Campbell v. Burnett

Pattison, J., delivered the opinion of the Court. The appellants, plaintiffs below, filed their bill in the Circuit Court of Baltimore City against the appellees, in which the facts alleged are substantially as follows: Clara Campbell, one of the plaintiffs, in the year 1899, loaned unto her husband. J. Vernon Campbell, diamonds and jewelry belonging to her. of the value of about $2,000, to be used by him as collateral security in obtaining a loan of that amount. Subsequently the loan was obtained from one Edward J. Codd, individually, who at such time was conducting a business under the firm name of E. <T. Codd & Company, and to him the jewelry was accordingly delivered to secure the payment of said loan.

Thereafter Campbell made payments on said indebtedness from time to time, when in 1906 the amount owing upon the loan had been reduced to the sum of $1,087.65. Tn or before the year last named, the E. -T. Codd Company was or had been incorporated, and the greater part of its stock was held and owned by the said Edward J. Codd, who was “practically the sole proprietor” of said company. At that time J. Vernon Campbell, the owner of certain patent lights purchased by him at the dissolution of the firm of ²¹⁷ Campbell-Zell Company, of which he had been the president, “entered into- an agreement with the said E. J. Codd Company whereby the said J. Vernon Campbell turned over to and employed the said E. J. Codd Company to do the repair work upon Campbell-Zell boilers as orders for the same might be received from time to time from the users of said boilers, which had been manufactured by the said Campbell-Zell Company under letters patent” aforesaid. And pursuant to this agreement the said 3".

Vernon Campbell turned over to the said E. J. Codd Company “all his drawings, price lists, list of users, and other valuable data and information relating to said repair business, with the understanding and upon the express agreement with the said E. J. Codd Company that, after the deduction of the actual cost of labor and material used in making such repairs, the balance of the prices and charges obtained for the same should be equally divided between the said E. J. Codd Company and the said <T. Vernon Campbell, and that the portion or share of the profits thus arising and belonging to him, the said J. Vemon Campbell, should be paid over to the said Edward J. Codd during his lifetime, and after his death to his executors aforesaid, to be credited and paid on account of the aforesaid loan and the interest thereon, until such time as the said payments should have fully satisfied and paid the same; and that thereupon the collateral security aforesaid should be released from said debt and returned to the complainant, Clara Campbell, and that then and thenceforth the said profits, so far as they belong to- the said J. Vernon Campbell, should be paid to him or to- his assigns in cash.” The repair business during the existence of the said Campbell-Zell Company was large and lucrative and continued so when thereafter conducted by J. Vernon Campbell individually, yielding to him, as the bill alleges, an annual net profit of from four to six thousand dollars. Thereafter, during the year 1906, J. Vernon Campbell assigned all his right, title and interest in the agreement to Carroll E. Campbell, one of the plaintiffs, notice of which ²¹⁸ assignment- was at the 'time given to the company “and accepted by it,” and the agreement continued and remained in full force and effect between the company and the assignee. In-1908 Edward Jl Codd died and William C. Codd and Frank L. Mohler, his executors, conveyed and assigned the-debt owing to him by Campbell unto the said company. But upon Campbell’s protesting against the delivery of the jewelry to the company, it was agreed that the same should be held by Mohler, one of the executors, until such time as the share of the profits accruing as aforesaid to Campbell or his assignee should be -sufficient to pay off said debt in full with interest thereon, whereupon the jewelry was to- be returned to Clara Campbell, and-all subsequently earned profits were to be accounted for and turned over to Clara E. Campbell in cash.

In 1910 Paul M. Burnett and Wm. H. Buck were appointed receivers for said company, who continued the business of said company, and in doing so, continued the repair work in pursuance of the alleged agreement. The bill then charges that- it is shown by a partial and superficial examination of the hooks of the company that the profits to which Carroll F. Campbell, assignee, is entitled under the agreement aforesaid, are more than sufficient to-liquidate said indebtedness in full and that the surplus,, amounting to more than $1,200, is owing unto the assignee, and that Clara Campbell is entitled to have the jewelry returned to her. “On the contrary, the E. J. Codd Company and its receivers pretend that there remains due to it and to them on account of said loan a balance of several hundred dollars,”' although neither the said company nor its receivers have ever rendered “a full and fair accounting of the business aforesaid,” or of its profits to which the said J. Vernon Campbell or his assignee, Carroll E. Campbell, or either of them, are-entitled. ²¹⁹ The hill also alleges that exhorbitant and improper charges, not warranted by said agreement, appearing upon the books of the company as overhead charges, amounting to $366 per annum, for upwards of four years, when in each of said years the total net profits credited to the plaintiff did not exceed the sum of $110, have been made against the profits to which the assignee is entitled, in violation of the express understanding between the original parties to the agreement. These charges, it seems were not made until after the expiration of the first year, and were then made without the knowledge and consent of the said J. Vernon Campbell or either of the plaintiffs, although claimed by the defendant receivers to have been properly made under the agreement.

