Rogers v. Citizens' Nat. Bank

• Decision Date: 13 June 1901
• Citation: 49 A. 843,93 Md. 613
• Parties: ROGERS et al. v. CITIZENS' NAT. BANK et al.
• Court: Maryland Court of Appeals

49 A. 843

93 Md. 613

ROGERS et al. v. CITIZENS' NAT. BANK et al.

Court of Appeals of Maryland

June 13, 1901

Appeal from the circuit court of Baltimore city; Albert Ritchie Judge.

Proceedings on the distribution of the assets of the Campbell & Zell Company, an insolvent corporation. Rogers, Brown & Co. filed exceptions to the auditor's accounts allowing the Citizens' National Bank and others certain amounts, and from an order overruling their exceptions they appeal. Affirmed.

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

Richard K. Cross, for appellants.

Barton Wilmer, Ambler & Stewart, Geo. R. Willis, and Alan McLane for appellees.

BRISCOE J.

This controversy arises upon the distribution of the assets of the Campbell & Zell Company of Baltimore city, a corporation of the state of Maryland, and now in the hands of its receiver, Charles C. Homer, in the circuit court of Baltimore. There is no dispute as to the facts of the case, and, in so far as they bear upon the questions presented for our consideration, they are set forth in the record by "an agreed statement of facts." The questions relate solely to the distribution of the funds of the corporation among its creditors, and which are now held by the receiver. The facts appear from the record to be as follows: The Campbell & Zell Company of Baltimore city, a body corporate, duly incorporated under the laws of Maryland, issued, under section 294 of article 23 of the Code of Public General Laws, preferred stock to the amount of $50,000, on the 13th day of November, 1895. Subsequently the funds derived from the issue of this stock were found to be inadequate to supply the necessary capital for the success of the corporation, and, in order to obtain a loan from the banks of the city of Baltimore, all of the preferred stockholders consented to postpone their lien in favor of any of the banks of the city that would accommodate it. On the 21st of April, 1896, the following indorsement was written on the face of each preferred stock certificate, and signed by the holder: "The preference created by the issuing of this certificate over subsequent creditors of the corporation herein named is waived and postponed to any and all claims against said corporation for money which has been or may be loaned to said corporation by any of the banks of the city of Baltimore." In consequence of this waiver of the security created by the preferred stock in favor of the banks of Baltimore, the Campbell & Zell Company were enabled to obtain a loan, which now amounts in the aggregate to the sum of $46,690.54, from the three appellee banks, to wit, the Citizens' National Bank, the Second National Bank, and the Manufacturers' National Bank of Baltimore. Subsequently this corporation became embarrassed, and on or about November 25, 1896, upon a bill filed in the circuit court of Baltimore city by George B. Hunting et al. against the Campbell & Zell Company of Baltimore City, alleging its insolvency, Henry James and Charles C. Homer were by the court appointed receivers of the corporation. Henry James died on July 27, 1897, and Charles C. Homer, as surviving receiver, after conducting the business of the corporation for several years under direction of the court, sold the greater part of its assets, but a portion still remains unsold or uncollected. It appears, upon the reports of sales and collections made by the surviving receiver, and in the distribution of the assets of the company, the auditor of the court stated three accounts, A, B, and C, respectively. It is agreed that account A was an expense account, that no exceptions were filed to it, and it was ratified on the 30th of June, 1900. It is not in the record, but it is agreed that it finally ascertains a balance of $22,027.27 for distribution among "the general creditors," which is carried to, and distributed in, account B.

There is nothing in the record before us to show that any objection was made to this account in the court below, or that an appeal was taken from the order of its ratification. On the contrary, it is admitted by the agreed statement of facts that no exceptions were filed to it in the court below, and it was ratified in regular order. The propriety, then, of the passing of this order of ratification is not before us, and cannot be reviewed in this appeal. The audit, when ratified and confirmed, had the effect of an adjudication in rem, and the distributions contained in it are res adjudicata. Thurston v. Devecmon, 30 Md. 210; Owings v. Rhodes, 65 Md. 408, 9 A. 903; Taylor v. State, 73 Md. 208, 20 A. 914, 11 L.R.A. 852; Land Co. v. Wilson, 50 Md. 90.

The remaining questions to be determined are presented by exceptions to accounts B and C, filed by the appellants Messrs. Rogers, Brown & Co., who are general creditors of the insolvent corporation to the extent of $4,688.32 for iron sold it. These appellants rely upon the following objections filed on June 22, 1900, to accounts B and C--First, because the auditor, in stating account B, has erroneously allowed dividends to the Citizens' National Bank, to the Second National Bank, and to the Manufacturers' National Bank...