McLean v. Maloy

Thomas, J., delivered the opinion of the Court. The late Colin McLean, of Baltimore City, wasi for a number of years connected with the Baltimore and Ohm Bail-road Company as superintendent of construction of bridges', etc., and left that company to engage in the contracting business in New York. After repeated reverse® in New York and elsewhere he returned to Baltimore in 1903. His losses had exhausted his means, and he no longer had the necessary money to carry on the contracting business, but in that year he caused to be incorporated in Baltimore City the McLean Contracting Company, with a capital stock of twenty-five thousand dollars, all of which was paid for by his wife with property she had in New York, and she gave him, or the company, thirty shares of the stock to distribute among his friends.

She also gave him, or the company, some money that she had in the savings bank to pay for a dredge. By this means, and with further financial assistance from Mr. George Shriver of the Baltimore and Ohio Bailroad Company, with whom h© had maintained friendly relations ever since his connection with that company, and with the aid of Mr. Frank Furst, who assisted him in securing1 the necessary contractor’s bond, the McLean Contracting Obmpany began the contracting business in Baltimore City. For several years ⁴⁶⁹ tbe company's earning’s, were sufficient to afford Mr. McLean a living and to enable tbe company to gradually acquire a plant. While engaged in the: dredging business around Baltimore, Mr. McLean discovered large deposits: of sand and gravel at the bottom of the river-, and in 1907 or 1908 he conceived the idea, of dredging for this sand and gravel.

To enable him, to do so the capital stock of the McLean Contracting Company was increased to $65,000.00, and Mr. McLean again appealed i» Mr. Shriver to get his, friends to take the stock. This enterprise of the McLean Contracting Company was so successful that it attracted the attention of Mr. Michael Horner, who had been a friend of Mr. McLean and who decided to undertake the same business). The competition between the McLean Contracting Company and Mr. Horner became very bitter, and tbe cutting of prices of sand and gravel below cost was about to ruin both the company and Mr. Horner. They both appealed to their mutual friend Mr. Frank Fnrst, and he advised them to combine and to form a company.

As: the result of this advice the Arundel Sand & Gravel Company was incorporated with the McLean Contracting Company, Mr. Burst and Mr. Horner1 as the principal owners of the capital stock, the McLean Company receiving for that part of its equipment employed in the sand and gravel business the stock of tbe: Arundel Sand & Gravel Company to the amount of $45,000.00. The Arundel Sand & Gravel Company, doubtless: through the business ability and financial backing1 of Mr. Burst, was a great success, and for several years tbe McLean Contracting Company received each year dividends on its stock of the Arundel Sand & Gravel Company to the amount of $22,500.00. In 1913 the Arundel Sand & Gravel Company was reorganized, and as a result of that reorganization the McLean Contracting; Company received $362,000.00 in cash, prefer red stock of the par- value of $213,000.00 and common stock of the par1 value of $140,-000.00. After the McLean Contracting Company received the money and stocks referred to:, Mrs. McLean and some of Mr. McLean’s friends wanted him to: retire: from business, ⁴⁷⁰ but as early asi 1907 Mr. McLean, who was the president of the McLean Contracting Company, and with his wife controlled that company, acting on what he supposed was reliable inside information as to the future needs: of the Baltimore and Ohio Railroad Company, began to. lease and purchase lots and Water-front properties at Locust Point with the Mew of selling them to the Railroad Company.

In April, 1907, he leased from E. Glenn Perine and others, in the name of the McLean Contracting Company, the lot. designated on the plat and known in this ease as lot A, subject to an annual ground rent- of $3,898.63. In November, 1910, he leased in his own name from E. Glenn Perine* and others lot D, subject to an annual ground rent of $4,739.04. In June, 1911, he leased from E. Glenn Perine and others in the name of the Contracting Company lot B, subject to an annual ground rent of $1,240.00, and in June, 1912, he leased from E. Gleam Perine and others in the name of the Contracting Company lot O, subject to an annual ground rent of $2,400.00. In March, 1913, he leased in his own name from the Baldwin and Myers heirs and tomate©» lot G, subject to an annual ground rent of $3,900.00.

In April, 1913, he purchased in his own name lot F, for $45,000.00, $20,000.00! 0f which was paid in cash, and the balance of $25,000.00 Was: secured by .a mortgage of the property. In August, 1913, he purchased in his own name from the 'Standard Oil Company lot E, for $42,500.00, $12,500.00 of which was paid in cash and the balance of $30,000.00, represented by three promissory notes of $10,000.00 each, were secured by a mortgage of the* property, and the first of said notes was paid in 1915, and in October, 1913, he leased in his own name from the Howard heirs lot H, subject to* an annual ground rent of $5,300.00'. He also purchased in his own name, in August, 1914, for $18,000.00 lot No. 1, a suburban property, commonly known as the Ingram property, on Park Heights Avenue, in Baltimore City. The dwelling on this property had been destroyed by fire, and Mr. McLean spent about $30,000.00 in restoring ⁴⁷¹ the building, and then incumbered the property by a mortgage to a building association for $24,000.00.