The bill then prays: First. Eor the appointment of a receiver to “take over and hold the jewelry” mentioned in the bill pending these proceedings. Second. That Burnett and Buck, receivers of the E. J. Codd Company, be required to render to the plaintiffs a full, accurate, detailed and true account of the work done under the agreement aforesaid from the date of the agreement in July, 1906, to and including the date on which the receivers sold the plant and property of the company, etc., “setting forth in detail therein, 1st, the prices charged for such repairs; 2nd, the actual cost of the labor required thereon; and 3rd, the actual cost of the material used thereon and all the sums and amounts credited from time to time on the aforesaid debt due Edward J. Codd by J. Vernon Campbell and the interest calculated upon said debt.” Third. “That if said accounting shall show the liquidation and payment in full of said debt- and interest, the said jewelry may be decreed to be surrendered to the complainant Clara Campbell.” Fourth. “And also that if it shall appear therefrom that a balance over and above the payment of said debt and interest is due on account of and by reason of said profits, a degree may be passed directing the receivers aforesaid to pay ²²⁰ the same to the said Carroll F. Campbell out of any funds of said E. J. Codd Company remaining and being in their hands.” Fifth.

For general relief. To this bill the executors of Edward J. Codd filed their answer, in which they admit that the jewelry pledged by J. Vernon Campbell to E. J. Codd, in his lifetime, as collateral security for the loan mentioned in the bill, has come into their possession as executors. In it, however, they allege they have no interest, but have been unable, with safety to themselves,, to surrender it because of the claims of both the plaintiffs and the receivers. In their answer they “tender themselves ready and willing to surrender said jewelry to any person whom this Court may designate.” Burnett and Bucle, the receivers of the E. J. Codd Company, demurred to the bill: “First — Because more than three years have elapsed since the transactions complained of in the years 1906, 1901 and 1908. “Second — That the alleged agreement of July, 1906, sought to be described in the bill of complaint, was not to be performed within a year, and was not in writing, and therefore of no effect under the Statute of Frauds. “Third — That the plaintiffs have not stated in their bill such a case as entitles them to any relief in equity as against these defendants.” The Court below sustained the demurrer and dismissed the bill.

It is from the order of Court sustaining the demurrer and dismissing the hill that this appeal is taken. We will consider the grounds of the demurrer in their reverse order. (1) It is to the last of the objections in support of the demurrer that the appellees devote most of their brief, and take the position, as expressed therein, that “the bill in effect asks the Court to enforce the agreement or understanding of 1906 by decreeing that the E. J. Codd Company had no right under the agreement to make the overhead charges ²²¹ as part of the expense account for the repair work on the Campbell-Zell boilers,” and they contend “that the right of action, if any, in the Campbells, is one of simple contract and should he brought in a Court of law.” This is too narrow an interpretation of the object and purpose of the bill as it is shown by the prayers. It certainly cannot, be said that this is ihe object of the plaintiff Clara Campbell, for whether these charges be allowed or not, she is not affected thereby if the debt is paid.

It is obvious that the object in filing- this bill is to obtain the jewelry to which she is entitled under the contract if the indebtedness has been fully paid. And the primary object of the plaintiff Carroll E. Campbell is to recover what may be owing him out of the profits. Whether these overhead charges shall be allowed or not- is merely incident thereto. The amount of the indebtedness was assigned, as the bill alleges, by the executors of Codd to- the E. J. Codd Company, although the jewelry was to remain in the hands of Mohler, one of the executors, until the debt was fully paid, at- which time it was to be delivered to the plaintiff Clara Campbell.

This indebtedness was to be paid by the borrower out of - the profits accruing under the aforesaid arrangement, in the nature of a partnership, made by him with the company. Those profits were not to- pass to- Campbell or to his assigns until this indebtednes was fully paid. In the meantime, as the bill alleges, they were to- be paid to the holder of the indebtedness, and since the assignment to- it in 1908, the E. J. Codd Company has been such holder. Thus it will be seen that the Codd Company was to do the repair work, establish the charges therefor, fix the value of the labor done and the cost price of materials furnished, and upon the division of profits to credit Campbell’s part upon the indebtedness.

It was only when the profits so credited extinguished the indebtedness that Clara Campbell was entitled to her jewelry, and it was not until then that Carroll F. Campbell was entitled to- have paid to- him a share of the profits arising from said work. The agreement imposed ²²² no active duties upon the plaintiffs, these were all to be performed by the Codd Company. It is alleged in the bill that this indebtedness has been paid. The E. J. Codd Company, as the bill discloses, says it has not been paid in full.

The executors, under the contract, cannot return the jewelry until it is determined that it has been paid. The prayer of the bill indicates that the plant or property of the company has been sold and delivered to the purchaser, in which event no further profits are to be acquired under the agreement, to be applied as a credit upon said indebtedness. Therefore, the plaintiffs are entitled to know what is the status or condition of this indebtedness and whether it has been paid or not. The duty devolved upon the company to so keep its accounts that the amounts received for the work done, the amounts of labor and materials furnished and the charges therefor, and the division of the profits, and the amount credited upon the indebtedness would thereby be