Goldman v. Brinton

Fowler, }., delivered the opinion of the Court. The questions presented by this appeal grow out of exceptions to several auditor’s accounts which were ratified by ²⁶² order of Circuit Court No. 2, of Baltimore City, in the case of Andrew v. Shinnick, pending in that Court. A bill for injunction and receiver was filed in the case just mentioned, alleging that William F. Shinnick, who was building a number of houses on the north side of North avenue, between Pulaski and Smallwood streets, in the city of Baltimore, was insolvent and unable to complete the partly finished buildings, and that unless the relief asked was granted the claims of the plaintiff and the other material-men, creditors of the defendant, would be greatly imperilled. The appellees, Messrs.

Tippett and Brinton, were appointed receivers, with power to take possession of and complete the houses. They were also authorized to borrow the necessary money for that purpose, and to enable them so to do, the Cqurt on their petition ordered that the money so borrowed should be a first lien on the proceeds of sale of the property in question. This order was passed on the i8th of August, 1896, and the following agreement was filed with it: “We, the undersigned, creditors of Wm. F. Shin-nick, hereby consent to the receivers in the above case borrowing sufficient money by mortgage or otherwise, to finish the building and construction of the twenty-two houses mentioned in the above cause, and we hereby consent to said mortgages, or borrowed money so raised, being prior liens over our respective claims.” All the creditors with the exception of one signed this agreement or agreed in writing to be bound by it.

That one, is the appellant, Milton Goldman. In pursuance of the authority given them by the order of Court just referred to, the receivers borrowed the sum of $15,000, completed and sold the houses. The sales have been duly ratified and the proceeds are in Court for distribution. The auditor’s report and accounts allow the receivers in full'for the sum of $15,000 borrowed money, and distributed the balance among the other creditors.

From the order ratifying the account making this allowance, and thus making the borrowed money-claim of $.15,000 a prior lien, the appellants, Goldman and the Drov ²⁶³ ers’ and Mechanics’ Bank, have appealed—the interest of the latter being that of an assignee of the mechanics’ lien claim of the former against the houses, which were finished and sold by the receivers. The mechanics’ lien claim of Goldman thus assigned to the bank was duly recorded, and unless Goldman or his assignee has waived this claim or unless he is in equity and good conscience estopped now to set it up against the borrowed money-claim or other lien creditors, it must be paid in full at their expense. In order to determine the present status of Goldman’s claim, now in the hands of the bank, his assignee, it .will be necessary to consider the testimony upon which the receivers rely to sustain their contention that to allow Goldman’s lien the priority claimed for it would violate well-settled principles of equity and the plainest rules of common honesty. We will, therefore, in the first place examine the testimony.

It appears that after the receivers took possession of the property under the orders of Court above referred to, a meeting of creditors was called to determine whether the property should be sold in its unfinished condition, and it was determined by them, Goldman being among the number, that the receivers should get authority from the Court to borrow money to finish the houses. A second meeting of creditors, including Goldman, was held at which it was agreed the receivers should go ahead and complete the houses and borrow money for that purpose. It was testified that Goldman knew the money had been borrowed and had to be paid back out of the proceeds of sale; that it was well understood between Goldman and all the other lien creditors that their claims were to be postponed, and that Goldman had unequivocally agreed to sign the agreement which was prepared to effectuate this plan and to enable the receivers to get the necessary order passed by the Court. It seems, however, that although Goldman had promised so to do he in point of fact never did sign the agreement giving this claim for borrowed money priority over his lien, although the receivers were under the impression that he ²⁶⁴ had in this respect complied with his verbal agreement, and they so alleged in their petition on which the order was passed to authorize them to borrow the money.

When the order, however, was presented to the Judge it was discovered that Goldman had not signed the agreement, but upon the' assurance that Goldman had given his verbal assent, the order was signed. Goldman was informed of the passage of the order, and he again agreed to sign the agreement-as filed in Court. He made