'special plea for partial defense.' The plaintiff demanded the particulars of the defendant's defense under the first and second pleas. The bill of particulars disclosed that the defense under the general issue pleas was that on March 4 1933, the bank commissioner of Maryland assumed the custody, control, and management of the Baltimore Trust Company, and that this status continued until the appointment of the receiver for the company on January 5, 1935; and that at the beginning and throughout this period the trust company was insolvent; and that the commissioner only received deposits and made collections upon the basis that such deposits and collections were held in cash, subject to demand withdrawal by such depositors, but otherwise did no general banking business. It is further stated that as of January 5, 1935, the Baltimore Trust Company had no debts or liabilities other than those incurred before March 4, 1933, except the subsequent deposits and collections for which cash was held in trust. Under these circumstances, it was asserted, any stockholder who became such after March 4, 1933, was not subject to an...