Whitman v. Dorsey

• Decision Date: 24 March 1909
• Citation: Whitman v. Dorsey, 110 Md. 421, 72 A. 1042 (Md. 1909)
• Parties: WHITMAN v. DORSEY et al.
• Court: Maryland Supreme Court

72 A. 1042

110 Md. 421

WHITMAN v. DORSEY et al.

Court of Appeals of Maryland

March 24, 1909

Appeal from Circuit Court No. 2 of Baltimore City; James P. Gorter Judge.

Bill by Horace L. Whitman, receiver, against William C. Dorsey and another. From the decree, complainant appeals. Reversed and remanded.

Thomas F. Cadwalader and Arthur W. Machen, Jr., for appellant.

Edwin J. Farber, for appellees.

BRISCOE J.

The appeal in this case is from an order of circuit court No. 2 of Baltimore City, sustaining a demurrer of the appellee, one of the defendants below, and dismissing the bill of complaint as to the defendant the United Surety Company, with costs. The appellant is receiver of the Clarion Concrete Construction Company, a body corporate of this state, and was appointed under the provisions of Code Pub. Gen. Laws 1904 art. 23, § 376, providing for the dissolution of insolvent corporations, in a cause entitled McCay Engineering Company v. Clarion Concrete Construction Company. The appellee the United Surety Company is also a body corporate, created and incorporated under the laws of Maryland and authorized to transact business in the state.

The amended bill avers: That on the 13th of January, 1908, the appellant, as the receiver of the Clarion Company, was authorized and directed, by an order of court, to institute proceedings against William C Dorsey and the United Surety Company touching the matters set forth in the bill of complaint. (3) That on the 25th day of September, 1906, the Clarion Company entered into a contract with the United Surety Company, whereby, in consideration of the sum of $5,800 payable at the time or times and in the manner in the contract provided, the Clarion Company was to do and complete certain work upon a certain church building, to wit, St. David's Episcopal Church, at Roland Park in Baltimore county, Md. A copy of the agreement is filed with the original bill in this cause; the original not being in the plaintiff's possession, but as he believes, and therefore avers, in the possession of one or other of the defendants. That in pursuance of the contract the Clarion Company did perform all the work which by the terms thereof it was required to perform, and a part of the money due thereon has been paid on account to the Clarion Company by the United Surety Company, but a considerable balance yet remains due and unpaid, but the plaintiff has no means whatever of ascertaining or verifying the state of the account between the United Surety Company and the Clarion Company, inasmuch as the books and papers turned over to him as receiver by the officers of the Clarion Company fail to disclose the same. The bill further alleges: That it is claimed by William C. Dorsey, one of the defendants, that by virtue of a certain alleged assignment (whereof the original is not in the plaintiff's possession, but, if it hath any existence, is in the possession of Dorsey, purporting to be executed by the Clarion Company through its proper officers, in the terms set out in a paper alleged to be a copy thereof and filed in this cause) the Clarion Company set over and assigned to Dorsey all its title, interest, claim, and demand in and to its contract with the United Surety Company and in and to all money then due or thereafter to become due under said contract or otherwise for work done and material furnished in and about the construction of the church building. That the copy of the alleged assignment fails to disclose what consideration, if any, passed from Dorsey to the Clarion Company, and, as the books and papers in hand as receiver fail to disclose this matter, he cannot inform himself thereon without a full and frank discovery by the defendant William C. Dorsey. The bill also charges: That, if the assignment was made without consideration, it amounts to an undue preference in favor of Dorsey, and was made for the purpose and with the effect of defrauding the stockholders and creditors of the Clarion Company and is void, and ought to be set aside by this court. That, at the time the alleged assignment was made, the Clarion Company was, and it still is, indebted to divers parties in amounts whose total largely exceeds its assets, and, being thus insolvent, the making of the assignment without adequate consideration was a preference of Dorsey over the creditors, and was made with the intent and effect of hindering and defrauding creditors and was undue, unlawful, fraudulent, and void, and the assignment, if so made, should be set aside. That if, under the terms of the alleged assignment, any good and sufficient consideration were due from Dorsey to the Clarion Company therefor, Dorsey should make full discovery of and accounting for the same, and that he be allowed such credits in the accounting as he can show himself legally and equitably entitled to, and no more. The bill then charges: That Dorsey, as assignee of the Clarion Company has instituted two suits in the superior court of Baltimore City against the United Surety Company claiming moneys alleged to be due to him under the contract and assignment, and, if the suits are prosecuted to final judgment, they will result in turning over to Dorsey the whole amount still unpaid on the original contract, whether the aforesaid assignment thereof to Dorsey be an unlawful preference or not, and without leaving to the receiver of the Clarion Company any security for any debt or debts of Dorsey that must be due and payable by him to the Clarion Company if said assignment is not a mere voluntary instrument. And the plaintiff has no remedy at law to prevent the prosecution of the suits to judgment and the collection of its moneys by Dorsey from the United Surety Company.

The specific relief asked by the prayer of the bill is as follows: (1) That the United Surety Company be directed to answer this bill under oath and to render an account of all moneys owing by it, under the contract or about the erection of the church, to the Clarion Company or its assigns, and to pay over into this court the balance shown to be so due and owing, to wait the final adjudication of the court in the premises. (2) That William C. Dorsey be directed and commanded to answer the allegations of the bill under oath, and to make full and complete discovery of his transactions with the Clarion Company, its officers and agents, touching the matters herein set forth, and to render an accounting of and pay over into this court all moneys that may be due by him to the Clarion Company or its assigns. (3) That Dorsey produce into court or otherwise satisfactorily account for the original, if any, of the alleged assignment and state in his answer under oath what consideration, if any, moved from him for the same, and whether, when, and how he hath satisfied or discharged the same. (4) That if the assignment shall appear to be voluntary or founded on inadequate consideration, or shall not appear to be genuine and duly executed by the Clarion Company, it be declared void and set aside by this court and delivered up to be canceled. (5) That in the meantime an injunction be issued restraining Dorsey from prosecuting the actions in the superior court of Baltimore City or from collecting the moneys, or any part thereof, from the United Surety Company, until the final adjudication by this court in the premises. (6) And for other and further relief as the case may require.

It appears from the record that on the 5th of March, 1908, the application for an injunction was granted by the court and directed to be issued, restraining the prosecution of the actions at law by Dorsey, and further restraining the collections of the moneys by him, from the appellee corporation, as prayed by the bill. Nothing further appears from the record to have been done in the case until the 24th of June, 1908, when the United Surety Company, one of the defendants, appeared and filed a demurrer to the plaintiff's bill, assigning three reasons as grounds of demurrer: (1) That the plaintiff has not stated in his amended bill such a case as entitles him to any relief in equity against this defendant. (2) That the plaintiff has a plain, adequate, and complete remedy at law against this defendant. (3) And for that the amended bill is bad for multifariousness: First, in that this defendant the United Surety Company should not be joined as a party defendant in this proceeding, and the bill should be dismissed as against it; second, because this defendant is not charged with, nor is it a party to any fraud with which Dorsey, its codefendant, is charged; third, because the amended bill embraces several distinct subject-matters with which this defendant has nothing to do; fourth, because it states several distinct and different causes of action. And from the order of court sustaining the demurrer and dismissing the plaintiff's original and...