The money paid for the lots purchased in Mr. McLean’s name, as well asi that required to carry all of the lots and to pay the ground rents, taxes and interest, and for extensive improvements, was furnished by the McLean Contracting Company, and as that company had never declared any dividends, 'except dividends of ten per cent, each year1 during] the several years ending in 1911, when the company received the dividends of $22,500.00 referred to from the Arundel Sand and Gravel Company, in order to meet the heavy demands upon it, it was compelled to sell by degrees' all of its common stock and a, part of its preferred stock of the Arundel Sand and Gravel Company, and to pledge as security for loans nearly half of its remaining preferred stock of that company. Mr. McLean made repeated efforts to sell these lots, and also placed them in the hands of a number of real estate agents for sale, without, any success, and by the end of 1915 his credit and the credit of the McLean Contracting Company had become so impaired that he told his attorney that “he could not last six months longer.” Another embarrassing feature of the situation in 1915 grew out of the proposed opening of McOomas Street through these lots. Mr. McLean, and those who succeeded him in the management of his estate and the affairs of the Contracting Company, believed that the opening of the street would practically destroy the value of the lots., and in addition to that the Commissioners for Opening Streets had assessed the benefits to these, lots at $82,000.00 more than the damages awarded. Appeals were entered from the action of the Commissioners and were pending at the time of Mr. McLean’s death.

Mr. McLean died in Baltimore City, intestate, on the 29th of April, 1916, leaving a widow, Catherine McLean, a daughter by a former marriage, Josephine McLean, now1 Mrs. Dali, and a. son, George McLean, as his only next of kin and heirs at law. Miss Josephine McLean was about thirty-six years of age at the time of Mr. McLean’s death. She married when ⁴⁷² she was about nineteen years of age and had been divorced from ber husband. Sbe bad no means', and as, according to ber testimony, the relations between ber and ber step-mother were rather “strained,” she lived in Washington on an allowance of $1,200.00 a year from her father.

George McLean was forty years of age at tbe time of Mr. McLean’s death, and was married and living in tbe State of New York. He bad been educated at Rock Hill College, at Ellicott City, Mjaryland, and after leaving college worked from time to time for bis father when be was engaged in tbe contracting business, and knew of tbe reverses and failures of bis father in that business. He bad not been very successful in any business of bis own, and Mr. McLean for a number of years before bis death had been assisting him, but not to tbe same extent that be- provided for bis daughter. After Mr. McLean’s death, Mrs. McLean, Miss Josephine and George MHLean consented to- tbe appointment of Mr. William M. Maloy and Mr. Obarles H. Knapp, both of Baltimore C&ty, as administrators of bis estate.

Mr. Maloy was a member of the bar and of tbe firm of Maloy & Brady, composed of himself and George M. Brady, and bad been counsel for Mk\ McLean and tbe McLean Contracting Company for a number of years'. Mr. Knapp was also a member- of tbe bar, and of tbe firm of Knapp-, Ulman & Tucker, was president o-f Burst Realty Company, which owned a great de-al of water-front property on tbe opposite side of Spring Gardens, and was counsel for tbe Burst interests in Baltimore City, for tbe Maryland Dredging Company and for tbe Arundel S'and & Gravel Company. Tbe theory upon which these gentlemen were selected to serve as administrators, apart from their ability and standing as attorneys, their knowledge of tbe properties involved and their relations with tbe parties interested, was that Mr. Maloy would represent the interests of tbe children and Mr. Knapp- would represent tbe interest of Mrs. McLean. ⁴⁷³ An examination of the condition of Mr. McLean's estate^ and of the affairs of the McLean Contracting Company, digtclosed that the estate consisted of: Lot D, leasehold, subject to annual ground rent of $4,739.04, redeemable at about. . $78,984.00 Lot G, leasehold, subject to an annual ground rent of $3,900.00, redeemable at. $66,000.00 Lot II, leasehold, subject to an annual ground rent of $5,300.00, redeemable at. $88,333.33 Lot E, in fee, subject to a mortgage of. ... $20,000 00 Lot P, subject to a ground rent of one dollar, but really in fee, subject to a mortgage of............................. $25,000.00 Lot I, Park Heights Avenue property, subject to a mortgage of................. $22,500.00 253 shares of stock of the McLean Contracting Company, par value $100.00, at $250.00 per share ................... $63,250.00 52 shares of preferred stock of Arundel Sand and Gravel Company, par value $300.00, at $90.00 per share........... $4,680.00 1 share of common stock of the Arundel Sand and Gravel Company, par value $100.00, at $74.00 .................... 74.00 1 share of the common stock of the Garrison Country Club, par value $10.00, at $1.00............................... 1.00 1 share of the common stock Southern Branch Drawbridge Co. (Norfolk, Ya.), par value $100.00, at $1.00............ 1.00 2 fifty-dollar bonds Baltimore Yacht Club. 100.00 30 shares common stock of the Baltimore Orchard Oo., par value $10.00, at $1.00 30.00 343 shares of the common stock of the Boston Sand and Gravel Co., par value $100.00, at $5.00..................... 1,715.00 226 shares preferred stock of the Boston Sand and Gravel Co., par value $100.00, at $25.00........................... 5,650.00 Other assets valued at.............. 132.00 ⁴⁷⁴ One of the mortgages was due, and among a number of other items of indebtedness of the estate werei the items of $14,500.00, due Mr. Georg© Shriver, and $12,532.76, due for taxes for the years 1914, 1915 and 1916. Iu addition to the leasehold interests iu lots A, B and 0, subject to the annual ground rents referred to of $3,898.63, $1,240.00 and $2,400.00, the assets of the McLean Contracting Company consisted of its. plant, machinery, merchandise stocks and accounts receivable, all of uncertain value, and Cash................................. $10,073.87 1916 shares preferred stock of the Arundel Sand and Gravel Co., par value $100.00, at $90.00 ...........................$172,440.00 50 shares of stock of the Boston Sand and Gravel Co....................... 1,000.00 36 fifty-dollar first mortgage bonds of the Baltimore Yacht Club ............... 1,800.00 50 shares of stock of the Frank Furst Realty Company..................... 5,000.00 The company was not only indebted for accounts payable and bills payable to the amount of $55,196.43, for which about 850 shares of its preferred stock of the Arundel S:and & Gravel Company had been pledged as collateral security, but it was also indebted for taxes for the years 1914, 1915 and 1916 to the amount of $12,355.70.

