Mylander v. Page

²⁵⁸ Bond, C. J., delivered the opinion of the Court. Each, of the appellants, plaintiffs helow, brought suit at law to recover shares of stock, or their value, and damages for the detention of them, from the Chesapeake Bank, the Coale Corporation, and the two individuals, Delcher and Coale; and, after the appointment of the bank commissioner as receiver of the assets of the bank, he was, upon petition and order of the court of law in which the suits had been filed, substituted in each case as defendant in the place of the bank. The stock sought was first pledged with the bank by Coale, Incorporated, or Coale, individually, for a loan of his own. It appears that he later sold 300 shares of it to the plaintiffs in equal proportions, and the plaintiffs paid him the full purchase price, and new certificates were procured in their names, but Coale failed to pay off the loan as security for which the stock was held, and deposited the new certificates, too, as security, along with powers of attorney or assignments, in blank, from the plaintiffs.

The plaintiffs produced, evidence to show that these powers or assignments had been given for another purpose never carried out, and that Coale used them fraudulently to continue their stock pledged as security for his unpaid debt to the bank. The bank, they contend, released its lien on the stock by surrendering the old certificates to have the new ones issued in the plaintiffs’ names, and, further, could not hold the new certificates as a bona fide pledgee, because it had notice, or knew facts to put it upon notice, of the plaintiff’s actual rights in the stock, and through- one of its officers, Delcher, became a participant in the fraudulent act of the broker, Coale, in misusing the powers or assignments. The three suits, all of which involved identical facts and questions of law, were consolidated and tried as one before the court without a jury, and verdicts and judgments were rendered in favor of the bank commissioner, the substituted defendant, and Delcher, and against the remaining defendants. On appeal the plaintiffs contest the judgment in favor of the receiver and Delcher, alleging errors in rulings on evi ²⁵⁹ deuce and prayers for declarations of the law applicable to the case.

The receiver is in possession of the stock certificates, and is apparently the only defendant in possession of any considerable assets: and he is substantially, therefore, the one defendant pursued. The plaintiffs’ prayers for rulings of law referred only to the receiver and the bank as defendants. There was no dismissal of the other defendants, however’, and verdicts and judgments were duly rendered for or against them as stated. A question of the propriety of maintaining such actions against the bank commissioner, as receiver, in place of the bank, arises at the outset, and should not be passed without comment, although it was not discussed in argument, and the record contains no mention of it.

Plainly, we think, the bank commissioner, when he becomes receiver of a state bank, does not become the successor of the corporate personality, as does a statutory receiver upon dissolution. The statue under which he is appointed, Code, art. 11, sec. 9, designates him as the receiver and possessor of the assets for whatever liquidation may prove to be necessary. The corporation itself is not only left in existence, but it may, according to the terms of the statute, be permitted to resume business. And by those terms, too, the court of equity, when applied to, assumes jurisdiction over only the property and assets of the corporation.

This being true, how are these suits excepted from the resulting general principle that a receiver does not succeed as defendant in the suits pending against the corporation ? Emory v. Faith, 113 Md. 253 , 77 A. 386 ; 1 Clark, Receivers, sec. 561; St. Louis Union Trust Co. v. San Benito Co., 4 Fed. (2nd), 1007; Fountain v. Stickney, 145 Iowa, 167 , 123 N. W. 947 ; Green v. Coleman-Nelson Corp., 115 Okl. 144 , 242 P. 196 ; People v. Smith Co., 230 App. Div. 268, 275 , 243 N. Y. S. 446; Deschenes v. Tallman, 348 N. Y. 33 , 36, 161 N. E. 321 . And if these particular suits can be excepted on proper, grounds, then has the equity court which has jurisdiction of the assets consented to the substitution of the receiver as defendant? Counsel for the appellants describe the actions brought as ²⁶⁰ in detinue, the old form of action for the recovery of goods in specie, and the judgments demanded in the declarations were for “the return of said goods, or their value, and $5,000 for the detention,” the established form of demand in detinue.

Code, art. 75, sec. 28. But detinue for the return of goods, like replevin, is maintainable only against one who has the goods in his possession (1 Poe, Pl. & Pr., see. 521), and here Delcher, the Ooale Corporation, and Coale, the individual, who were not in possession of the stock sought, were joined as defendants, and the verdict and judgment rendered against the Coale Corporation and Coale, without any objection made to form or contents, were for damages only. If the plaintiffs should succeed further and obtain a verdict and judgment against the bank commissioner and Delcher, there would apparently have to be a distinction drawn, and the recovery against Delcher restricted to damages, treating the suits as the equivalents of actions in trover, while the receiver would be required to return the stock claimed. “Every judgment in detinue, and replevin,” says the Code, art. 75, sec. 128, “and every verdict therein shall ascertain separately the value of the goods and chattels and the damages, if any, for their detention.” But the verdict and judgment taken in these suits against the Coale corporation and Coale were “for $2,000, the sum found by the court, with interest from April 2, 1931, and costs of suit.” Eor recovery of the stock in specie from among the assets taken charge of by the receiver a proceeding against the receiver would naturally be proper, when a dispute of the claimant’s right makes any proceeding necessary. The appropriate form would seem to be that upon petition in the receivership case in equity. 1 Clark, Receivers, secs. 543 and 664; Praeger v. Implement Co., 122 Md. 303 , 89 A. 501 .

