Wlodarek v. Thrift

• Decision Date: 12 June 1940
• Docket Number: 53.
• Citation: 13 A.2d 774,178 Md. 453
• Parties: WLODAREK v. THRIFT et al.
• Court: Maryland Court of Appeals

13 A.2d 774

178 Md. 453

WLODAREK v. THRIFT et al.

No. 53.

Court of Appeals of Maryland

June 12, 1940

Appeal from Superior Court of Baltimore City; George A. Solter Judge.

Action by Philip Wlodarek against James F. Thrift and David G McIntosh, individually and as copartners, trading as McIntosh & Thrift, to recover damages allegedly resulting from failure to properly examine title to realty. From a judgment for the defendants, plaintiff appeals.

Reversed and remanded.

J Paul Schmidt, of Baltimore (Avrum K. Rifman and J. Carroll Power, both of Baltimore, on the brief), for appellant.

Vernon Cook, of Baltimore, for appellees.

Argued before OFFUTT, PARKE, SLOAN, MITCHELL, SHEHAN, JOHNSON, and DELAPLAINE, JJ.

PARKE Judge.

In this action the original declaration had Philip Wlodarek, Eleanora Durkie and Adam F. Durkie, her husband, and the Realty and Mortgage Company, a body corporate, united as parties plaintiff, with James F. Thrift and David G. McIntosh, individually, and as lawyers associated as partners under the firm name of McIntosh and Thrift, as the defendants. As a result of a demurrer the declaration was amended so that Philip Wlodarek became the sole plaintiff; and the defendants pleaded the general issues of non assumpsit and nil debet and issues were joined thereon and the action went to trial with a jury. At the conclusion of the testimony, prayers were offered by both sides, but the court acted upon but two prayers. These prayers directed a verdict in favor of the defendants, and the jury gave its verdict accordingly. A judgment in favor of the defendants was duly rendered, and the plaintiff has appealed. The ruling of the trial court on the two demurrer prayers is made the subject of the thirteenth bill of exceptions, and the other twelve exceptions are to the action of the court on the testimony.

One of the prayers granted was a general demurrer to the legal sufficiency of the evidence to entitle the plaintiff to recover and the other granted prayer denied the action on the theory that the plaintiff as a mere stockholder in a corporation had no right of action for damages sustained by the corporation in its real estate. The withdrawal of the case from the jury requires a careful examination of all the testimony in order to ascertain whether the determination of the court should be sustained.

Since by the granted of the demurrer prayers the issues of fact were not submitted to the jury, all the testimony in support of the right of action must be accepted as true. It was upon this assumption that the trial court acted, no matter what might be the conflict of testimony and the court's view of its weight of credibility. Without setting it forth in detail, there is on this record legally sufficient testimony tending to show these facts.

James F. Thrift and David G. McIntosh are attorneys who compose the law firm of McIntosh and Thrift. In the course of their practice they make examinations and abstracts of titles for their clients, for reward. The defendant Thrift informed the plaintiff that the firm guaranteed its title work. For a fee of $40 the defendants entered into a contract with the plaintiff to examine the title to two blocks of lots of land in Anne Arundel County for the purpose of informing the plaintiff whether the apparent owners of the lots could convey a good and merchantable title. The examination was made in the first part of 1925, and the plaintiff was advised by the defendants that the examination of title by them established that the purporting owners of the lots held them in fee simple by a good and merchantable title. In reliance upon said examination and report, the plaintiff bought and paid for the lots, which were known as Nos. 20-25 in one block and 13-15 in the second, on the plat of 'Bay Head', but had the title to them conveyed to Eleanora Durkie and Adam F. Durkie, her husband, so that while the record title in fee simple was vested in said grantees, the title was held by the grantees for the sole use and benefit of the plaintiff. The deed for Lots Nos. 20-25 was executed on February 19, 1925, and the plaintiff took possession of the lots and on August 29, 1928, in execution of their agreement, the grantees of the legal title to the lots, Nos. 20-25, along with another distinct block embracing Lots Nos. 13-15, at the request of the plaintiff, conveyed them in fee to the Realty and Mortgage Company, a body corporate of the State of Maryland, upon a similar agreement to hold the legal title to the lots for the use and benefit of the plaintiff.