The capital stock of the McLean Contracting Company consisted of six hundred and fifty shares and was held as follows: Mrs. McLean, 382 shares; Mr. McLean’s estate, 253 shares; Miss Joesphine McLean, 6 shares; Donald McLean, 3 shares; Robert Kennedy, 3 shares- and Mr. Gagbey, 3 shares. Mrs. McLean, who owned a majority of the stock, had always been very much opposed to the purchase of lots A, B, O, D, E, E', G and H, and did not share in Mr. McLean’s hopes and expectations in regard to them. Moreover Mr. McLean’s experience, and the experience of some of her friends in the contracting business, made her imwilling to continue- that business-, and ⁴⁷⁵ after Mr. McLean’s death, prompted by her own views and the advice of relatives and friends, she was anxious to have the company liquidated. Mr. Knapp shared her1 views, as to the value of the lots and the advisability of liquidating the company or disposing of her stock, but Mr. Maloy had more faith in the value of the lots and, also, felt that the continuation of the company was the only means by which he could hope to raise the money necessary to carry the lots until they could he disposed of, and that liquidation of the company would, therefore, he disastrous to his dienta, Miss Jaephme- and George McLean.

At a, meeting of the stockholders of the company on May 17th, 1916, which Miss Josephine McLean attended, Mrs. McLean was. elected president of the company; Mr. Maloy and Mr. Knapp were elected members of the board of directors,, composed of Airs. McLean, Miss Josephine Moldean, Robert, Kennedy, Donald McLean, Joseph Oagihey, William M. Maloy and Charles H. Knapp, and a resolution was pas-sad creating an executive committee composed of Mrs. McLean, Mr. Maloy, Mr. Knapp and Mr. Donald McLean, who Was the nephew of Mr. Colin McLean and the general manager of the company. At that meeting there was read a statement of the condition of the company and of the- McLean estate and a copy of that statement, was given to Miss Josephine McLean. At a subsequent meeting of the stockholders and directors- of the- company it was. arranged that Miss McLean, who had hem receiving one hundred dollars a month from her father and who was dependent upon it, for support, and George and Mm McLean should have an account with the company upon which they co-uld draw while the estate was being settled.

At a meeting of the directors and stockholders of the company on May 31 sit, a resolution was passed authorizing the company to borrow $35,000'.00 and to deposit as collateral 500 shares of the Arundel Sand & Gravel Company preferred stock, $20,000.00 of which was to be loaned to the estate of Mr. McLean on the note of the distributee® and to- be used in paying the debts of the estate, and the balance of $15,000.00 was to be used in paying the ⁴⁷⁶ debts of the company. In the latter* part of June or early in July Mrs. McLean and Miss Josephine and George McLean and the. administrators leased lot G to the Coastwise Ship Building Oompany for the term of five years at an annual rent of $6,500.00, with the right to a renewal of the lease for a like term at an increased rent, and with a cotonant on the part of the lessee to construct certain improvements on the lot, and subject to the right of the Baltimore and Ohio Railroad Company to' purchase or condemn that portion of the lot north of the northern line of MeComas Street as proposed to be opened. On. the 28th of August, 1916, Mr. Maloy and Mr. Knapp' succeeded in reaching an agreement with the city settling the controversy in reference to the opening of McC'omas 'Street, and also obtained an agreement with the Baltimore and Ohio Railroad Oompany in reference to the purchase of those parts of lots E, E, G and H situated north of the northern line1 of the proposed MeComas Street. By these agreements, which were executed by Mrs. McLean, Miss Josephine and George McLean and by the administrators, the railroad company agreed to pa.y for said parts of lots E, F, G and Ii, in fee, so .much per square foot, amounting toi $56,236.96 for the part of lot H, $38,341.83 for the part of lot G, $12,249.59 for the part of lot E and '$14,263.86 for the part of lot Ej and the city agreed, subject to the passage of the necessary ordinance, to abandon or close that part of MeComas Street east of lot H, and to purchase, in fee, that part of lot U south of the northern line of MeComas Street for the sum of $82,000.00, less the sum of $20,000.00', which the McLean heirs and administrators agreed should be assessed against the remainder of lot H and lots E, F, G, D and A. As an ordinance had to be passed to carry out this agreement with the city, settlements with the city and the railroad company were not made until the following October'.

Mrs. McLean, who was determined to liquidate the McLean Contracting Company or to dispose of her stock, refused to let the company take any contracts^ in consequence ⁴⁷⁷ of which the plant was rapidly deteriorating and Mr. Knapp threatened Mr. Maloy that if he did not find some one to purchase her stock “he could not hold Mrs. McLean any longer” and they would have to liquidate. While M!r. Maloy and Mr. Knapp- were trying to close the lease to- the Coastwise -Ship .Building Company and to- effect a settlement of the MciCom-as Street appeals b-y the agreements with the city and railroad company referred to, they were also endeavoring to- sell the lots and. to find a purchaser for Mrs. McLean’s stock. Mr. Knapp- offered lots A, B, O and, D to- the Baltimore and Ohio Railroad Company for $350,000.00 in fee, which, after1 der dueting the sum necessary to redeem the ground rents-, would have left $146,00-0.00 for the leasehold interest, but the railroad company declined the proposition without making any counter offer.

