Lupton v. American Wholesale Corp., Baltimore Bargain House

• Decision Date: 26 April 1923
• Docket Number: 4.
• Parties: LUPTON v. AMERICAN WHOLESALE CORPORATION, BALTIMORE BARGAIN HOUSE.
• Court: Maryland Court of Appeals

122 A. 315

143 Md. 333

LUPTON v. AMERICAN WHOLESALE CORPORATION, BALTIMORE BARGAIN HOUSE.

No. 4.

Court of Appeals of Maryland

April 26, 1923

Appeal from Circuit Court No. 2 of Baltimore City; Charles F. Stein Judge.

"To be officially reported."

Suit by the American Wholesale Corporation, Baltimore Bargain House a body corporate, against Elmer H. Lupton. From an order overruling a demurrer to the bill of complaint, defendant appeals. Affirmed and remanded.

Argued before BOYD, C.J., and BRISCOE, THOMAS, PATTISON, URNER STOCKBRIDGE, and OFFUTT, JJ.

Michael J. Manley and Charles F. Harley, both of Baltimore, for appellant.

Martin Lehmayer and Charles McH. Howard, both of Baltimore (Venable, Baetjer & Howard, of Baltimore, on the brief), for appellee.

URNER J.

By his demurrer to the bill of complaint in this case the defendant asserted that a court of equity was without jurisdiction, and that the plaintiff had an adequate remedy at law, with respect to the alleged cause of action. The appeal is from an order overruling the demurrer.

In effect, the bill avers that the plaintiff is a corporation engaged in the business of selling dry goods, notions, clothing, and general merchandise to retail merchants throughout the United States; that the defendant was employed by the plaintiff as the head of the credit department of its business for the states of North Carolina, South Carolina, Kentucky, Tennessee, and Mississippi, by virtue of which employment the defendant had authority and discretion, to allow, increase, restrict, or refuse credit to merchants in the designated territory who desired to become, or continue to be, customers of the plaintiff, and in the course of this service the defendant had charge of the books of the plaintiff containing the accounts of its customers in the states mentioned, and supervised the bookkeepers by whom the accounts were kept, and directed them as to the various entries; that the defendant also had charge of all collections in his department and was required to account for and pay to the plaintiff the proceeds of such collections; that one of the plaintiff's customers was the Fairview Department Store, Inc., of Winston-Salem, N. C., which originally was extended a credit of $2,000, but this was largely increased by the defendant, who had become interested as a stockholder in the business of that customer, of which fact the plaintiff was not then aware; that the Fairview Department Store, Inc., became financially embarrassed, while indebted to the plaintiff to the amount of $37,773.78, and the defendant, without the plaintiff's knowledge, caused the assets of the debtor company to be sold and transferred to a purchaser who agreed to remit to its treasurer sufficient funds to pay its debts; that, in pursuance of this agreement, the J. W. Frazier Company, which succeeded to the rights and liabilities of the original purchaser of the assets and business of the Fairview Department Store, Inc., remitted to its treasurer more than $12,000 for payment to its creditors, of which the defendant received, and refuses to pay to the plaintiff, sums aggregating $7,000; that, by the defendant's direction, the plaintiff's account for $37,773.78 against the Fairview Department Store, Inc., was transferred, to the amount of $30,773.78, to an account opened against the J. W. Frazier Company on the plaintiff's books, and the remaining $7,000 of the former account was subsequently charged to "profit and loss," and by a similar entry, which the defendant directed, the account debited to the Frazier Company was reduced to the extent of $4,082.49, all of which entries were made without the plaintiff's knowledge or consent. There are allegations in the bill describing the defendant's employment by the plaintiff as being of a fiduciary nature and charging that the fund of $7,000 to which the bill refers, as having been collected by the defendant, is held by him under a constructive trust for the plaintiff's use.

It was averred that the defendant concealed from the plaintiff the nature of his relations with the Fairview Department Store, Inc., and failed to disclose the amount of his investment in the stock of that corporation, and that by reason of his fiduciary relation to the plaintiff, and of his concealment of his personal interest in the debtor company, he was chargeable as a trustee for any profits which he may have made by the use of his fiduciary position and for "any amounts which he received in payment for his interest in the company by subordinating the prior rights of the plaintiff as a creditor."

The bill prays for a discovery as to the defendant's transactions with the Fairview Department Store, Inc., and its successors, in regard to all sales and collections made by him while in the plaintiff's service;...