But there are some situations in which the equity court may find reasons for authorizing the l’eceiver to intervene and defend a pending suit for the same purpose. And, if the suit is confined to the demand for the return of property from among the assets, there would be no objection to making the receiver a defendant in his own name. Possibly the ²⁶¹ equity court might also find reasons for having the receiver defend a suit against the corporation for the recovery of money, but it would seem improper for the receiver to defend such a suit in his own name; he should defend in the name of the corporation, for the plaintiff, recovering judgment, would be entitled at most only to file his claim in the receivership proceeding on it, and, that being true, it would be inconsistent to give him a judgment against the receiver on its face requiring the receiver to pay out money from the assets at all events, irrespective of the rights of other claimants against them. 1 Clark, Receivers, sec. 561; Horsey v. Martin, 142 Md. 52, 55 , 120 A. 235 . And see Riehle v. Margolies, 279 U. S. 218 , 49 S. Ct. 310 , 73 L. Ed. 669 ; Attorney Gen. v. Supreme Council, 196 Mass. 151 , 81 N. E. 966 ; 30 Yale L. J. 674.

This court is of opinion that, in the absence of any showing in the record to the contrary, it may be presumed that the consent of the equity court to the substitution of the receiver as defendant was obtained; and that the question of the propriety of that consent is not open to consideration in this proceeding. An action of detinue cannot properly be joined with one for the recovery of damages merely (1 Poe, Pl. & Pr., sec. 285), and, of course, it is one of the principal obstacles to the joinder of parties and actions that several different judgments, not one joint judgment, would be recovered in the one proceeding. 1 Poe, Pl. & Pr., secs. 282, 285 ; Williams v. Bramble, 2 Md. 313, 318 ; Philadelphia, W. & B. R. Co. v. Constable, 39 Md. 149, 157 ; Haines v. Haines, 104 Md. 208, 217 , 64 A. 1044 ; Price v. Mutual R. Ins. Co., 107 Md. 374, 381 , 68 A. 689 . But the provision in the Code, art. 5, see. 10, that in no case shall this court decide any point or question which does not plainly appear by the record to have been tried and decided in the court below, seems to prevent consideration of any question of misjoinder, or of practical difficulty arising from the differences in the situations of the parties sued.

Sasscer v. Walker, 5 G. & J. 102, 110 ; Cushwa v. Cushwa’s Lessee, 5 Md. 44, 54 ; Barker v. Ayers, 5 Md. 202 ; Standard Co. v. O’Brien, 88 Md. 335, 340 , 41 A. ²⁶² 898; Novak v. State, 139 Md. 538, 542 , 115 A. 853 . We therefore take up the appellants’ objections to rulings during the trial as argued. The evidence on behalf of both sides showed that in August of 1929, Coale arranged with Delcher, a vice-president of the bank, for a loan upon the collateral security of 376 shares of the stock of a Beneficial Industrial Loan Corporation, for which Coale held a certificate in the name of one Mannix, duly indorsed by Mannix. The board of directors of the bank approved a loan for the full amount of Coale’s purchase price, and Ooale signed and delivered his note for that amount, with the Mannix certificate deposited as collateral.

On behalf of the plaintiffs it was testified that Ooale, apparently within the next few days, in August, sold to each of the plaintiffs a hundred shares of the stock which he had so pledged, and was paid in full for them from the proceeds of the sale of other securities placed in his hands by the plaintiffs for the purpose. As has been stated, Coale failed to redeem the shares sold from the pledge for his own loan; the money he received from the sale he appropriated to' his own use, depositing it in his own private account. Ooale testified for the plaintiffs that he had promised to pay Delcher a portion of the profits which might be derived from sale of the stock, and that he did, on September 5th, pay Delcher $600, by check drawn to Delcher’s order and subsequently indorsed by Delcher in his own individual name only. Delcher, called by the defendants, denied that he had any agreement with Ooale other than appears on the face of the papers.

He was not questioned more specifically about the payment of any money to' him by 'Ooale. It was testified that on September 19th, Coale settled with the Misses 'Mylander for the sale made and payment from the sale of the other securities, and returned to them the excess from the proceeds of these other securities over and above the price agreed for the Beneficial Corporation stock, with interest on that excess for twenty-two' days. The stock was for the time being, however, still left undisturbed in the possession of the bank; the certificate standing in the name of Mannix. Subsequent to these trans ²⁶³ actions, Coale arranged with.

Delcher for a temporary withdrawal of the certificates of the pledged stock, in order that new certificates for 300 shares in the names of the Misses Mylander might be procured, and the remaining 76 shares might be sold elsewhere and transferred. For these purposes the stock was redelivered to Coale upon his depositing with the bank a trust receipt and separate powers of transfer or assignments of the stock from the Misses Mylander to Coale, dated September 23rd. An amount representing the remaining 76 shares was paid by Coale to the bank. Coale paid the next installment of interest on his loan for which the Beneficial Corporation stock was pledged.

It was testified that Coale owned shares in a Bankers’ Securities