He also- appealed to Mr. Frank Furst, who was familiar with the character1 of business- in which the company was engaged and had ample means-, to- buy the stock of the company at $250.00 a share-, but he would not entertain the proposition. Mr. Maloy, who was, anxious to find some one to purchase Mrs- McLean’s stock who, was a, practical ■engineer and who would continue the business in harmony with his clients, who- were minority stockholders-, finally appealed to Mr. Oscar B. C'oblentz, a member of the bar of Frederick Oounty, whom he- had, met- in a professional way in connection with winding up the affairs- of an engineering and contracting company, and with whose “practical ability” as a lawyer, engineer and business man he- and his- partner, Mr. Brady, “had then been much impressed.” He communicated with Mr. Co-blentz and invited him to come to- Baltimore to discuss the proposition. Mr. Ooblentz came to Baltimore in July and looked into- the matter very carefully, but. upon bis return to- Frederick he wrote Mr. Maloy on August 10th declining to “undertake the propo-s-itian” because- he knew “practically nothing about the contracts along the seaboard.” He stated in his letter that ha had been very favorable “impressed with Mr. (Do-nald) McLean,” that he knew “his business” and that he liked his “manner and person ⁴⁷⁸ ality.” Later in August Mr. Maloy induced Mr. Coblentz to come to Baltimore again for the purpose of discussing the matter of purchasing Mrs. McLean’s stock. Mrs. McLean, who had in the meantime employed a very competent man to examine and value the plant and other property, belonging1 to the company, agreed to sell her stock in the company, consisting of the 382 shares then standing in her name, and her third of the 253 shares belonging to the McLean estate1, making 466 share®, at $250.00 a share, and to sell to the company her one-third interest in lot D, which, as we have said, was subject to the ground rent of $4,739.04, for $10,000’.00, provided the company would pay her $5,000.00 that it owed her, and would assume and pay $5,000.00 of the $20,000.00 asr sessment imposed by the city for the MeOomas Street improvement, and provided further the company would pay such part of the fees of Mr. Maloy and Mr. Knapp, administtrators», and their attorneys, as might he agreed upon by the administrators and the attorneys and the company as properly chargeable against the company.

This option to purchase her stock, etc., upon the conditions mentioned was gjven to Mr. Donald McLean on the 31st of August, and stipulated that the money was to he paid within thirty days from that date. It was not convenient for Mr. Coblentz to raise tbe entire amount necessary to p>ay for Mrs. McLean’s stock, but he was willing to raise $50,000.00, so it was agreed by all parties interested (Miss Josephine McLean actively participating in all the negotiations) that if Mr. Coblentz purchased Mrs. McLean’s stock there should he a distribution of the Arundel Sand & Gravel Company preferred stock owned-by the McLean Contracting Company among the stockholders of tire latter company in proportion to the number of shares of the latter company held by them, and that Mrs. McLean would accept in port payment for her stock of the McLean Company the preferred stock of the Arundel Sand & Gravel Company at $90.00 per share. It was also agreed that in the event that Mir. Obblentz purchased Mrs. McLean’s stock upon the terms and conditions mentioned in said option of August ⁴⁷⁹ -31sit, that Mis® Josephine and George McLean would sell their two-thirds interest in lot B to the McLean Company, .and accept in payment therefor two notes of the company, •each for $10,000.00 and bearing interest from date, one payable to Miss Josephine and the other to George McLean, and an agreement on the part of the company that they should share in the profits in the event that the lot should thereafter be sold for the prices therein mentioned; also that a distribution of the preferred stock of the Arundel Sand & Gravel Company owned by the McLean Contracting Company should be made among the stockholders of the latter company and that they would sell the shares; of stock of the Arundel 'Sand •& Gravel Company so received by them to Mr. Ooblentz and Mr. Donald McLean and accept their notes in payment therefor.

This agreement on the part of Miss Josephine and George Melgan was in the form of a, letter addressed to Mr. 'Ooblentz and Mr. Donald McLean, dated September 6th, 1916, and signed by Miss Josephine and George McLean, with the acceptance of Mr. Ooblentz and Mr. Donald McLean subscribed thereon, and isi the agreement referred to in this case as the agreement of September 6th, 1916. The carrying out of these agreements for the purchase of Mrs. MoI^ean’s stock and of lot D1 necessitated the statement of an account, by the administrators and a, distribution to Mrs. McLean and the children of lot D and of the stock of the McLean. Company belonging to the .estate, and formal action on the part of the stockholders and directors of the McLean Company. The account was stated and distribution was made by tbe administrators, and appropriate action was taken by the M'chean Company, in which Miss Josephine and George Moldean participated, and Miss Josephine and George McLean, each received one-third (84 shares) of the stock of the McX.ean Company belonging to the estate, and each received for their respective interest in lot D the promissory note of the McLean Company for $10,000.00, dated October 2nd,, 1916, and bearing interest from date, together with the agreement for a contingent interest in the proceeds of a future sale of ⁴⁸⁰ the lot.

