Killen v. George Washington Cemetery, Inc.

• Decision Date: 23 April 1963
• Docket Number: No. 172,172
• Citation: 231 Md. 337,190 A.2d 247
• Parties: Harold J. KILLEN v. GEORGE WASHINGTON CEMETERY, INC., et al.
• Court: Maryland Court of Appeals

Page 337

231 Md. 337

190 A.2d 247

Harold J. KILLEN v. GEORGE WASHINGTON CEMETERY, INC., et al.

No. 172.

Court of Appeals of Maryland.

April 23, 1963.

Ewing C. Whitaker, Langley Park (E. Richard McIntyre, Silver Spring, on the brief), for appellant.

Jerrold v. Powers, Upper Marlboro (Sasscer, Clagett & Powers, Upper Marlboro, on the brief), for appellees.

Before BRUNE, C. J., and HENDERSON, HAMMOND, HORNEY, and SYBERT, JJ.

SYBERT, Judge.

This is an appeal by a defendant from the refusal of the Circuit Court for Prince Georges County, in a jury trial, to grant his motions, made at the conclusion of the plaintiffs' case and again at the conclusion of all the evidence, for a directed verdict in his favor as to all counts of the plaintiffs' declaration on the ground that the claims thereby asserted against him were barred by the statute of limitations. The appellant also challenges the court's instructions to the jury as to when limitations began to run.

This case arose out of a sale of the stock of George Washington Cemetery, Inc. ¹ On February 26, 1957 the appellant, Harold J. Killen (defendant below), then the sole stockholder of the corporation, sold all of his stock to Albert F. Houser (he and the corporation were plaintiffs below and are appellees here) and Harold I. Miller. In a written agreement of the same date Killen agreed to pay, within 90 days from the date of the sale, any obligations or notes of the corporation not set forth in an audit of the corporation dated December 31, 1956, which at a later date might be disclosed to have existed as of the date of the audit. Subsequently, Miller transferred his stock to Houser.

On November 9, 1960 Houser and the corporation sued out a nonresident attachment on original process against Killen, who in October, 1957, had moved to Arizona. The first two counts of the declaration alleged that early in 1958 the plaintiffs had learned of the existence of two outstanding promissory notes of the corporation, held by the trustees of the care fund for the cemetery, one dated July 8, 1953, for $1,980.00, and the other dated November 1, 1955, for $2,070.00, both of which were alleged to have been obligations of the corporation existing on the date of the audit, but not shown thereon, and still unpaid. The eighth count charged that at the time of the sale of his stock Killen had represented the assets and financial condition of the corporation to be as reflected by its books and records and that among the books and records there was reflected as an asset of the corporation a parcel of land adjoining the cemetery and known as the 'well lot', but that Killen, who held title to the lot individually, had never conveyed it to the corporation as promised, despite the fact that a $4,000.00 encumbrance thereon which Killen claimed had prevented it from being transferred, had been paid off by the corporation. In the ninth and final count, the plaintiffs alleged that they learned in September, 1960, that one Alice Henson had paid to Killen, as an officer of the corporation and for its use, the sum of $20,000.00, in return for which the corporation agreed to and did construct a memorial fountain and garden, but that the money given to Killen was never turned over to the corporation. Each of the counts claimed money damages. Counts three, five six and seven were withdrawn before trial, and count four is not material here as verdict and judgment thereon were for the defendant and the plaintiffs did not appeal.

The attachment was laid in the hands of the plaintiff, George Washington Cemetery, Inc., which filed a plea as garnishee admitting certain assets due by it to the defendant, Killen. Killen appeared, and to the whole declaration he filed, in addition to the general issue pleas, a special plea of limitations, to which the plaintiffs filed no replication or other pleading. At the commencement of the trial the defendant objected to the introduction of the contract of February 26, 1957 upon which the suit was based, or of any other matters which occurred more than three years prior to the suit, on the ground that, although the defendant had pleaded the three-year statute of limitations (Code (1957), Art. 57, Sec. 1), the plaintiffs had filed no replication setting up exceptions to, or matters in avoidance of, the statute, and therefore the plaintiffs could not avail themselves of such matters and hence the claims were barred by the statute. The trial court, however, allowed the introduction of the evidence after the plaintiffs, in open court, joined issue on the plea of limitations, asserting it to be their position that no cause of action arises until it is discovered, and that the declaration alleged discovery within three years before suit. The court stated that it would reserve decision on the question of limitations until after all of the evidence was introduced. The defendant objected as the evidence was offered.

With respect to the two notes which were the basis of counts one and two of the declaration, counsel for the plaintiffs asked Houser whether he had any knowledge of their existence prior to their receipt by the corporation in a letter dated April 3, 1958 from one of the trustees of the cemetery care fund. Apparently, counsel expected a negative reply to this question, but Houser answered that he had learned of the notes from the trustee previously, when he began to check into the condition of the care fund. The time when this occurred was not pursued further in direct examination, but during cross-examination Houser stated several times that it had occurred 'sometime in the summer of 1957.' That was, of course, more than three years before suit was filed in November, 1960. Killen's position was that Houser knew about the notes even before he purchased the stock, and that therefore he had not been prejudiced. Other testimony indicated that the two notes were not included in the audit of December 31, 1956.

Concerning the eighth count, Houser testified that when he and Harold Miller were negotiating to purchase Killen's stock--prior to the agreement of February 26, 1957--Killen told them, in effect, that while he held title to the 'well lot', it was really the property of the cemetery corporation, and informed them it was subject to a $4,000.00 mortgage which was then in default and that if the mortgage was not paid off immediately the lot would be lost to the corporation. According to Houser, he and Miller advanced $4,060.00 (including interest) to Killen in November, 1956 for the payment of the mortgage upon the agreement of the latter that he would deed the lot to the corporation when it was released by the lien holder. Houser stated that the corporation's records showed that this $4,060.00 came into the hands of the corporation. A corporation check was then introduced showing the payment of $4,060.00 to Killen on January 31, 1957, with the stub notation reading 'Payment of $4000.00 Note, Wallace & Sons' (Wallace & Sons allegedly being the holders of the mortgage). Houser said Killen later told him that he had paid off the mortgage. His testimony shows he learned that Killen did not intend to convey the lot to the corporation in March, 1957, after the transfer of the stock, when he and Miller went to the office of the attorney who had handled the stock sale, for a final settlement with Killen. Houser stated that, at this time, when he asked Killen about deeding the lot to the corporation, Killen denied that the corporation had ever owned the lot, or that he had ever transferred it to anyone as security for a mortgage for $4,000.00. At the trial, Killen himself testified that he had conveyed the 'well lot' to the corporation in 1951, without consideration, and that the latter had transferred it back to him in 1952, without consideration. This was substantiated by a title examiner called on behalf of the appellant who had abstracted the title of the 'well lot' and found no revenue stamps on either deed. The $4,060.00 paid to Wallace & Sons was, according to Killen, a personal obligation paid with funds which were partially his and partially the corporation's (due to some intermingling of funds in connection with a related property transaction). He denied having represented the 'well lot' to be part of the assets of the corporation.

In connection with the ninth count, Alice Henson testified that she had loaned the corporation $20,000.00 in March, 1954 for which she received a note. This obligation was...