Horner v. Nitsch

Schmucker, J., delivered the opinion of the Court. This is an appeal from an order of Circuit Court No. 2, of Baltimore City, refusing to dissolve an injunction pendente lite which had been issued in the present 'case against the defendant Albert N. Horner on the application of his co-defendant Josephine Nitsch. The original bill in the case was filed on December 27th, 1902, by Moses Greenberg against Albert N. Horner, his wife, Mary D. Horner, Arthur' B. Nitsch, William M. Warfield, Abraham S. Potter and others. Its purpose was to procure an accounting between the parties to ascertain and determine the true amount, if anything, due to Horner as a' result of a series of alleged grossly usurious loans and discounts, and usurious renewals thereof from time to time made for the benefit of the plaintiff and Arthur B. Nitsch on promissory notes signed or endorsed by one or more of the parties to the case.

The bill also prayed for an injunction restraining Horner from assigning, transferring or prosecuting-suits upon any of the said notes held by him, until the accounting asked for had been made. ⁵⁰⁰ A preliminary injunction as prayed for was granted against Horner upon the filing of the bill, but on January 23rd, 1903, it was so modified as to apply only to suits against the plaintiff, and on June 16th, 1904, it was dissolved by consent, the plaintiff having been adjudicated a bankrupt. As soon as this injunction was modified so as to apply only to suits against the plaintiff Horner brought suit at law on two of the notes against Mrs. Josephine Nitsch, who had endorsed them. Thereupon the Circuit Court upon her application granted a new injunction against Horner restraining him from prosecuting his suit at law against her until, by the statement of an account in the present case, it should be ascertained what was the correct amount due upon the two notes constituting the cause of action in the suit at law. The allegations of the bill so far as they relate to the present controversy are substantially as follows: In July, 1901, the plaintiff, Greenberg, at the request of Arthur B. Nitsch and Wm.

M. Warfield took a note of Nirsch endorsed by Warfield to Horner, who was in the habit of discounting notes at usurious rates, and he discounted the Nitsch note at the rate of ten per cent per month. For several months thereafter Greenberg continued to procure Nitsch’s notes, endorsed by Warfield or A. S. Potter and amounting in the aggregate to several thousand dollars, to be discounted by Horner, who uniformly deducted discount at the rate of ten per cent per month. At Horner’s request Greenberg then began soliciting business for him and brought him for discount notes of various persons not parties to this suit which he, Horner discounted at highly usurious rates making large sums of money thereby. For about eight months the loans represented by the Nitsch notes were, through the instrumentality of Greenberg, renewed by Horner who exacted the payment of ten per cent cash discount at each monthly renewal until Nitsch being no longer able to pay in cash the discount charges gave short notes for them endorsed by the same parties whose names appeared upon the principal notes.

These notes were sometimes as a ⁵⁰¹ matter of convenience drawn to the order of Greenberg and by him endorsed, but he did not share or participate in the discount or charges exacted by Horner. About June, 1902, Horner having thus accumulated a large amount of the Nitsch paper demanded security therefor, whereupon Nitsch furnished him a note for $5,000 endorsed by his mother, the appellee, and Warfield, and subsequently furnished him an additional note for $3,000 drawn by Nitsch and endorsed by his mother. The only consideration given by Ho\ ner for these two notes of $5,000 and $3,000 respectively was the surrender of usurious notes of Nitsch, which he had procured as aforesaid to the amount of $7,780, and the promise to return similar usurious notes of Nitsch to the extent of $350 which has never been fulfilled. Horner demanded and received as further renewal charges when he took the two notes of $5,000 and $3,000 two additional notes, of $150 each, of which one was drawn by Nitsch and endorsed by Warfield, and the other was drawn by Warfield and endorsed by Nitsch.