Miss Josephine McLean also received for the stock of the Arundel Sand & Gravel Company distributed to her, and sold by her to Mr. Coblentz and Mr. Donald McLean for $90.00 per share, four notes of Mr. Coblentz and Mr. Donald McLean, each for $2,700.00, dated October 2nd, 1916, and bearing interest from date, with 70 shares of the stock of the McLean Company as collateral security, and George McLean received for the Arundel Sand & Gravel Company stock distributed to him, and sold by him to Mr. Coblentz and Mr. Donald McLean at $90.00 per share, four notes of Mr. Coblentz and Mr. Donald McLean each for $2,500.00, dated October 2nd, 1916, and bearing interest from date, with 64 shares of stock of the McLean Company as collateral security, the difference in amount of the notes being due to the fact that Miss Josephine owned 90 shares of the McLean Company stock while George owned 84 shares^ and the distribution of Arundel Sand & Gravel Company stock to her was proportionately larger. As the result of these transactions Miss Josephine and George McLean not only disposed of their interest in lot D at a price thirty thousand dollars in excess of the ground rent redeemable at about $78,984.00, and which the estate was not in a position to carry, together1 with the contingent interest referred to, but they also received full value for their stock in the Arundel Sand & Gravel Company. On the 31st of October settlements were made with the city and. the Baltimore and Ohio Railroad Company in pursuance of the agreements of August 28th, and the adminisitrators received the following amounts: From the B. & O. R. R. Co., for part of lot E................................ $12,249.59 From the B. & O. R. R. Co., for part of lot F............................... 14,263.86 From the B. & O. R. R. Co., for part of lot G............................... 38,341.83 From the B. & O. R. R. Co., for part of lot H............................... 56,236.96 From the city for the balance of lot H... 82,005.10 Total............................$203,097.34 ⁴⁸¹ The city deducted the $20,000.00 agreed to be paid on account of the assessment, and with the balance of the amounts so received the administrators were able to pay off the mortgage of $25,068.33 on lot F, the mortgage of $20,202.29 on lot E, to redeem- the ground rent on lot H. at $88,661.17, and pay the taxes on the lots. The owners of the fee in lot G agreed to let the ground rent on that lot of $3,900.00, re-deemable at $65,000.00, stand on the remainder of lot G, provided a mortgage of the balance of lot E be given as additional security for the rent, and the administrators did not therefore have to pay the $65,000.00 to redeem that ground rent, and after making the payments mentioned they had about $45,000.00 which could be applied to the payment of other debts of the estate, etc. The threatened liquidation of the McLean Company and the destruction, of the property by the opening of MeOomas Street and the assessment of $80,000.00 by the city having been a,voided, and the company now being in friendly and competent hands; Miss Josephine and George McLean having each received 84 shares of the stock of that company, and having also assured incomes of $1,200.00 a year from the proceeds of their interests in lot D and the Arundel Sand & Gravel Company stock, and thei settlement with the city and Baltimore and Ohio Railroad.

Company having been completed, things began, to look more encouraging, and while conditions were still complicated and there were difficulties to be encountered and overcome, idle administrators were- appro-aching the end of their trust, and counsel for Miss Josephine and George McLean had reason to hope for something more substantial for their clients-. The estate still o-wned the unsold portions of lots E, F and G and the Park Heights Avenue property, lot No. 1. Lots E and F were in fee and free from incumbrances, but lot E was- unoccupied and yielded no income, while the revenue from lot F was uncertain, and was derived from tenants who, from time to time, desired, storage space on the pier, but who could not be induced to accept or ⁴⁸² execute permanent leases. Lot No. 1, the Park Heights Avenue property, from which there was no income, was subject to a building; association mortgage which required weekly payments of about $90.00.

The situation in regard to lot G was about as follows: Continuing the negotiations begun by Mr. Colin McLean, the administrators (the widow and children uniting in the lease) succeeded in July, 1916, in leasing the lot', at an increased rent, to the Coastwise Ship Building Company for the term of five years, for $6,500.00 a year, with the rigjht of renewal for a like term for $8,500.00 a year, etc. At the time the lease was executed the administrators were negotiating the sale of a part of the lot to the railroad company, aud when the agreement with the railroad company was made in August, the administrators, because of the lease referred to, were not in a position to give the railroad company possession of the part purchased "by it, and therefore in the contract of sale the administrators and next of kin agreed to pay the railroad company six per cent, on the contract price of $38,341.83 until they could deliver possession, and they had also to agree in the lease to the Coast-wise Company that in case the railroad company took possession of part of the lot to extend, at their cost, the bulkhead line of the lot three hundred feet- and to fill in behind the bulkhead so as to give the Coastwise Company the amount of land included in the lease at the date of its execution. The ground rent on the lot of $3,900.00, the interest payable to the railroad company, amounting to about $2,300.00, aud the taxes, amounting to about $3,000.00, exceeded, therefore, the rent of $6,500.00 from the Coastwise Company, and the lot was consequently a burden instead of a source of revenue to the estate. In addition to the lots the estate owned the stock of the Boston Sand and Gravel Company heretofore mentioned. The 'widow and two children of the decedent were each entitled to' one-third of the personal estate, while the widow, under the rule, in lieu of dower, was entitled to one-ninth and each of the children to four-ninths of the real estate, and the children were also1 entitled to have the per ⁴⁸³ sonal estate applied to the payment of incumbrances on the real estate.

