Newcomer v. Miller

• Decision Date: 25 April 1934
• Docket Number: 47.
• Citation: 172 A. 242,166 Md. 675
• Parties: NEWCOMER ET AL. v. MILLER ET AL.
• Court: Maryland Court of Appeals

172 A. 242

166 Md. 675

NEWCOMER ET AL. v. MILLER ET AL.

No. 47.

Court of Appeals of Maryland

April 25, 1934

Appeal from Circuit Court, Baltimore County; C. Gus Grason, Judge.

Petition by Waldo Newcomer and another against C. Wilbur Miller and another, receivers of a corporation, for leave to examine the corporation's books. From an order dismissing the petition, petitioners appeal, and respondents move to dismiss the appeal.

Motion to dismiss appeal overruled, and order dismissing petition reversed.

Appeal from order denying application of owners of all stock of corporation, who questioned good faith of receivership proceeding, to examine corporation's books, held not premature.

Argued before BOND, C.J., and URNER, ADKINS, DIGGES, PARKE, and SLOAN, JJ.

Charles Markell, of Baltimore, for appellants.

David G. McIntosh, Jr., of Baltimore (H. Courtenay Jenifer, of Towson, and J. Rieman McIntosh, of Baltimore, on the brief) for appellees.

BOND Chief Judge.

The appellants are owners of all the stock of a corporation bought in by them at an auction sale of collateral security for debts owed to them, and in a proceeding in which receivers were appointed for assets of the corporation they filed a petition for leave to examine the corporation's books. The receivers answered, resisting the allowance of it the petition was denied, and the appeal is from the denial. The receivers were appointed in a consensual proceeding instituted in the name of the wife of the petitioners' debtor; her husband, who was president of the corporation, answered and consented in its name; and the husband and the wife's counsel were appointed receivers. Subsequently all the property of the corporation was sold by the receivers to the wife, and the sale was finally ratified in the absence of exceptions to it, and for the conclusion of the proceeding there remains, subject to the controversy now here on appeal, only the accounting and distribution of the proceeds. The petitioners question the validity of debts claimed for the wife, and complain of the whole proceeding as a maneuver of their debtor to hinder recovery on his debts, and to retain the property for his own benefit; and inspection of the corporation's books is applied for as a means of testing these claims advanced against the assets as superior to the claims of the petitioners as stockholders, and for protection of the interests of the petitioners generally.

The receivers, the appellees, have filed a motion to dismiss the appeal, and a first question is whether the petitioners have a right of appeal from such action of the court at any time, and, if at any time, whether the order was such a final one as would permit of appeal at this stage of the case. Objection is made by the receivers that there was no auditor's account of the proceeds of sale yet stated and made subject to exceptions, nor was there any other proceeding open and to which the application for examination of the books would be relevant.

There is no dispute on the essential facts so far alleged. C. Wilbur Miller and his wife owned jointly all the stock of a Worthington Valley company, which held 1,700 acres of land, with improvements and equipment for a farm and a dairy. It was valued formerly at $800,000 and more. Miller was president of the company. He had for some time past been indebted to the two petitioners on promissory notes in amounts aggregating $1,500,000, and the stock of this company had, as stated, been pledged as collateral security, 600 shares with Newcomer, and 400 with the trust company. On June 29, 1933, the bill in equity was filed in the name of Mrs. Miller, alleging that the corporation was indebted to her, and praying that receivers pendente lite be appointed for its assets, the answer was filed for the corporation by the husband, consenting to the receivership, and the husband and Mr. Anderson, who had filed the bill for the wife, were appointed receivers. The petitioners complain that knowledge of the fact that all the stock was then pledged for the husband's debts was withheld from the court, and that the pledgees were given no notice of the proceeding. On July 26, 1933, the foreclosure and sale of the collateral occurred, and the petitioners and appellants then became owners of all the stock.

On August 10, 1933, the receivers reported to the court a contract with Mrs. Miller subject to approval by the court, to purchase all the assets of the corporation for $45,810.02, subject to existing mortgages of a total of $209,189.98, making the total purchase price $255,000. It was later reported that Mrs. Miller held a mortgage. The receivers valued the property at approximately $230,000, and testimony of three experts placed even lower valuations on it; and in the order ratifying the sale it was recited that it had been accepted only after consultations with the court on conditions and possibilities of sale. An order nisi required that exceptions be filed by September 25, and, none having been filed, the sale was finally ratified on that day.

On the same day the petitioners filed a first petition for appointment of coreceivers because of opposition of the receivers to the petitioners' interest, and an advantage they would have in the contest of interests in the sole possession of information concerning all rights and claims, and because of need of the petitioners for protection; but the court, considering that there was nothing to be done except to distribute the proceeds of sale, found no need of additional receivers. The petitioners were, however, admitted as parties to the cause.

On the day after the dismissal of that first petition, it appears the petitioners wrote a letter to Mr. Anderson requesting permission to examine the books, and a second letter with the same request on November 7, but received no answers because as it happened, Mr. Anderson was confined to his home by sickness; and, having failed to obtain the permission sought, the appellants filed the petition now to be considered, that for an order for the examination, "to ascertain as nearly as possible the true financial...