North Point Const. Co. v. Sagner

• Decision Date: 02 November 1945
• Docket Number: 12.
• Parties: NORTH POINT CONST. CO. v. SAGNER et al.
• Court: Maryland Court of Appeals

44 A.2d 441

185 Md. 200

NORTH POINT CONST. CO. v. SAGNER et al.

No. 12.

Court of Appeals of Maryland

November 2, 1945

Appeal from Baltimore City Court; Joseph Sherbow, Judge.

Action by North Point Construction Company against Louis J. Sagner and others for malicious prosecution of a civil suit. From a judgment for defendants, entered on a directed verdict plaintiff appeals.

Affirmed.

Eldridge Hood Young, of Baltimore (Lemuel Oliver and Albert A. Sapero, both of Baltimore, on the brief), for appellant.

Enos S Stockbridge and Symone S. Spector, both of Baltimore (Solomon Hirschhorn and Frederick H. Hennighausen, both of Baltimore, on the brief), for appellees.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, MELVIN, HENDERSON and MARKELL, JJ.

WELVIN Judge.

This is an action at law for the malicious prosecution of a civil suit. At the conclusion of the plaintiff's case the trial court granted defendants' motion for a directed verdict, and from the judgment on that verdict the plaintiff has appealed.

The appellant is a corporation formed in April, 1941, for the purpose of constructing, and then selling, thirty-six houses on a tract of land which it owned on Gough Street in Baltimore County, adjacent to the city limits. The promoter of that enterprise and the directing head of the corporation was Earl W. Powers who, with his wife, owned practically all of its capital stock. They also then owned and controlled another corporation named 'University Building Corporation', which was engaged in developing similar building projects on 'Pioneer Drive' and on 'Northern Parkway' in Baltimore City.

Shortly after the North Point Construction Company (appellant) was organized, Mr. Powers caused to be transferred to it certain of the lots and houses in the two developments just named. He also, as of June 24, 1941, caused to be placed, through a local building association, four construction mortgages in the amount of $29,700 on each of four sections of nine lots and houses thereon into which this project had been divided.

In January, 1942, there was an accumulation of bills due by both of the Powers corporations, 'University' and 'North Point', for labor and materials furnished for these construction jobs, the largest creditor being Robert S. Green, Inc., hereinafter called 'Green'. Its claim against Mr. and Mrs. Powers 'for materials and supplies delivered heretofore (at the direction of Powers) to the University Bldg. Corp.' was in the amount of $15,000, more or less, and its claim against the North Point Construction Company amounted to $11,000, more or less. There were numerous other creditors for labor and material which had been furnished on these projects at the instance of Mr. Powers, as the directing head and practical owner of both corporations, but their aggregate amount did not exceed $3,000.

In this situation the attorney for the 'Green' corporation, Albert A. Sapero of the Baltimore Bar, prepared a formal written agreement under date of January 26, 1942, between the North Point Construction Company, Earl W. Powers and Ethel M. Powers, his wife, as parties of the first part, and Robert S. Green, Inc., and Albert A. Sapero, agent for Robert S. Green, Inc., as parties of the second part. After reciting the above-mentioned claim of $15,000 on account of the University Building Corporation and $11,000 claimed to be due by the North Point Construction Company, the agreement calls for the transfer of the latter corporation's property and assets, including 'all monies of whatever nature * * * emanating from the proceeds of sale of any of its property, ground rents, mortgages, construction loan advances, and assets of whatever nature, to Albert A. Sapero, Agent.' Green and Sapero, on their part, agreed, among other things, to pay labor and material bills within their discretion 'provided the same be approved by Albert A. Sapero, Agent.' As a part of the consideration 'Green' agreed to release its claim against Mr. and Mrs. Powers for materials and supplies delivered to the University Building Corporation in the amount of $15,000. As to the Gough Street property, Green and Sapero, as agent, agreed to 'advance sums of money within their discretion during the construction of thirty-six houses by the North Point Construction Company.'

Under date of February 11, 1942, the majority stock holdings in that corporation were acquired by Robert S. Green, and from that time on Sapero had the active management of the corporation. According to his testimony, when he and 'Green' entered into this agreement of January 26, 1942, they considered their claim of $11,000 against the North Point Construction Company 'uncollectible', and they 'abandoned that claim because they were satisfied that they controlled the stock of the Company so if there was any profit in the Company--not any profits but anything in the Company--they would get it in the form of their stock.'

On March 5, 1942, 'Green' and Sapero tightened even further their hold on 'North Point' by the latter corporation's execution of a mortgage (prepared by Sapero) to 'Green' on the Gough Street properties in the amount of $16,000. By this time, under Sapero's direction, the North Point Construction Company had been stripped of all of its property and assets that might have been available otherwise to the general creditors of Powers and his corporations, and complete dominion and control given to 'Green.' Moreover, according to the written agreement, Sapero had placed in himself, as agent, absolute veto power over the payment of any and all bills for labor and material in connection with these building projects.

It is thus to be noted that Mr. Sapero's first appearance in the picture in the instant case was as attorney for one of the creditors (the largest) of a debtor corporation, and that his next appearance, almost immediately, was in the joint role of officer and manager of that debtor and of general counsel and agent for the creditor, at the same time and for the same operation.

It was in this situation that the other creditors of 'North Point',--those who had also furnished labor and materials for the Powers projects, found difficulty in getting their own accounts paid. They appealed to Mr. Powers, with whom, like Green, they had had their original dealings, and under date of April 9, 1945, he wrote a letter calling a meeting of the creditors to be held on April 11th, at the office of Louis J. Sagner, of the Baltimore Bar, one of the appellees here. Mr. Sagner was then representing a creditor of the North Point Company who had been referred to him by Mr. Powers' attorney, William L. K. Barrett, also of the Baltimore Bar, because the latter 'didn't feel like he should represent a creditor trying to collect from somebody and represent the North Point, too.' The agreement of January 26, 1942, was called to the attention of Mr. Sagner at or about the time the claims of the appellees were placed in his hands for collection, and before the letter of April 9, 1942, was sent out.

In response to this letter from Mr. Powers, the meeting was held in Mr. Sagner's office at the appointed time and was attended by all four of the appellees, namely, by Mr. Sagner and his three clients hereinafter named, as well as by some other creditors. It was Mr. Powers' position, as testified by him, that when the agreement of January 6, 1942, was entered into, Sapero and Green undertook and agreed to pay the bills in question. As expressed by Mr. Powers, 'that letter (April 9, 1942) was written in an effort to explain to the creditors that when I transferred it (the North Point assets) to Robert S. Green, it was done on the strict understanding, a definite promise by Mr. Sapero and Mr. Wheeler of the Robert S. Green Company, that all of those bills would be paid and the men would have no trouble getting their money.'

It developed that 'the men', including the three appellees-creditors, did have trouble, that Mr. Sapero resisted payment of the bills as submitted, and that he undertook to effect a compromise settlement directly with one of them (Weimeister) although he knew that the claim was then in the hands of Mr. Sagner. The net result of all these negotiations and of the stripping of the debtor corporation of all of its assets in favor of one of the creditors (Green) against all the others, was the filing on April 24, 1942, of a bill of complaint for a receiver for the North Point Construction Company. The plaintiffs were Weimeister, Hammer and Clopein, and the solicitors who signed and filed the bill were Mr. Sagner and also Mr. Enos S. Stockbridge, of the Baltimore Bar.

No order of any kind was passed on this bill, and no final court action taken, so far as shown by the record. The three claimants did, immediately thereafter, file their claims in a court of law and, under date of November 6, 1942, all of the claims...