After completing the settlements with the city and the railroad company, the administrators began the preparation of their second and final account. There was; not sufficient cash to pay the debts and costs and expenses of administration, and if there was to be a distribution in hind of the property, as in the first account, the account would show an indebtedness of the widow and next of ldn to the estate. The condition of the estate was gone into and fully discussed in detail by Mr. Maloy, Mr. Brady, Mr. Knapp and Miss Josephine and George McLean on November 18th. Mrs. McLean had very little faith in the value; of the lots, and that view, and the possibility of an obligation arising under the agreement in the lease to the Coastwise Company, made her unwilling to hold on to any of the lots.

The amount she would owe the estate, if she and the children took the properties, after1 de1 ducting her share of the real estate already sold (being: parts of lots E and E, the proceeds of which had been received by the administrators)', was then estimated to be about $36,-000.00, and Mr. Knapp informed .Mr. Maloy that rather than pay what she would owe the estate she would be willing to transfer to bliss Josephine and George McLean all her interest in lots E, F, G and No. 1, if they would assume her indebtedness to the estate, and they practically decided that day that they would do so provided they could get her interest at. the proper price, the account not. having been stated and the exact amount of her indebtedness not yet ascertained. At the same meeting of (ho parties the approximate amount of bliss Josephine’s and George’s indebtedness to the estate, in case they took the lots, was also ascertained, and the question of what they should do with the properties, what, was the wisest course for them to adopt, whether to borrow a sufficient amount to carry, improve and rent them with the view of getting the benefit of any future advance in their value and a sale (all efforts to sell them having so far failed), or to sell them to some one or some company who would improve ⁴⁸⁴ the lots and secure the purchase-price by a lieu on them, and thus acquire a fixed and permanent income, letting the purchaser assume the risk while taking the chance of profits, was fully discussed. Mr. Maloy suggested that it might be well for them to borrow the money necessary to cany the lots, with the view of getting the benefit of a future sale, but Miss Josephine and George positively refused to do' that. In order that they might have the condition of the estate and of the several lots, and the several propositions discussed, before them in wilting, Maloy & Brady two days later, on November 20th, wrote to Miss Josephine and George giving’ them a very full and clear statement of the situation in respect to each of the lots and of the probable result of the final account, and also of the several courses that might be adopted by them in disposing of the properties', and urging them to give the matter careful thought and consideration.

Miss Josephine, unknown to Mr. Maloy, sent this letter t'o Mr. Dali, who was a building contractor and a man of business experience and ability, and who she afterwards' married, and whose advice she had also taken before she decided to dispose of her interest in lot D by the agreement of September 6th, 1916, and he wrote for her the following letter in reply: “Washington, D. 0., November 29th, 1916. “Messrs. Maloy and Knapp, “Administrators, Estate of Colin McLean. “Gentlemen: “I have your letter of November 20th, concerning the affairs of the estate of my father, and while this seems to be a very comprehensive report as to the respective interests of those concerned, there are some things, regarding the liability of which, I do not quite understand. I assume that the inventory filed with the Orphans’ Court is substantially correct and that the statement you are now preparing will be in such form that each parcel will be a separate account by itself. If this is done I shall be sooner and better able to talk intelligently to you, as it is my purpose ⁴⁸⁵ with your assistance to arrive at some basis of definite procedure or settlement, as early as possible along the lines of the established means which you have suggested. “You will recall the early resolutions passed at the first meeting of the McLean Contracting Company, after my father’s death, and the subsequent development of our affairs.

Both my brother and I have always depended upon your judgment, and we have co-operated with you in working on these affairs according to your notion of what should be done. Our anxiety from time to time has prompted us to ask about the ultimate result of our interests, and you have led us to believe that both he and I would receive from the personal estate such an amount as would yield an income of not less than five thousand dollars a year. Now that the method of dealing with the personal affairs is nearing decision, I urge you to keep in mind the wishes of my father and secure for us the protection he desired. Assuring you of our continued co-operation and grateful always for the assistance you have rendered, I remain, “Yours very sincerely, “Josephine McLean.” Mr. Maloy did not know Mr. Dali, and he says that this letter gave them a] shock because it was “out of accord” with their discussion with Miss Josephine and George; that there was no justification for the statement that he had led her to believe that the amount they would receive from the estate would yield each of them an income of $5,000.00, and that he knew that Miss Josephine could not have written it.

On December 11th Maloy & Brady wrote Miss Joephine the following letter, enclosing a copy of the final account of the administrators, which was passed on December 6th, and again giving her a statement of the situation and of the possible plans to be pursued by her, and urging her to consult some friend in regard to the matter: ⁴⁸⁶ “Baltimore, December lltb, 1916. “Miss Josephine McLean, “The Brighton, California St., “Washington, D. C. “My Dear Miss McLean: “Mr. Maloy and Mr. Knapp received your letter of November 29th, and I asked the. privilege of answering it. Unfortunately as I have, been engaged in court, I have been delayed a few days. “Your letter would suggest a desire for information along two lines — first, what are the existing conditions, and, second, what are. the prospects? I am enclosing a copy of the administration account — that is to say, the second account. The paper will probably seem long, but it consists practically of two parts— first, the complete account, except as to the items of the McLean Contracting Company.

The balance of the paper is an itemized statement as to the McLean Contracting Company, except as to the personal drawings of you, Mrs. McLean and Mr. George McLean. This paper is the result of the matter as submitted by the administrators to the court and gone over by the court auditor. You will note that on the page which I have marked eight, the administrators have advanced to the next of kin $56,339.58. In order to liquidate all indebtedness, the administrators would have to advance said sum of money, but they have not actually done so.

