Ghingher v. Fanseen

Offutt, J., delivered the opinion of the Court. Foster II. Fanseen, the appellee, on or about September 1st, 1932, borrowed from the Baltimore Trust Company, a Maryland banking corporation, herein called the bank, $500, and deposited with the lender collateral security for the loan. At the institution of this proceeding, the unpaid balance due on the loan was $469.4-7.

Prior to this proceeding he had opened an account with the savings department of the bank entitled as follows: “Foster H. Fanseen, in trust for himself and Lillian Fan-seen, as joint owners, subject to- the order of either, the balance at the death of either to- belong to the- survivor” — and had deposited to- the credit of that account of his own proper funds $500, without'the knowledge- of Mrs. Fanseen, who prior to- February 5th, 1933, knew nothing of the account or of the deposit. At some time prior to this proceeding Fanseen offered to sot off the- amount of the deposit against his debt to the- bank. It refused to. so- apply the deposit, but threatened to- sell the collateral to enforce its claim, and John J. Ghingher, state banking commissioner, in whose- control it was, refused to “direct and authorize-” it to- permit the set-off. Thereupon Fanseen filed the- petition in this case, in which he prayed the court to direct the writ of mandamus to- issue- “(a) Directing John J. Ghingher, State Banking Commissioner, to authorize the Baltimore Trust Company to- set off the savings account against the loan due by your Petitioner to- the Baltimore Trust Company, (b) Directing John J. Ghingher to an ⁵²³ fhorizo the Baltimore Trust Company to release the ten shares of the East Stroudsburg (Pennsylvania) XTational Bank and deliver the same to your petitioner.” A demurrer filed by the defendant to' that petition was overruled, and the court ordered the writ of mandamus to issue “directed to John J. Ghinghor, Bank Commissioner of the State of Maryland, commanding him forthwith to order the proper officers of The Baltimore Trust Company to allow the set-off of the savings accounts in said Trust Company, standing in the name of ‘Poster H. Fanseen, in trust for himself and Lillian Fanseen, as joint owners, subject to the order of either, the balance at the death of either to beLong to the survivor/ against the obligation of said Foster H. Fanseen in the hands of the said The Baltimore Trust Company, and to deliver the collateral held in connection with said note or obligation to the said plaintiff, and that the clerk of this court be directed to enter a judgment in favor of the plaintiff for costs.” From that order this appeal was taken.

The contention of the appellant is. that the claim of the bank against Fanseen and the claim of Fanseen against the bank were in different rights and lacked mutuality, in that Fanseen’s interest in the fund was that of a trustee, while the bank’s, claim was against him in his own right for money loaned to him personally, and that therefore his. interest in (he fund could not be' set off against his personal debt to. the bank. Appellee’s contention is that, since by the terms of the deposit he could have withdrawn the entire fund deposited to his account, he also had the right to have it set off against the bank’s claim against him for his personal debt to it. The petition is inartificially drawn and omits facts which should properly have been shown. Construed most strongly against the pleader, it sufficiently alleges the facts, stated, but fails to- show when the trust account was opened, or when Fanseen offered to set off his interest in the trust, fund against the bank’s claim against him.

It will therefore be assumed that the deposit was made prior to February 25th, 1933, and the demand was- made after March 13th, 1933. ⁵²⁴ The question which the parties intend to present is. Did the two claims, that of the bank against Fanseen for the money he owed it, and Eanseen’s claim arising out of the trust account, possess that quality of mutuality essential to give him the right t.o have his interest in the fund set off against his debt to the bank ? But before dealing with that question we must notice a question of practice which, while not presented by the petition, is manifest on the face of the record. It appears from the record that, when the court overruled the demurrer, it granted leave to' the defendant to- answer within ten days, and that, the defendant having in open court refused to' answer, the court then without testimony or other proof directed the writ to' issue.

The practice relating to the issuance of the writ of mandamus is special, technical and peculiar. The petition must set forth fully the grounds of the application, and must be verified by the affidavit of the petitioner. Formerly, upon the filing of the petition in a proper case, the writ issued immediately in the alternative, commanding the defendant to “do the thing ordered, or to show cause by a certain date why he should not do it.” Pennington v. Gilbert, 148 Md. 652 , 129 A. 905, 907 . Under the modem practice the writ does not issue upon the filing of the petition, -but the defendant is laid under a rule to show cause why it should not issue.

