Johnson & Higgins, Inc. v. Simpson

⁸⁴ Sloan, J., delivered the opinion of the Court. The plaintiff (appellant) has filed a bill for an accounting against the defendant as administratrix of her divorced husband, and at the same time to enjoin the prosecution of a suit at law of the defendant (appellee here), plaintiff in the case at law, which was the subject of an appeal to this court at the October Term, 1932, 163 Md. 574 , 163 A. 832 , and to have the controversy settled in equity instead of at law, where it now is. The facts are so fully stated by Judge Offutt in the former appeal that anything which may be said here is bound to be mere repetition, and no more will be said than is necessary to discuss the questions for decision. The defense to the suit at law was that the defendant’s decedent had, by his misconduct as officer and employee of the plaintiff, forfeited his right to recover on the contract sued on, during his lifetime, and that for this reason his estate could not collect on it after his death, and this court held in the former appeal such misconduct to be ground of defense.

The docket entries in the two appeals show that the bill, amended bill, and supplements were filed and demurred to during the pendency of the suit at law, but the case was not heard on demurrer until after the decision on the former appeal, when a second supplemental bill was filed, and it is from the decree sustaining the demurrer to the bill as amended and supplemented that this appeal is taken. The bill of complaint, as amended and here for review, charges Braun, the defendant’s decedent, while in its employ, with the misappropriation of $4,845.86. The contentions of the plaintiff are, as stated in the prayers for relief and in its brief, that it is entitled to an accounting in equity and to an injunction against the prosecution of the' suit at law on the contract sued on, for the reason that, being for an accounting, it comes within the general jurisdiction of a court of equity, and that it is entitled to pursue its remedy on the account in equity whether the suit at law be enjoined or not, though it contends that it is entitled to an injunction against the prosecution of the action at law. ⁸⁵ The demand which the plaintiff here makes was made in its defense of the case in which an appeal was taken by it from a judgment in favor of the appellee, but the reason now-urged for the change of jurisdiction is that the account upon which the bill is founded • is so complicated that it would be hopeless for a jury to understand it, and it should therefore be tried before a tribunal where the complications can be more effectively unraveled and solved than is possible with a jury. The circumstances under which the remedy ought to be in equity or at law are clearly stated in 1 Story s Equity, sec. 459, quoted in Union Passenger Rwy.

Co. v. Baltimore, 71 Md. 238 , 17 A. 933, 934 , as follows: “It may be laid down, as a general doctrine, that, in matters of account growing out of privity of contract, courts of equity have a general jurisdiction where there are mutual accounts, (and a fortiori where the accounts are complicated,) and also where accounts are on one side, but a discovery is sought and is material to the relief. And, on the other hand, where the accounts are all on one side, and no discovery is sought or required, and also where there is a single matter on the side of the plaintiff seeking relief, and mere set-offs on the other side, and no discovery is sought or required, in all such cases, courts of equity will decline taking jurisdiction of the cause. The reason is that no peculiar remedial process or functions of a court of equity are required.” The plaintiff does not- contend that the accounts are on any side but its own, which must- have had possession of the books of account in this case to have made the allegations with the particularity set out in the bill of complaint. Accounts “ail on one side” means the other side.

Seeley v. Dunlop, 157 Md. 378 , 146 A. 271 . The only reason given for the plaintiff’s contention that equity is the proper tribunal is that its accounts with the defendant’s decedent are complicated. With regard to such an allegation, in Anderson v. Watson, 141 Md. 217 , 118 A. 569, 575 , it is said equity may extend to cases “where ‘there are circumstances of great complication, or difficulties in the way of an adequate ⁸⁶ remedy at law’,” and also to cases where “a fiduciary relation exists between the parties and a duty rests upon the defendant to render an account” (Pomeroy Eq. Jur., sec. 1121; Miller’s Equity Proc., p. 823), and the necessity for a discovery may sometimes furnish a ground for equity jurisdiction (1 C. J. 617).

"While these general principles are not questioned and may be regarded as established, the decisions applying them to the facts of particular cases are not uniform, and there is some divergence of opinion as to the meaning to be given such expressions as “great complication,” “difficulties in the way of an adequate remedy at law,” and “confidential or fiduciary relations.” “Under the decisions of this court, the expressions ‘great complication’ and ‘difficulty in the way of adequate remedy at law,’ when used in connection with an accounting in equity, may be taken to mean such an account as a court of law, with the aid of all the legal machinery at its command, is unable to solve so as to do substantial justice between the parties.” Anderson v. Watson, supra. No hard and fast rule can be laid down as to when complication of accounts is a reason for the taking of jurisdiction by a court of equity, where the remedy at law for the collection of a debt is ordinarily adequate. 1 C. J. 620. The proceeding is generally originated by the one who prays .an accounting, but in this case it is the defense of an obligor on a contract on which suit was brought at law, and that defense involves also a counterclaim for moneys alleged to have been fraudulently appropriated by the plaintiff’s decedent in the suit at law on the contract. It can hardly be treated as a set-off to the claim in the suit at law, because the transactions of the 'employee, as disclosed by the entries in the employer’s books, if they establish the lind'ebtedness claimed by the appellee, also prove his misconduct, which was held on the former appeal, if true, to be a bar to the appellee’s right to recover on the contract.

In the suit at law, where a judgment was recovered against the appellant, afterwards set aside on appeal and a new trial ⁸⁷ awarded, the effect of the jury’s verdict was to deny the misconduct alleged and to find that the decedent, Braun, was not indebted to the defendant, and that none of its money had been appropriated by him. In the opinion in the first appeal was the statement that it could not be definitely and finally said that the debts claimed “showed dishonest or unauthorized misappropriations (the burden being on the appellant), any more than that they were the result of slovenly