They charge themselves with the mortgage of $20,619.20. This has not been paid. They charge themselves with paying to you, Mrs. McLean and Mr. George McLean, as heirs at law, $23,-671.25, or with paying to Mrs. McLean one-ninth— that is to say, $2,630.11; to Mr. George McLean $10,-520.56, and to you $10,520.55. If you, Mrs. McLean and Mr. George McLean each, as next of kin, were to pay to the administrators the sum of $18,779.86, the administrators could pay off the mortgage and return to Mrs. McLean, Mr. George McLean and to you the sums above mentioned and at the same time pay off the other unenumerated items, which are mentioned in ⁴⁸⁷ the account and which go to make up the total overpayment of $56,339.58. “If you subtract from the indebtedness due by each of you as the next of kin the amount standing as to credit to each of you, as an heir at law, and if in addition thereto, the administrators pay the personal indebtedness due by each of you, in the varying amounts to the McLean Company as of the time when you were last here, or rather immediately prior thereto, your indebtedness to the company being put at $850.00, Mrs. McLean would owe to the administrators $17,-116.49, Mr. George McLean $12,738.78, and you $9,-109.31. “The property which you would own would be as we have already informed you.

You would, under such conditions, have the Park Avenue property free of any indebtedness, and you would have lots E and E free, and you would have lot G subject to the ground rent. These properties would be held as to the Park Avenue property and lots E and E with a ninth to Mrs. McLean and four-ninths to each of you. Lot G would be owned by the three of you in equal shares. You would have, in addition thereto, the stock which has already been mentioned and which is worth more than $2,500.00 as to each share. “Mrs. McLean will, as we understand it, surrender all her interest in the properties, except as to the stock, provided that you and your brother assume her indebtedness to the administrators.

She will, I believe, in addition thereto, pay about two thousand dollars so as to reduce her indebtedness from approximately $17,-000 to $15,000. “Under these circumstances, and with Mrs. McLean eliminated, we find that there is a total overpayment of $56,339.58 due by you and your brother, but that there is due hack to you the money belonging to the heirs at law $23,671.25, leaving an indebtedness of $32,668.33. Part of this indebtedness can he provided for by taking over the Park Heights Avenue property, subject to the mortgage of $20,619.20, leaving an in ⁴⁸⁸ debtedness of $12,049.13. You, of course, appreciate the fact that the property, most of which is unproductive, is a burden, and hence from the time of your last visit, certain items of expense have been accruing and will continue to accrue. The taxes, however, on all the properties have been paid for the year 1916, and the expenses are not great. “The future may apparently be solved in three ways — first, you may take the property and seek to use it as you in your judgment may deem best, bearing in mind that while valuable it is unproductive.

Secondly, we may under your direction endeavor to secure tenants so as to make the property productive. We believe that tenants can be secured for the property and that the property can be made to produce a good income. We are prepared to undertake to secure tenants, but where they may be secured and how they can be secured are unknown quantities. Whether they would be permanent tenants or not or whether they would require the making of large and expensive or small inexpensive improvements are matters that can only be determined after we have made a try and you have waited, leaving the expenses to accrue without an income.

Thirdly, we may endeavor to secure, and since your last interview have mentioned it to one party, a permanent income from the party for you. We believe that a fair income can be secured. We believe that we can secure an income sufficiently large, permanently and satisfacorily secured, so as to be attractive to you, and we believe but do not urge that this is the thing to be done. Just the amount of the income and just the method of securing it are important details which need to be worked out.

We believe that an income of $4,000 and possibly $4,500 (and a try for $5,000) to you and a similar income to your brother can be had from all of your interests in the McLean Company and the McLean estate. “We would like to go over this with you again at your earliest convenience, and will be glad to have you either talk the matter over with some friend in Wash ⁴⁸⁹ ington, or have you bring said party here, and let him or them go over the matter with you. “Awaiting your convenience for an appointment, we are, “Yours sincerely, “Maloy & Brady.” “GMB — JM. “December 11, 1916. “P. S. — In addition to the indebtedness of twelve thousand dollars as mentioned on the second page, you must not, in case you borrow money and carry the property, forget the amounts received by you and the others on drawing accounts with the McLean Company, as mentioned on top of page two. Mrs. McLean’s was about a thousand, yours eight hundred and fifty, subject to subsequent additions, and your brother George’s about forty-five hundred. “Yours very truly, “Maloy & Brady.” “GMB — MMS.” IJp to the time of writing this letter of December 11th neither Mr. Maloy nor Mr. Brady had the slightest adverse interest to their clients. The party referred to in that letter as “one party” toi whom they had mentioned the matter was Mr. Ooblentz, but Mr. Coblentz had not up to December 11th expressed a desire or willingness to- make an arrangement to purchase the property, and Mr. Donald McLean, who knew of the trouble and worry that Mr. Colin McLean had experienced with the lots, was opposed to his. doing so. However, shortly after the letter of December 11th wasi written, Mr. Ooblentz and Mr. Donald McLean were told by Mr. William T. Moore, the agent of the Baltimore and Ohio Railroad Company at Locust Point, who had been a friend of Mr. Cblin McLean and who had assisted the administrators in securing temporary tenants for lot F, that the Garland Steamship Company might be secured as a tenant for lot F. That ⁴⁹⁰ company had been using the railroad company’s piers, but as it stored cotton, etc., on the piers, and as that use of the piers increased the cost of insurance of other property on the pier, the railroad company was anxious to> get rid of the Garland Company, and the Garland CPmpany was also anxious to secure other accommodations because of delays it frequently incurred in having to wait sometime before it could get the use of the railroad company’s, pier.

