Penniman v. Cole

Miller, J., delivered the opinion of the Court. The appellant’s claim is now presented in an entirely new phase. On former occasions he has unsuccessfully insisted, first, that these debts formed part of the assets of the new firm and therefore passed to him by his purchase and the receiver’s deed, and secondly, he claimed the right to retain what he had collected of them as a set-off against an alleged indebtedness of the old to the new firm. He now claims an abatement of $2500 from the purchase money upon the ground' that the receiver, prior to and at the time of his purchase, represented to him that these old debts to the estimated value of $2500, constituted part of the assets which were to be sold, and that his offer to purchase which was accepted by the receiver and the Court, was made upon the faith of this representation and under the belief that it was true.

The testimony sustains this position. If is clearly shown that an itemized statement, in the hand-writing of the receiver of the assets which he professed to sell, and in which appeared the item “$2500 estimated value of old debts,” was shown by the receiver to the appellant, and that this item formed a material inducement to his purchase. There is also no doubt that this representation was made by the receiver in good faith, and that he, as well as the appellant, thought these debts constituted part of the property which he was directed by the Court’s order to sell. In this it turned out he was mistaken, but this mistake though innocently made, does not deprive the purchaser of the equity lie now claims of a proportionate abatement of the purchase money.

The inquiry in such cases is not whether the party making the statement knew it to he false, hut whether the statement made as true was believed to be true, and therefore, if false, deceived the party to whom it was made. In such case where the sale is made by the Court through its officer, it ⁶¹² is the duty of the Court to protect a purchaser who deals with it in good faith. In this respect the case is covered hy the decisions in Marbury vs. Stonestreet, 1 Md., 147 and Kent, et al. vs. Carcaud, 17 Md., 291 . We see nothing in the fact that most of the creditors agreed to accept the offer made by the appellant, and united in the request to the Court for an immediate ratification of the sale, nor in any of the surrounding circumstances which ought to make this an exceptional case so as to prevent the application to it of this well settled equitable doctrine.

In our judgment the appellant is entitled to the equity he nows claims unless he has lost the right to assert it by laches, or has failed to present it in the proper mode. But it cannot be disputed that he has been diligent in asserting a claim to these debts in one form or another. He had the undoubted right to insist, as he did immediately after his purchase, that all of them passed to him under the receiver's deed. In this he was successful in the Circuit Court, but was defeated by the decision of .this Court, on appeal taken by the opposing party, Mr. Loney, the sole representative of the old firm and who also claimed them.

He also had the right to raise the further question of set-off. The fact that he was not ultimately successful in these efforts furnishes no reason why he should not avail himself of the equity he now sets up, and, in our opinion, he is entitled.to it unless the fund has, in the meantime, passed from the control of the Court under a final distribution to the creditors. But the record shows this is not the case. When the controversy between the appellant and Loney inspecting these debts commenced, the sum of $5000, was retained from distribution to await the decision of the Court on that (question.

In September and October, 1812, two accounts were stated