Id.) Code, art. 60, sec. 2. The defendant then is required to file an answer verified by affidavit setting forth all facts relied on as a defense (Code, art. 60, sec. 3), and while not expressly so provided by the statute, he may, instead of filing an answer, demur to the petition, West v. Musgrave, 154 Md. 42 , 139 A. 551 . If an answer is filed, the petitioner may demur to it (Good v. Board of Police Commissioners, 137 Md. 198 , 112 A. 294 ); and, if the demurrer is sustained, the writ may issue without proof in cases where, if every fact averred in the answer is assumed to be true, a valid legal ground is shown for the issuance of the writ (Hooper v. New, 85 Md. 586 , 37 A. 424 ; Price v. Ashburn, ⁵²⁵ 122 Md. 520 , 89 A. 410 ). For, notwithstanding the fact that a demurrer to- the answer is sustained, the answer remains in the case (Id.), and, in determining whether in such a case the writ is to issue, the court will consider its averments and concessions as well as- those of the petition, and if, upon all the facts so alleged, admitted or conceded, it appears that the writ should issue, it will be so ordered.

The rule is not the same, however, where a demurrer to the- petition is overruled, and the defendant, fails o-r refuses to- answer, for in that ease the demurrer is not taken as such an admission of the facts alleged in the petition as will permit the- writ to issue without proof or the equivalent of proof that the facts alleged in the petition are true; for, as stated in Legg v. City of Annapolis, 42 Md. 223 : “'The allegations of the petition are not authorized to- he- taken pro confesso; nor is the judge authorized to- enter judgment as by default for want of answer, o-r- by nil dicii. The case must he heard, and the mind of the judge satisfied, both as to- the law and the facts, before the writ can be ordered.” Hooper v. New, supra. In Beasley v. Ridout, 94 Md. 649 , 52 A. 61, 62 , it was held that a statement of the trial court that the-“questions of fact at, issue were waived or admitted” was “equivalent to full proof,” but it was- again stated that a demurrer to the petition does not admit the facts alleged; “that not- being the effect- of a demurrer in a proceeding for a prerogative writ like mandamus.” See, also, Hooper v. New, supra; West v. Musgrave, supra. In this case- there was neither answer, proof, waiver, nor admission, hut the court directed the writ to- issue as though the failure of the defendant to answer relieved the petitioner of the burden of proving the facts alleged in his petition.

Since defendant’s failure or refusal to- answer had no such effect the order mus-t he- reversed. But while the order must be reversed for that reason, s-ince no point was made in this court of that defect in the proceedings, and the case was argued here as though the question stated above was the only question in the case-, we have ⁵²⁶ thought it proper to deal with it, so that upon a remand the case- may be at an end. In approaching that question, it may be considered that in dealing with a petition for the writ of mandamus, while- the proceeding is a legal one -and in a common law court, the court will invoke equitable principles- to reach the “real issue or merits of the controversy.” Creager v. Hooper, 83 Md. 502 , 35 A. 159, 160 ; Pope v. Withridge, 110 Md. 475 , 73 A. 281 ; 38 C. J. 545, 549, 551. The basic principle underlying the law of set-off is that a defendant has the right to set off against the plaintiff’s demand or claim any claim o-r demand that he may have against the plaintiff extrinsic to- the transaction out of which the plaintiff’s claim arises, where the cross-demands are mutual, arise out of the s-ame right, are due and payable, and are liquidated. 57 C. J. 360-362; 24 R. C. L. 792; Fidelity & Deposit Co. v. Poe, 147 Md. 502 , 128 A. 465 ; Cohen v. Karp, 143 Md. 211 , 122 A. 524 .

As the doctrine was not known to the common law, in actions at law the right exists only by virtue of some statute (57 C. J. 360; 24 R. C. L. 799; Code, art. 75, sec. 16 et seq.); but, since it is equitable ia its nature, it is generally recognized as within the general jurisdiction of courts of equity.