It was understood that the Garland Company would probably lease the pier on lot E for one year and pay $15,000.00 a year, but that in order to secure the lease the owner of the lot would have to. spend from $15,000.00' to $30,000.00' for improvements. Mr. dóblente saw Mr. Maloy on December 13th and told him of the Garland Company, and that he and Mr. Donald McLean would be willing to form a company with a capital stock of $20,000.00 to purchase all of the interests of Miss. Josephine and George, and that each of them would take $5,000.00 of the stock provided that Mr. Maloy and Mr. Brady, as. evidence of their faith in the undertaking, would each take $5,000.00 of the stock. Another reason why Mr. Ooblentz wanted Mr. Maloy interested was that the city had in contemplation some plan in reference to what is referred to as “incline piers” in the harbor, and as these plans were very objectionable to the owners of piers, and as Mr. Maloy had been very successful in dealing with the city in the matter of the opening of McOomas. .Street, Mr. Ooblentz wanted to make certain of his help and influence to get rid of that menace.

Mr. Maloy told him that he and Mr. Brady were counsel for Miss Josephine and George McLean, and that they could not take any stock in the proposed company without their consent and approval. On the same day, the 13th, Mr. Maloy called Miss Josephine up. by telephone and started to tell her of the proposition, but she, apparently having some one with her before whom she did not care to discuss it, told him that she would be over to see him on Friday, the 15th, and that he could tell her about it then. She "accordingly came over to see Mr. Maloy on the 15th and he then told her ⁴⁹¹ (Mr. Brady being present) of Mr. Coblentz’si willingness to form a company to purchase all her interests and George’s interests, including all their interest in the estate and what they received under the agreement of 'September 6th, and to secure them a fixed income from the property, provided that he and Mr. Brady would each take $5,000.00 of the stock, and that he had told Mr. Coblentz that he and Mr. Brady could not do that without her and George’s consent and approval. She assented to the plan proposed, except that she was¡ anxious to retain the Boston Sand and Gravel Company stock they were to receive from the estate, she having received some information indicating1 that it was going to be worth more than its then value would indicate.

Up, to that time Mr. Coblentz had not expressed a willingness to secure as their income more than $4,000.00 a year to each, and she was willing to accept that amount, if that was the best could be done, but it was understood when she and Mr. Maloy parted that day that he would try to get Mr. Coblentz to agree to go as high as $5,000.00 for each of them, using; his consent to take some of tire stock of the proposed company as an inducement. She and George had already determined to purchase Mrs. McLean’s interest in the estate and properties and to assume her indebtedness to the estate according to the plan already mentioned, and as the matter of the lease to the Garland Company did not appear to be pressing at that- time she contemplated spending the Christmas holidays, in New York with her brother George. On the 19 th of December Mr. Maloy, according to the course apparently followed throughout their dealings with Miss Josephine and George, prepared a letter addressed to both of them, giving in detail the plan discussed and tentatively agreed upon in the conversation with Miss, Josephine on the 15th, asking her to talk over the matter with George “again,” stating that. Mr. Cohlentz had consented to make the yearly income to he secured to each of them $5,000.00, and saying at the conclusion of the letter: “There is one feature of the matter which we desire you to understand thoroughly.

Mr. Coblentz is loath ⁴⁹² to take up the matter unless we go in with him, axe willing to help him work out the proposition, and also- to show our faith by investing some money in the plan. Representing you we declined to do this unless it be with your knowledge and approval. I informed you of this when you were in Baltimore the other day, but want you to understand it thoroughly.” This letter was never mailed, and that is accounted for by what followed that day. Mr. Coblentz received word from New York that the question of leasing lot F to the Garland Steamship Company had to be decided at once, and he called up Mr. Maloy and asked him to communicate immediately with Miss Joephine (by whose course George was largely guided in all matters connected with the estate).

Mir. Maloy called her up in Washington, told her that Mr. Coblentz had agreed to- make the income to- be secured to each of them $5,000.00, and also to their retention of the Boston Sand & Gravel Company stock, explained the necessity for immediate action and asked her to come to Baltimore to- talk over the matter and, if necessary, to execute the necessary agreement. She replied that she had engagements with the dentist that would “occupy her the next few days.” He told her that if she could not come to Baltimore they would go over to Washington to see her, but she said “the next few days were filled up,” and that she would see them when she got back from New York. Ue explained that the matter could not be put off, and told her that if they did not want to- convey their interests according to the plan they had discussed she and George could secure the lease for themselves and that he would help them to raise the money to malee the required improvements-, and urged her to come over, but she s-aid she would not make the improvements for a, one-year tenant, would not consider it.

In the afternoon of the same day, when Mr. Coblemtz came to Mr. Maloy’s office^ feeling that probably Mr. Maloy had not made the matter sufficiently clear to her, he got Mr. Brady to call her up with the same result. Mr. Maloy and Mr. Coblentz could not understand this apparent sudden indifference on the part of Miss Josephine to what ⁴⁹³ they regarded as a very important matter affecting the proposition theretofore considered and practically agreed upon, and as the result of their failure to get co-operation from her they both regarded the whole matter at an end, and the letter of the 19th was not mailed, and Mr.' Coblentz immediately entered into arrangements to lease lot D, belonging to the McLean Company, to the Garland Steamship Company. The explanation of Miss Josephine’s conduct, as it appeared later, was that she had already sent the letters of November 20th and December 11th