Carey v. Mercantile Credit Co.

³⁸⁸ Bond, C. J., delivered the opinion of the Court. A complainant in equity appeals from the dismissal of his bill of complaint after a demurrer to it had been sustained, lie had stipulated that no further amendments should be made. The bill seeks, among other remedies, a receivership of the assets of the Maryland Lacquer & Varnish Company, and it has been stated in argument for the appellees that at an earlier stage of the case, at the instance of additional complainants, a receiver had been appointed for that company, and that subsequently it had been adjudicated bankrupt, and was now in bankruptcy. The argument on both sides has omitted discussion of the prayer for this receivership.

The facts of the earlier receivership and the bankruptcy are not before this court on the record, however, and we must consider the hill as one for the appointment of a receiver of the Lacquer Company along with other reliefs asked. Ho demurrer was filed on behalf of the Lacquer Company, and it is not an appellant. The bill is not clear in some respects, bnt the substance of the complaint appears to be this. The defendants, Crouch and Lawrence, were interested in two corporations, both made defendants, the Lacquer Company and the Credit Company.

Crouch was president of both, and Lawrence was secretary and treasurer of both until the complainant, Carey, was appointed to those offices in the Lacquer Company. Lawrence sold out his interests and withdrew before some of the transactions complained of. The two companies were, in effect, veils adopted by Crouch and Lawrence, and especially by Crouch, and devices of a conspiracy between those two, for their own aggrandizement by perpetration of frauds such as are alleged to have been committed on the complainant. Crouch, in the first place, fraudulently induced Carey to become a stockholder in the Lacquer Company by representing to Carey that it was a solvent coi’poration, making money, and that persons named had invested considerable sums of money in the company, whereas in point of fact, as Crouch, and also Lawrence, knew, the money stated had not been invested, the company was insolvent, and involved in litiga ³⁸⁹ tion, and Crouch was making a practice of transferring bills receivable from the Lacquer Company to the Credit Company without consideration and without authority.

A large amount of stock had been issued in payment for rights in a process which was not secret and not of special value, and it is averred that the complainant does not know whether this was stock which later stood in the names of Crouch and, Lawrence. Carey bought his stock from Lawrence., and paid for it in part by a note for $3,000, on which Lawrence is now ■suing at law. It is prayed in the bill that this purchase may be annulled and that the prosecution of Lawrence’s suit may be enjoined. The note appears to have been endorsed to the Credit Company, but Lawrence sues on it as plaintiff.

As a result of the same first fraudulent representations, Carey also made a loan to the Lacquer Company of $2,000. At later times, Carey, as secretary and treasurer, signed a renewal note for the Lacquer Company, in favor of the Credit Company as payee, for over $15,000, and endorsed it in his individual capacity; and, again, signed as maker, together with others, two notes for an aggregate sum of $5,000, for the benefit of the Lacquer Company. And it is averred that the endorsement and signatures of Carey on the last three notes mentioned were all obtained by fraud of Crouch, consisting in his pretensions that the