Devereux v. Berger

Smith, J., delivered the opinion of the Court. Appellant (Devereux) was held in contempt of the Circuit Court for Montgomery County for violation of the terms of an interlocutory injunction. We shall affirm the action of the trial court. Devereux was the president of Metropolitan Acceptance Corporation (Metropolitan), a Maryland corporation.

Appellee (Berger) was a secured creditor of Metropolitan. In October of 1966 Berger apparently did not entertain as high an opinion of Metropolitan, its president and its operations as lie did when he loaned $60,000.00 to that corporation on March 3, 1964, under a security agreement which gave him a continuing security interest in certain assets of that corporation. Berger brought suit for his debt in the Circuit Court for Montgomery County. After Devereux was twice returned non est, Berger entered this suit in the Circuit Court for Montgomery County against Metropolitan.

At his request that court passed an order providing in part: “ORDERED, that the Defendant, METROPOLITAN ACCEPTANCE CORPORATION, and its President, C. KEMP DEVERUEX, (sic) and all its agents, servants, employees, attorneys, successors and assigns and any and all persons in action, concert or ²⁶⁶ participation with it, be and they are hereby enjoined and restrained, from the time this Order shall be served upon them until a hearing hereon, from any liquidation dissipation or dissolution of the assets of the Defendant corporation and from engaging in any course of conduct designed to impair, diminish or destroy the present assets of the corporation, and from taking any action in fraud of creditors, including the Plaintiff herein, and from performing any acts which are in derogation of the Security Agreement referred to in the Bill of Complaint herein, and it is further sj; >¡< sfs “ORDERED, that a copy of this Bill of Complaint, Order thereon, Motion for Ex Parte Injunction, and Order Granting Ex Parte Injunction be served upon the Defendant by the quickest possible means, “PROVIDED, the Plaintiff first furnish bond to the State of Maryland in the sum of Fifty Thousand Dollars ($50,000.00) and “PROVIDED, that the Defendant is given leave to move on not more than two days notice on the Plaintiff for a hearing hereon, and “PROVIDED, that this Injunction shall expire on the 28th day of October, 1966.” The ex parte injunction was extended on October 26 to November 7. Counsel for Metropolitan consented to an interlocutory injunction which was passed on November 4, 1966, in the following terms: “ORDERED, that the Defendant, METROPOLITAN ACCEPTANCE CORPORATION, and its President, C. KEMP DEVEREUX, and all its agents, servants, employees, attorneys, successors and assigns and any and all persons in action, concert or participation with it, be and they are hereby enjoined and restrained, from the time this Order shall be served upon them until a hearing hereon, from any liquidation, dissipation or dissolution of the assets of the Defendant corporation and from engaging in any course of con ²⁶⁷ duct designed to impair, diminish or destroy the present assets of the corporation, and from taking any action in fraud of creditors, including the Plaintiff herein, and from performing any acts which are in derogation of the Security Agreement referred to in the Bill of Complaint herein, and it is further “ORDERED, that the Defendant is given leave to move on not more than two days notice on the Plaintiff for a hearing herein.” The facts in this case are not disputed. A certified public accountant examined the books as of August 31, 1966, (prior to any injunction) and as of April, 1967. There was a reduction in an account receivable from Blair TV (apparently another company of Devereux) in the intervening period without any consequent increase in cash.

In fact, the amount of cash declined in that period by approximately $2000.00. In April of 1967 there was on deposit the sum of $6432.00 with American Savings and Trust Company. On a later attachment by Berger on a judgment he recovered against Metropolitan in another proceeding, this had become approximately $800.00. The explanation of Devereux was that about $4000.00 of this sum was in the possession of his secretary.

With reference to the remainder he said: “I would assume, and here again I am not prepared to give exact data on it, but in the process of converting our accounts receivable into cash—of course we are an operating company, the amounts of money coming in today are not very considerable and they are generally not sufficient to cover the operating cost—I would assume and I feel fairly certain that a good deal of this money will be expended on the normal operations of the corporation.” The examination showed a suspense account of