Leahy v. McManus

OppEnheimer, J., delivered the opinion of the Court. .This appeal is from a judgment absolving the individual appellee from personal liability on a note of the corporate appellee, on the ground that the former signed in a representative capacity. The note, dated April 15, 1957, reads: “—Eour months after date we promise to pay to the order of A. Hamilton Leahy— One Thousand and no/100—Dollars Payable at............ Without defalcation, value received, with interest.” There follows authority to confess judgment. The note bears the stamped name of Multi-Krome Color Process, Inc. (the corporation) ; immediately below are the signatures and seals of the individual appellee, C. E. McManus, Jr. (McManus) and C. E. Delauney (Delauney), without designation of any representative capacity.

A. Hamilton Leahy (Leahy), the payee of the note, died on October 10, 1962, and suit on the note was brought in the Circuit Court for Baltimore County by Lis executrix, the appellant herein. Judgment by confession was entered against both the corporation and McManus; McManus filed a motion to vacate the judgment, stating under ■oath that he had signed the note solely as an officer of the ■corporation; testimony was taken on the motion, and Judge ⁴⁵³ Turnbull vacated the judgment against McManus, setting the case to be heard on the merits. Certain facts, adduced at the two hearings, are undisputed. The $1000 represented by the note went into the corporation’s funds.

At the time the note was executed, Leahy was a stockholder and director of the corporation. McManus was chairman of the Board, and Delauney was the corporation’s treasurer. On October 24, 1956, when the corporation was in some financial difficulties, although not insolvent, the corporation’s board of directors passed a resolution requiring the counter-signature on all the corporation’s checks of either McManus or one Ralph Bolgiano, in addition to the already authorized signatures of the treasurer (Delauney), the president, or the vice-president. Delauney prepared the note here involved.

The corporation, at the time of suit, had discontinued operations and was insolvent. Leahy never made demand on the corporation or McManus for payment of the note during his lifetime. At the hearing on the motion to vacate, Bolgiano testified that the corporate resolution as to signing of checks was meant to and did apply to the signing of all corporate obligations. McManus testified to the same effect at the hearing on the merits.

The resolution had not been prepared by the corporation’s counsel. At the time of the second hearing, Bolgiano was deceased, as were all the other persons involved, other than McManus. McManus testified that he had made advances to the corporation, and that Leahy had lent money to Delauney, whose estate, at the time of his death, was insolvent. McManus also stated that he signed the note “as a result of the new set-up” of the corporation, under which he was authorized to sign for the corporation.

He was not permitted to testify as to any conversations with Leahy about the note, because of the Dead Man’s Statute, Code (1957) Art. 35, Section 3, but on cross-examination, stated that the “we” in the note referred to the corporation, as “a collective group”, and that he signed in a representative capacity. At the conclusion of the testimony, the lower court held that there was a prima facie case against McManus, but found that, on the evidence, Leahy knew that McManus and ⁴⁵⁴ Delauney, were signing in representative .capacities and accepted the note as the obligation of the corporation alone. The court’s verdict was for McManus; the judgment against the corporation remained undisturbed. The appellant’s first contention is that the lower court erred in vacating the judgment by confession, although retaining the lien until the case was heard on the merits.

Under Maryland Rule 645b, on motion duly made by the defendant on such a judgment, the court shall take such action “as justice may require.” We have held that the court’s discretion shall be liberally