Cantor v. Baltimore Overall Manufacturing Co.

⁶⁶ Briscoe, J., delivered the opinion of the Oourt. This controversy arises upon exceptions to an auditor’s account distributing the assets of the Baltimore Overall Manufacturing Company, an insolvent corporation and now in the hands of receivers, appointed by the Circuit Court of Baltimore City, to administer and wind up its affairs, under the supervision of that Oourt. The auditor in the distribution of the funds in the hands of the receivers allowed the appellant a dividend of $1,419.60 on a promissory note for $3,000, drawn by the company to his order, dated April 25th, 1911, and payable four months after date without interest. The appellees are general creditors of the company, and tiled exceptions to the allowance of this dividend on the alleged claim, and state the following grounds of exceptions: (1) That the defendant corporation is not now, and never was indebted to the appellant in the sum of three thousand dollars and is not indebted to him in any sum whatever.

(2) That the appellant is a stockholder and not a creditor of the defendant corporation, and is not entitled to participate in the distribution of the assets until all the creditors who have filed claims have been paid in full. (3) That the appellant is indebted to the defendant corporation. (4) And for additional reasons state, that the sum of three thousand dollars ($3,000) was by the appellant contributed or paid unto the corporation or into the business conducted and carried on under the name of the Baltimore Over-all .Manufacturing Company as capita], and he is not entitled to participate in the distribution of the assets of the corporation or of the business conducted under the name of the Baltimore Overall Manufacturing Company until all the creditors who have filed claims are paid in full; and, (5) That after the sum of three thousand dollars ($3,000) was so contributed or paid in by him as capital he withdrew a part thereof. ⁶⁷ By an agreement as to record filed on the 25th of October, 1912, it was agreed, that the exceptions filed hy the National Exchange Bank, Pereth Cohen, Collins, Ray & Company, S. Hurwitz, L. Spiegelberg & Sons, W. P. West & Sons, Standard Overall Company,.McKenny, Field &.Woodman, H. B. Claflin Company, The Thread Agency, and The EarrishStafford Company, as shown hy the docket entries, are similar to and substantially the same as the exceptions and the additional exceptions filed hy T. Martin and Brothers Mfg. Co. and that the claims of all the excepting creditors were duly proved and verified, and all the items on all of said claims are for charges against said corporation for merchandise sold to it after May 2, 1911, except the claim of The National Exchange Bank, which is for money advanced or loaned on a promissory note after this date.

These exceptions to the claim of the appellant were sustained hy the Court below, and from the order so passed on the 18th day of July, 1912, this appeal has been taken. The net balance in the hands of the receivers for the distribution appears to he the sum of $4 431.84 ánd if the appellant is to participate as a general creditor, the dividend of $1,419.60 as allowed hy the auditor, will consume nearly one-third of the entire assets of the estate, and the remaining creditors who have filed their claims, will receive on or about 47.31 per cent. A large mass of testimony was taken in open Court, covering nearly two hundred pages of the record, so we will not review it at length, hut state our conclusions, and refer briefly to the facts upon which they rest. While the evidence is somewhat conflicting and contradictory upon some of the material facts we think, it is sufficient upon the whole record, to sustain the conclusion reached hy the lower Court, and its decree must he affirmed.

The questions to he determined are issues of facts, rather than of law, and come to this: Was the three thousand dollars here in controversy contributed hy the appellant as an addition to the capital of the company, and to be treated as ⁶⁸ such, in so far as the creditors, who have filed their claims in this case, are concerned, or was it a fund so borrowed by, and loaned to the company by the appellant as to constitute him a .creditor and entitling him to participate in the distribution of its assets along with the creditors of the company who became such after the obtention of the fund. It must be borne in mind at the outset that we are dealing with a class of creditors who became such after the 25th of April, 1911, the date of the note, given to the appellant, and it is admitted, that all of the items on all of the claims are for charges against the company for merchandise sold to it after May 2nd, 1911, except the claim of the National Exchange Bank, which is for money advanced or loaned on a promissory note after that date. The undisputed evidence shows, that on the 27th day ot April, 1911, Pelzerman, the president of the company, M. Wilenzig its