Schaeffer v. Sterling

• Decision Date: 17 May 1939
• Docket Number: 19.
• Citation: 6 A.2d 254,176 Md. 553
• Parties: SCHAEFFER et al. v. STERLING.
• Court: Maryland Court of Appeals

6 A.2d 254

176 Md. 553

SCHAEFFER et al. v. STERLING.

No. 19.

Court of Appeals of Maryland

May 17, 1939

Appeal from Circuit Court, Carroll County; F. Neal Parke, Judge.

Edgar H. Schaeffer and others excepted to certain distribution accounts of Warren F. Sterling, receiver of the Pleasant Valley Bank of Carroll County. From a decree overruling the exceptions, the exceptants appeal.

Decree affirmed.

Theo. F. Brown and H. Ralph Cover, both of Westminster (James E. Boylan, Jr., and Fringer & Sponseller all of Westminster, on the brief), for appellants.

D Eugene Walsh, of Westminster, for appellee.

Argued before BOND, C.J., and OFFUTT, SLOAN MITCHELL, SHEHAN, JOHNSON, and DELAPLAINE, JJ.

DELAPLAINE Judge.

This is an appeal from a decree of the Circuit Court for Carroll County, overruling exceptions of Edgar H. Schaeffer and others to the second and third distribution accounts of the Bank Commissioner as receiver of the Pleasant Valley Bank of Carroll County.

In 1931, after Nevin W. Crouse, the cashier, had embezzled about $29,500 of the bank's funds, Schaeffer was delegated by the board of directors to call upon the cashier's parents, Samuel E. Crouse and Clara J. Crouse, with the object of restoring the loss. Accompanied by the attorney for the bank and an agent for the cashier's bonding company Schaeffer visited the Crouse home and induced the parents to give to the bank their savings accounts totalling nearly $13,000 and a confessed judgment note for $17,000 with securities as collateral.

Judgment was entered on the note in the Circuit Court for Carroll County and in the Superior Court of Baltimore City. On this debt the parents paid interest and a curtailment of $3,000.

Later, upon a bill of complaint filed by the parents, the Court passed a decree declaring the judgments void, ordering the return of the securities, and declaring the insolvent bank and its receiver and the ten living directors and the administrators of a deceased director all indebted to the complainants in the total sum of $16,832.21.

The Crouses filed with the receiver a claim under the decree, upon which they received their dividend of twenty per cent allowed in the first distribution account. They then proceeded to enforce collection of the remainder from the directors. Schaeffer and five other directors paid $15,784.40, whereupon the decree was entered to their use.

The second and third accounts, each allowing a dividend of twenty per cent, made no distribution to Schaeffer and the other assignees of the decree. The Chancellor did not express any opinion as to whether the exceptants had the right to contribution against the other directors. That question has not been considered in this case. The only question before us is whether the appellants are entitled to distribution on their claim.

It is evident from the record that the fears of the aged couple were so aroused by threats that they surrendered nearly everything they possessed with the hope of saving their only son from prosecution. The scheme of the directors of the bank suggested the compounding of a felony and was an undoubted wrong.

According to Pomeroy, the Courts should enforce strictly the maxim of equity, 'He who comes into equity must come with clean hands.' If a person seeking the aid of a court of equity has himself been guilty of any conduct which violates the fundamental conceptions of equity jurisprudence, this maxim refuses him all recognition and relief in reference to the subject. It says that whenever a person seeking some remedy 'has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.' 1 Pom.Eq.Jur. sec. 397; Restatement of the Law of Restitution, 385.

This maxim is...