The notes which Horner thus procured from the parties we have named were transmitted to him through Greenberg, who had come to be his agent or go-between in his discounting business, but-received no part of the profits thereof, and he required Greenberg to put his own name upon them “for memorandum only” as Horner said, and with an agreement that Greenberg was not to be held liable therefor. The bill then alleges that all of the notes of Nitsch, to which we have referred, two of them endorsed by his mother and others by Potter, Warfield and Greenberg or some one or morq. of those persons represent but one transaction, namely, the borrowings of Nitsch from Horner with the usurious discounts charged thereon and that the books and papers relating to that transaction are in the possession of Horner, and that upon a proper application of all the money paid by Nitsch to Horner in connection with said transaction to the repayment of the actual loans made with legal interest thereon it will appear that the former has repaid to the latter in large part the money actually due to him. It is further alleged that ⁵⁰² Horner has for pretended considerations transferred some of the notes aforesaid to his wife, Mary D. Horner, and others, to the defendants, Joseph E. Gartside and Robert H. Carr, Jr., and other persons and that Horner, Gartside and Carr have each brought suit at law on some of the notes against the plaintiff; and that it is impossible for him, in the absence of a full accounting by Horner-to'ascertain what if anything is due on the several notes held by the latter and his transferees, and that it is absolutely necessary in order that justice may be done and the rights and interests of the several parties interested preserved and a multiplicity of suits avoided, that an accounting should be had in equity whereby the exact amount of money due by Nitsch and the complainant be ascertained and determined. The plaintiff tenders himself ready to the extent of his assets, which he discloses in the bill, to pay whatever if anything may be found to be due from him to Horner by the accounting and explains his failure to tender or offer to pay any particular sum as representing such indebtedness by the allegation that he has been unable to obtain from Horner the information necessary to enable him to do so although he has asked Horner for it.

The different parties alleged to be interested as makers, endorsers or holders of the outstanding notes mentioned in the bill are made co-defendants with Horner and the prayer is for a discovery by Horner in detail of the money lent by him upon the notes and the discount exacted therefor by him, for an accounting and an injunction restraining him from transferring any of the notes to other parties or bringing ^suits thereon. The defendants, Horner and his wife, Nitsch, his mother, Josephine Nitsch, Warfield and Potter, all answered the .bill. Horner in his answer did not directly deny the many and specific charges of usury on his part contained in the bill but said that he had purchased certain promissory notes from the plaintiff for value and before maturity and admitted that he' and his wife together held Nitsch’s notes to the amount of ⁵⁰³ $24,684, on which the plaintiff was a subsequent endorser. He denied that the plaintiff had ever been his agent although he admitted that he sometimes' purchased notes from the plaintiff.

He objected in his answer by way o'f demurrer, to the bill for multifariousness, because the plaintiff had an adequate remedy at law, and because it showed the plaintiff to be in pari delicto if its allegations were true. The other defendants, except Mrs. Horner, practically admitted the allegations of the bill so far as they had knowledge of them and submitted themselves to the jurisdiction of the Court. Mrs. Josephine Nitsch in her petition, filed February 13th, 1903, after she had answered and submitted to the jurisdiction of the Court, alleged that Horner held the two notes of her son, Arthur B. Nitsch, for $5,000 and $3,000, respectively, endorsed by her and by William M. Warfield, for which he had given no consideration whatever except the return by him to her said son of other notes which represented the last of a long succession of renewals of grossly usurious loans made to her said son and to The A. B. Nitsch Brick Co., and that the only amount due to Horner on the two notes so endorsed by her was w'hatever he may actually have loaned to her son and the Brick Company with legal interest upon the notes surrendered. That Horner in making the usurious loans to Arthur B.- Nitsch and the Brick Company had taken as security therefor their notes grossly in excess of the amounts of the loans, on which he charged ten per cent per month-in addition to the legal interest thereon, drawn in various ways calculated to mislead and confuse the transactions and make them difficult to unravel.

That Horner had brought suit on the said two notes for $5,000 and $3,000, against' her under the Act of 1886 which made it necessary for her-to p'ead and state under oath the amount actually due on the two notes, which it was impossible for her to do until the account had been stated in this case and the amount so due correctly ascertained. The prayer of the petition is for an injunction against Hor ⁵⁰⁴ ner restraining him from prosecuting his suit at law on the two notes or instituting other suits against her' thereon, until the account in the present case has been stated and the true amount due on the notes ascertained. On the filing of the petition and an appproved bond for $15,000, the injunction Was issued