Preston v. American Surety Co. of New York

• Court: Maryland Supreme Court
• Writing for the Court: JONES, J.
• Citation: Preston v. American Surety Co. of New York, 104 Md. 40, 64 A. 292 (Md. 1906)
• Decision Date: 16 June 1906
• Parties: PRESTON v. AMERICAN SURETY CO. OF NEW YORK et al.

64 A. 292

104 Md. 40

PRESTON v. AMERICAN SURETY CO. OF NEW YORK et al.

Court of Appeals of Maryland

June 16, 1906

Appeal from Circuit Court of Baltimore City; Henry Stockbridge Judge.

Action by James H. Preston, as receiver, against the American Surety Company of New York, and others. From a decree for defendants, plaintiff appeals. Affirmed.

Argued before McSHERRY, C.J., and BRISCOE, BOYD, PEARCE, SCHMUCKER JONES, and BURKE, JJ.

S. S Field, for appellant.

James U. Dennis, for appellees.

JONES J.

The American Surety Company of New York, one of the appellees in this case, became surety on the bond of John McNeill, as receiver, under appointment of the circuit court No. 2 of Baltimore City under the following circumstances: A minor one Swan Ward, had inherited from his mother, subject to the life estate of his father, Michael J. Ward, a fee simply property located on Green street in the city of Baltimore. The property was subject also to a mortgage to the Spalding Perpetual Building & Loan Association of Baltimore City, a considerable portion of which was unpaid. The mortgage was in default and the mortgagee building association was proceeding to enforce a decree for sale of the property in question which had been obtained; and the trustee named in the said decree had taken steps toward making such sale. Thereupon one Ella Mahon, as guardian to said minor, Swan Ward, filed in circuit court No. 2 of Baltimore City a bill of complaint in which it was charged that the life tenant, Michael J. Ward, had been collecting the rents of the property in question and applying the same to his own uses, and had allowed the taxes and other expenses on the property to remain unpaid to such an extent that the before-mentioned building association had brought suit to foreclose its mortgage "claiming the sum of $725.89" to be due thereon for balance of "principal, interest, fines, taxes, advanced for 1900 and 1901, etc."; that the trustee appointed to conduct the proceedings to foreclose the mortgage had advertised the property for sale; that it would be a great loss to the minor, her ward, and to all concerned if the property was allowed to be sold; that the life tenant Michael J. Ward, who was in charge of the property and collecting the rents and profits thereof, was insolvent and unable to properly handle said property, and to prevent the sale thereof which would "be most disadvantageous to all concerned, especially in view of the fact that said property" was "rented to a good tenant and for a good rental" with the prospect of an early increase thereof; that inasmuch as there was "imminent danger of loss to those interested in the said property by reason of the proposed sale, and otherwise, a receiver should be appointed *** to take charge of said property," who could "deal authoritatively in the said trustee in order to prevent said sale under foreclosure proceedings and to hold and manage said property subject to the direction of" the court; and it was accordingly prayed that a receiver be appointed "to take charge of and manage said property, under the direction of" the court. Upon this bill and exhibits accompanying it and an answer thereto a decree was passed appointing John McNeill receiver "with the power and authority to take charge and possession of the" property described in the bill and requiring the said Michael J. Ward to deliver up possession thereof, "subject, nevertheless, to the further order of" the court. The decree required the said McNeill before entering upon his duties as receiver to file a bond in the penalty of $2,000 "conditioned for the faithful performance of the trust reposed in him by this order, or which may be reposed in him by any future order or decree in the premises." McNeill accepted the office of receiver and executed a bond with the penalty prescribed and with the aforesaid appellee corporation as surety. The bond recited that "Whereas, by an order of the circuit court No. 2 *** John McNeill has been appointed receiver to cover the collection of rent from property No. 5 N. Green St. and to dispose of same under *** of the court"; but the condition was that prescribed by the decree "to faithfully perform the trust reposed in him by said order, or that may be reposed in him by any future order or decree in the premises." The decree appointing the receiver was passed on the 5th of February, 1903, and McNeill's bond was dated on the 6th of that month. It thus appears in evidence that the property in question had been advertised in the mortgage foreclosure proceedings to be sold on the 10th of February 1903, and "through" McNeill it was bid in at the sale by Ella Mahon for $7,775, and a deposit of $300 on the purchase price was made by her. She testified she bought it in to protect her ward. Without consultation with her McNeill had exceptions filed, in her behalf as purchaser, to the ratification of the sale. McNeill then procured Mr. Bernard to advance sufficient money to make up, with the $300 deposit money, the amount of the mortgage claim and expenses for the payment of which the property had been sold and Mr. Bernard took an entry of the decree to his use; that is, he was substituted to the place of the mortgagee. McNeill also procured from Mr. Bernard through a check drawn to him as receiver $300; the amount of deposit made by Ella Mahon and returned this to her. For the two amounts thus received he gave to Mr. Bernard the following receipt: "Received of Richard Bernard three hundred dollars which with ten hundred and sixty-one 21/100 dollars advanced to Peter J. Campbell, trustee, makes thirteen hundred and sixty-one 21/100 dollars advanced for the purpose of conserving the property sold by Campbell, trustee in the case of the Spalding Building Association vs. Ward until disposition can be made of said property for the benefit of all parties interested. It being understood that said sums so advanced will bear interest. [Signed] John McNeill, Receiver."

At the time of the return of the $300 deposit money to Ella Mahon she gave to McNeill an acknowledgment of the receipt of it from "John McNeill receiver" in which she recited the sale to her of the property in question for $7,775, the payment of the deposit, the filing of the exceptions, and that the sale stood unratified and concluded the paper as follows: "In consideration of the payment of said sum of three hundred dollars, I do...