Easter v. Tatelbaum

Delaplaine, J., delivered the opinion of the Court. Andrew J. Easter, landlord of Honey Lane, Inc., a restaurant corporation, is appealing here from a decree of the Circuit Court of Baltimore City ratifying the auditor’s account in trusteeship proceedings on condition ■ that the trustee would pay him $250 for rent for his restaurant building situated at 6608 Belair Road. Appellant had leased his building to the corporation for five years, beginning December 1, 1948. On January 6,1950, the corporation executed a deed of trust to Hyman P. Tatelbaum, and the Circuit Court assumed jurisdiction of the trust.

On January 12 National Store Fixture Sales Company filed a petition alleging that it had sold to the corporation certain booths, settees, tables, chairs, stands and other equipment on conditional contracts of sale, and there was due thereon the sum of $5,294.63. On January 17 Louis I. Swimmer filed a similar petition alleging that National Store Fixture Sales Company had sold other equipment to the corporation on conditional contract of sale, which had been assigned to him, and there was due thereon the sum of $4,182. The trustee planned to sell the restaurant equipment at auction on January 24, 1950, but appellant requested the Court (1) to revoke the order authorizing sale of the equipment, (2) to disallow the claim of National Store Fixture Sales Company, and (3) to declare the entire contents of the restaurant building to belong to appellant. After a hearing on appellant’s petition, the trustee agreed to postpone the sale.

Appellant then filed a petition to exclude the air conditioning system and the kitchen stoves from the sale. It was subsequently decided by agreement of counsel that the air conditioning system was a fixture and would not be sold by the trustee, while the kitchen stoves were not fixtures and might be sold by the trustee. On March 6, 1950, the trustee sold the restaurant equipment at auction for $13,000. Prior to the sale appellant had filed a claim for rent for the months of ⁶³⁹ October, November and December, 1949, and January, 1950, and also a claim for the month of February, 1950.

After the sale he filed a petition to require the trustee to pay a consolidated claim for rent in the aggregate sum of $2,873.75. The trustee answered that it was impossible at that time to determine whether or not there would be any funds in the trust estate with which to pay any part of the landlord’s claim. On May 9 the Court authorized the auditor to allow the claim, subject to the usual exceptions. The auditor’s account, however, made no allowance for rent, and appellant excepted to the account.

On April 24, 1951, the Court heard arguments on the exceptions, but withheld decision in order to give appellant further time in which to investigate what distrainable articles were in the inventory. On May 2 appellant’s attorney presented a list of articles appraised at $6,808.72, which he claimed were not covered by conditional contracts of sale and were subject to distraint. He then agreed to “submit to the jurisdiction of the Court” upon that statement without testimony. The Court ratified the auditor’s account on condition that Joseph W. Spector, attorney for the trustee, would pay out of his counsel fee of $1,051.92, which was allowed in the account, $250 to Andrew J. Easter, landlord, $50 to Max Blum, appraiser, and $100 to Lester Ellin, auditor.

That was a final decree. Two days later, however, appellant’s attorney asked the Court for permission to file “An Offer of Proof and Exhibit.” Thereupon on May 4 the Court filed a revised decree reciting that the papers in the case had been read and considered, and ordering the trustee, instead of the trustee’s attorney, to pay the landlord, appraiser and auditor. The Court afterwards explained that appellant’s attorney was permitted to file his paper on May 4 without notice to the trustee and without any evidence of its authenticity. The insolvency statute provides that whenever any person or corporation shall make an assignment for the benefit of his or its creditors, in the distribution of ⁶⁴⁰ the property or estate of such person or body corporate, all the money owing from such person or corporation for rent of any real or leasehold property in this State due not more than three months, but not actually distrained for, before the execution of such assignment, shall constitute a lien