Loft, Inc. v. Seymer

Bohd, C. J., delivered the opinion of the Court. This appeal, and the one next to be discussed, bring up- for review further proceedings, in the matter considered by the court in the case of In re Buckler Trusts, 144 Md. 424 . The two -appeals now to- be considered have been argued together, and are -so- connected that for the sake of clearness the facts on which both -are- based will be reviewed in one statement. As was stated in the previous case, the trust fund is invested in three stores -o-n West Lexington Street, in B-alti ⁶⁴⁰ more City, each one of which is subject to a lease toi expire on December 31st, 1929.

The trustees named in the original deed of trust, J. LeBoy White and J. Southgate Yeaton, both died, and for a time there were m> trustees. During that time, it appears, the MoOrory Stores Corporation made some overtures to Mr. John E. Semmes> who was 'counsel for the beneficiaries of the trust, for a lease of all three stores together after the termination of the three existing leases. The extent of these negotiations is not shown on the record. Then negotiations were taken up between Loft, Incorporated, and Mr. Semmes for a like lease of all three stores, and proceeded .almost to the point of agreement on all terms.

The record for the next appeal shows that counsel on both sides of the negotiations agreed upon a lease for ninety-nine years, with annual rentals increasing at intervals from $12,857.15 to $40,000, 'and were in agreement on all other terms except four, stated in a letter from Mr. Semmes to Mr. Coady, dated March 8th, 1923. Mr. Semmes demanded (1) that if any existing lease terminated before its agreed date of expiration, Loft, Incorporated, should not merely have an option to enter upon possession, as counsel for Loft, Incorporated, proposed, but 'should be obliged to- enter; (2) that money from insurance should be applied to rebuilding; (3) that Loft, Incorporated, should pay the same» rent on any premises' taken over before December 31st, 1929, as the tenant of that property had paid under the previous lease; and (4) that after that date the yearly rental under the new, general lease- should begin at once instead of at a time when the property should be “ready for occupancy,” as proposed by Loft, Incorporated. “I do not understand,” wrote Mr. Semmes, “what you mean by ‘ready for occupancy.’ If you will go over this, we are prepared to draw the lease as soon as the title is in condition. I am now taking up the matter of title. The- two- trustees are dead 'and equity proceedings will have to be taken to appoint a new trustee and I will advise you what action we propose to take.” Ho answer to this letter is shown by the record.

One week later, March ⁶⁴¹ 15th, 1923, Mr. Semmes wrote again to Mr. Ooady, and inclosed a written form of agreement thought to- embody the views of both counsel. And the letter closed with this statement. “The other day I received a letter from the people who first offered to lease this property, and while I told them the matter had not been actually closed, I thought that the terms had been agreed upon. Of course, I do not want to lose them in case anything should happen to interfere with carrying out the agreement with the Loft people. - We have both been letting the thing drift along without being actually put in a binding shape, but I understand that the Loft people really want the property on the terms embodied in this agreement.” Eo- answer to this letter appears in the record. Mr. Semmes testified that “Mr. Richards called upon me and asked if this property was still in the market.

I told him of these negotiations-, and that I had not any definite contract or obligation with the Loft people, but that I did not care to enter into -any arrangement without notifying them. I then wrote a letter to- Loft telling him that there was another party desiring to lease the property and unless I heard from them within two- weeks, or ten days, I forget which, that I should consider that they did not want the property, and should make arrangements, if they were satisfactory, with the other person. I heard nothing from them during that period. About the end of that time Mr. Richards came with a proposition from the McCrory Company, with a resolution of the board offering practically the terms set forth in this lease, accompanied by a check for twenty-five thousand dollars, which I took.

I then agreed that proceedings should be immediately instituted to- have trustees appointed to- carry out legally the terms of this lease, as I considered it an opportunity which was not to- be lost.” This is all the evidence on the progress of the negotiations with the two- possible lessees. On March 23rd, 1923, a proceeding was instituted in the Circuit Court Eo. 2 of Baltimore City, to have the court as ⁶⁴² sume jurisdiction of the trust and to appoint new trustees. An order nisi was passed, and before the time limited by it for showing cause in opposition to the relief prayed, Loft, Incorporated, sought, by filing what was called an answer, to prevent action looking to the lease of the properties to another lessee in derogation of rights which they considered to have been secured to them in the negotiations outlined above. The answer was ordered stricken from the files because Loft, Incorporated, had no interest to be prejudiced and no- right to interfere in that proceeding; and on May lYth, 1923, John E. Semmes, Jr., and John Ridgely, Jr., were duly appointed substitute trustees.

An appeal from the action of the court thus far was dismissed. In re Buckler Trusts, supra. On November 13th, 1923, while that -appeal was pending, a formal lease was executed by the McCrory Stores Corporation and the trustees, subject to the approval of the Circuit Court No-. 2 of Baltimore City. The annual rentals ■agreed upon ran from $11,428.58 to' a maximum of $45,000, increasing with time, and exceeded those offered by Loft, Incorporated.

After the termination of the earlier appeal, a bill was filed by Loft, Incorporated, in the Circuit Court of Baltimore City, praying that the agreement which they considered had resulted from the negotiations between Mr. Semmes, Sr., and that corporation, be specifically enforced, and to- this bill the trustees demurred. It is stated in the papers later filed on behalf of Loft, Incorporated, that the demurrer was argued on April 14th, 1924, and that upon a statement then made that the trustees were about to- institute proceedings in the Circuit Court No. 2 for ratification of the lease to- the McCrory Stores, the court deferred action on the demurrer to afford Loft, Incorporated, an opportunity to make a better offer. This, so- far as -anything in the record indicates, was the first mention of the possibility of a better offer by Loft, Incorporated; and it was made five months after the trustees had executed the formal lease to the McCrory Stores ⁶⁴³ Corporation upon terms which were then, and for eight 'months had been, the highest terms offered. On April 23rd, 1924, the trustees filed in the Circuit Co-urt Fo>. 2 an original bill praying for ratification of their lease, and sent a copy of it to- counsel for Loft, Incorporated.And that is the proceeding in which this first appeal was later taken.

Upon an answer filed by the adult beneficiaries consenting to a decree, -and upon testimony taken as to- the desirability of the lease in the interest of infant beneficiaries, the court below passed a decree finally ratifying the lease. Meanwhile counsel for Loft, Incorporated, assuming that because of the absence of the adult beneficiaries abroad, notice by publication, with a consequent delay, would be necessary, took no action. Fine days afterwards, on May 19th, 1924, however, they filed a petition in the trustees’ proceeding praying that the decree of May 10th, 1924, be stricken out, and that the lease of the property be auctioned to- the highest bidder, adding that Loft, Incorporated, was “prepared to make a better offer.” The trustees and the MeCrory Stores Corporation moved that the petition- be stricken from the files, and by an order of court, passed on Fo-vember Ith, 1924, it was stricken from the- files