The two successive grantees of the legal title to the lots gave no consideration whatsoever, and, under the agreement with the plaintiff, were the successive grantees of the bare legal title. The plaintiff paid the fee of the defendants for the examination of the title; the purchase price of $2,760 for Lots Nos. 20-25 to their original vendor, and the taxes assessed against the said lots until October 14, 1933, when one Sarah Stinchcomb asserted that she was the owner in fee simple of said lots. The plaintiff forthwith made the adverse pretensions known to the defendants, who affirmed that the title to the lots was in fee simple and good and merchantable.

Sometime in the summer of 1933, the plaintiff had a prospective purchaser for lots 20 to 25, inclusive, who had the title examined by his attorney. The examiner reported that the nominees of the plaintiff had acquired no title to the lots, and the sale was lost. The plaintiff had an interview with the attorney, who had examined the title for the prospective buyer, and, with the information received, called upon the defendants and saw Thrift. It was insisted by the defendants that the title was good and merchantable, but finally Thrift and the plaintiff agreed to call upon the attorney whose examination had discovered the defect. At the interview, the two attorneys talked apart and after they separated, the plaintiff was told by Thrift that the title was bad.

The plaintiff then demanded to be compensated for the loss and Thrift claimed the right for time to make the title good, but did nothing promptly to that end. However, as a result of the plaintiff's importunity to act, Thrift instituted a suit in equity against Sally Stinchcomb in the name of the Realty and Mortgage Company to quiet the title then of record in the company as heretofore stated.

The plaintiff testified that the defendant Thrift asserted that he could get the title straightened out through court, but that his 'firm was perfectly responsible to me for the title and whatever I had in it, but I must have patience until it goes through court, and after all means are exhausted through court when then is the time that that McIntosh & Thrift were going to pay me my money. I hadn't a thing under the sum to worry about. He said, it was a responsible, reliable firm and they guaranteed me the title, and they were ready and willing to make good if they couldn't get it cleared up through Court.' The costs and expenses of the litigation were to be borne by the defendants, but they repudiated the obligation, and the plaintiff paid these charges.

The Realty and Mortgage Company, Incorporated, was organized in the month of March, 1926, and the defendants were the attorneys in its formation. No stock was ever issued, and no one ever contributed or invested any capital except the plaintiff. The plaintiff had the five lots conveyed to it in order to give it assets, in the event the plaintiff wanted to secure a loan for the company, but the corporation never functioned, as the defendants did not fulfill their promise to put money into the enterprise. All the money and property were supplied by the plaintiff and, although the formalities of incorporation, the adoption of by-laws, the procurement of a seal, and the minutes of the first meeting were provided or directed by the defendants, the corporate existence was nominal and all its assets furnished by the plaintiff, who solely carried on, conducted and controlled whatever was done in its corporate name and behalf. He paid the franchise tax until 1935, when he stopped.

In addition to the assertion in 1933 of counsel for the prospective buyer, a Doctor Hess, that the title to the five lots was defective, a Miss Sally Stinchcomb claimed title to the lots, and in 1933 put up a fence in accordance with her pretensions, which embraced Lots Nos. 20 to 25, inclusive. After the building of this fence but in the same year, the defendants brought the heretofore mentioned suit in equity against the claimant, Sally Stinchcomb, in the name of the Realty and Mortgage Company, Incorporated, to quiet the title in the latter. The decree was obtained on April 23, 1936, but the defendant appealed and this court reversed the decree and dismissed the bill of complaint, as is reported in the appeal of Sarah Stinchcomb v. Realty Mortgage Company, Inc., 171 Md. 317. On being informed of this adverse result, the plaintiff renewed his demand for indemnification, but was urged to be patient as a motion for re-argument had been made. The motion was not granted, and the plaintiff was advised by Thrift that title to the five lots had been lost.

After the plaintiff made his discovery in respect of the title it is in evidence that Thrift interviewed David Fytte, the grantor of lots Nos. 20 to 25 to the Durkies; and told Fyffe that he had no title, and, on Fyffe's inquiry of Thrift if the latter had not searched the title, Thrift's response was that he had relied upon Fyffe's word as to the title.

The transactions were practically all had with the defendant Thrift who acted for the partnership. It was he who, for the partnership, entered into the original contract and later conducted or directed all...