Penrose v. Page

³ Thomas, J., delivered the opinion of the Court. On April 9th, 1923, William Penrose, Esq., the appellant, filed in the Circuit Court of Baltimore City, in the case of the State of Maryland v. Lafayette Bank, his, “petition and claim,” in which he alleged that the Lafayette Bank was a corporation organized under the State hanking laws, and “that its affairs were placed in the hands of the State Bank Commissioner as receiver on the 28th of November, 1921”; that about the 1st of October, 1921, prior to the appointment of the receiver, the board of directors of said bank passed a resolution by which the petitioner' was appointed “special counsel” of said bank, and that from 'the time of his appointment until the bank was closed by the State B'ank Commissioner he devoted his entire time to the affairs of the bank, “which was then in a critical condition”; that during said period he collected overdrafts to the amount of about $13,000, sold stocks and bonds belonging to the bank for the purpose of meeting demands of depositors, borrowed large sums of money for the bank, was in daily consultation with the board of directors, which required his services “until late at night,” and provided several plans for the liquidation of the bank and the settlement of its obligations, which would’ have averted the failure of the bank if he had not- been prevented from carrying out the same. The prayer of the petition was that the receiver be directed to hold out of the undistributed assets of the bank sufficient funds to satisfy the claim of the petitioner, and for general relief. The receiver of the bank answered the petition, admitting the incorporation of the bank and tire appointment of a receiver, and stating that he was without knowledge of the other matters alleged.

At the hearing of the petition counsel for the petitioner and the receiver entered into the following agreement: “It is stipulated that either side may refer to any testimony or proceedings in the case of Page, Receiver,' vs. Penrose (Baltimore City Court), and the Court of Appeals in deciding this case may consider any such ⁴ testimony or proceedings to the same extent as if it were fully incorporated in this record, and that the Court of Appeals has decided that the Hontrose Building Association, of which "William Penrose was, at the time of the rendition of the services, vice-president and a director, owned at that time one-half of the capital stock of the Lafayette Bank, and at the time of the filing of the claim for said services two dividends of twenty-five per cent, each, had been paid by the receiver to the general creditors of the Lafayette Bank.” The plaintiff then offered in evidence the following resolution of the board of directors of the Lafayette Bank, passed at a special meeting on October 14th, 1921: “On motion, Hr. Drayer, seconded by Hr. Wilson, Hr. William Penrose was appointed special counsel for the bank, and authorized on behalf of the bank to borrow from time to time such sum or sums as may be needed,” and testified that he had been a member of the Bar of Baltimore City for over thirty years; that he had been a director and counsel for the Canton National Bank, had been an active director of the Union Trust Company for eight or ten years, and had been “called in” bv the Bank of Laurel when it was in difficulties; that prior to the resolution mentioned he was neither a director, stockholder or an officer of the Lafayette Bank, and that the only service he had rendered the bank was the securing of a loan of $40,000 from the National Bank of Baltimore, which was “needed in a great hurry,” and which he had to guarantee; that after the passage of said resolution he put in all of his time during the day and a part of the night in work for1 the bank; that he collected about $13,000 of unsecured overdrafts, borrowed in all $97,000 for the bank from the National Bank of Baltimore, and became personally responsible for it; that the only agreement between him and the Lafayette Bank was the resolution referred to1; that the directors of the bank asked him at the time what his fee would be for his services, and that he told them that he could not tell because he did not know “what the work would be, and that if ⁵ they could not agree they would leave it to arbitration”; that after the passage of the resolution lie was in almost daily consultation with the directors and officers of the bank, and gave them the best legal and banking advice be could, and advised several plans of liquidation and reorganization, and that if the directors had pulled together there would have been no receivership; that for securing the loan of $40,000 from the First National Bank of Baltimore, for which he became personally responsible, and which was procured prior to the resolution employing him as special counsel, he received $1,600, $200 of which he paid to Hr.

Haydon; that he borrowed for the bank from the Equitable Trust Company, from October 19th to November 18th, 1921, various sums aggregating $92,000, for which service he received “no compensation whatever,” and that he also obtained a loan of about $50,000 from the Harvland Title Company; that from his experience with various banking institutions, and from what he had been told by bankers and lawyers, he was able to state that the fair value of the services rendered by him to the bank as special counsel was $20,000. On cross-examination the plaintiff testified that the services for which he was claiming compensation were rendered between the 15th of October and the latter part of. November, 1921; that he had never sent the bank a bill for his services, and had not filed a claim for same in the receivership case prior to filing his petition in this ease; that he had testified before Judgr Bond “in the Montrose case six months previous,” and that in his testimony in that ease he said that he was called in in September, 1921, and that the bank’s affairs were in a critical condition, although he could not find out how badly off they were,” and that in reference to the charge contained in the answer in that case that he and his partner had figured iu a number of transactions with the bank in which the bank had been induced to loan large sums of money on inadequate security and lost money, and in which they were compensated by their clients, be said that he had never asked for a loan from the bank, never induced any one to-, and never ⁶ profited to the extent of one penny in any transaction with the hank, except in one instance where he borrowed $40,000' for the bank and was paid a fee. The plaintif further testified on cross-examination that he did not state in the Montrose case that he had a claim against the bank for $20,000, that his connection with the bank was not gone into in that case, that he was not asked what his charge was for the work he had done for the bank, and that there Was no occasion at that time to mention his claim against the bank; that the reason he mentioned the compensation paid him for securing the loan of $40,000 was because that was the only thing for which he had received any compensation, and he had not profited in any way by loans made by the bank; that very few of the overdrafts, amounting to $13,000, were secured, and that it was hard work to collect them; that he was not asked to collect them, but that he did it because he felt it was his duty to do so as special counsel.

On re-direct examination he stated that he had no claim in the Montrose Building Association case, but was simply summoned as a witness by both sides; that he was not asked in that case by either side anything about his personal claim, but thinks that Mr. Page asked him, some time after the appointment of the receiver, what his “status with the bank was,” and that he told Mr. Page that “he was employed by the board of directors.” Mr. Dolfield, president of the Canton National Bank, testified that there was no precedent in Baltimore “with regard to reasonable compensation for securing loans under the circumstances detailed by the plaintiff,” but that he was able to place a value on the services of the plaintiff, and, over the objection of the defendant, stated that in his opinion it was “at least $20,000,” and that “the fee of $20,000 would cover all his services.” Mr. Jeffery, president of the Equitable Trust Company, who stated that the loans of his company of $92,000 to the Lafayette Bank came under his supervision, testified that his company would not have made the loans but for the solicitations of the plaintiff; that the plaintiff had “a ⁷ very difficult proposition to perform,” and in his opinion “$10,000 would be ample compensation.” for his services. On cross-examination he stated “that he had no precedent for the valuation of the services, it was just an impression without being able to give all the reasons.” Mr. Alexander, vice-president of the Equitable Trust Company, after being told the services rendered by the plaintiff, testified that in his opinion $10,000 would be “a fair fee” for such services. On cross-examination he testified that he was viewing the matter as a whole proposition; that his bank would not have made the loans “except they felt that somebody that Was different from that crowd was guaranteeing it,” and that if he “tried to appraise the services in securing the loans it would be a minimum of $5,000, or as high as $10,000, but that he could not get his mind away from the whole atmosphere of the thing.” Mr. Addison, one of the directors of the Lafayette Bank, testified that between the- 14th of October and the time of the receivership “there was not any disapproval at any board meeting of Mr. Penrose’s handling of the bank’s affairs; that he was present at the meeting when plans devised by Mr. Penrose for saving the bank were presented, and they were under the impression Mr. Penrose could save the bank.” Mr. Ganster, a member of the bar, who was formerly in the office of the plaintiff, testified that between October 14th and November 28th the plaintiff' devoted practically all of his time to the Lafayette Bank; that he was borrowing money from the National Bank of Baltimore and the Equitable Trust Company; that the plaintiff guaranteed the loan by the Lafayette Bank of $27,000 on the South Charles Street property with him, and that the plaintiff did it at his request, and the bank loaned the money on the strength of the plaintiff’s “guarantee”; that he had been after tbe plaintiff “for tbe past year” to file his claim against the bank for his services, and that they had talked it over on many occasions in the office, hut that the plaintiff’ takes care of everybody but himself and put it off’; that the plaintiff had determined on $20,000 as the value of his services ,and had ⁸ bis claim typewritten before he was sued, and that be told tbe plaintiff that be should have made bis claim larger. Mr. Thomas, president of the National Bank of Baltimore; upon being “told what services bad been rendered by” tbe plaintiff to tbe Lafayette Bank as special counsel, testified that, with tbe plaintiff’s “guarantee of the paper and the amount of work be put on the matter” $80,000 would be a reasonable fee, and that without bis persona] guarantee the fair value of tbe services would have been from $15,000 to $20,000.

Mr. Page, tbe receiver, when called as a witness for tbe defendant, testified that be bad been State Bank 'Commissioner for four years and deputy “for six years prior to that,” and that be took charge of the bank on the 25th of November; that be found on tbe