Plakatoris v. Bainder

Delaplaine, J., delivered the opinion of the Court. This is the second appeal that has come here from the receivership proceedings brought by New Coffee Cup Restaurant, Inc., in the Circuit Court No. 2 of Baltimore City under the Sales in Bulk Act. Code 1951, art. 83, secs. 97-101. The first appeal was taken by the City of Baltimore, claimant to taxes due on personal property in the New Coffee Cup Restaurant at 3503 South Hanover Street.

It appeared on that appeal that Steve Stavracos, operator of the restaurant and also the cocktail lounge at 3505 South Hanover Street, had contracted in 1949 to sell the equipment and stock in the lounge to Jake Plakatoris and John Stavracos for $16,000. Plakatoris made three payments totaling $8,000, and it was understood that the other $8,000 was to be paid by cancellation of a loan made by John to Steve Stavracos. Steve assured Plakatoris that there were no creditors of the lounge, but Plakatoris learned soon afterwards that Steve was heavily in debt. While the indebtedness was mainly on account of the restaurant, it was doubtful whether the business of the restaurant could be segregated from the business of the lounge.

On February 17, 1950, Steve Stavracos contracted to sell the restaurant business to Peter Kritikas for $22,000. ²²⁶ Kritikas paid $500 in cash and agreed to pay the balance after notice to creditors had been given in accordance with the Sales in Bulk Act. On February 21 Kritikas assigned the contract to New Coffee Cup Restaurant, Inc., which obtained a list of Stavracos’ creditors and notified them of the sale. In March, 1950, New Coffee Cup Restaurant, Inc., filed its bill for appointment of a receiver to distribute the purchase money under the direction of the Court. The Court appointed R. Lewis Bainder receiver.

William Saxon was appointed attorney for the receiver. In April, 1950, the receiver made a demand upon Plakatoris and John Stavracos to contribute toward paying off Steve Stavracos’ chattel mortgages. Plakatoris refused, claiming that it was understood at a hearing in a previous proceeding in the Circuit Court, in which he had applied for a receiver to take charge of the restaurant and lounge, that the lounge was to pass to him and John Stavracos free of debt. The receiver contested that position, paid off the chattel mortgages, became substituted trustee, sold the chattels in the lounge under foreclosure proceedings, and received the balance remaining from the proceeds of sale.

In August, 1950, the City of Baltimore filed its claim for taxes for the years 1946, 1947, 1948, 1949 and 1950. In May, 1951, Plakatoris petitioned the Court to determine what preference he was entitled to for the money he paid for the property in the lounge and for which he received nothing. It was conceded that Stavracos, at the time he accepted the $8,000 from Plakatoris, led him to believe that he was solvent. Accordingly the Court on June 4 directed the receiver to pay Plakatoris $5,500 as a preferred claim, subject to exceptions.

The auditor, however, in his account filed on June 28, 1951, did not make any allowance for Plakatoris. Plakatoris excepted to the account, and on April 25, 1952, the Court sustained his exceptions and passed an absolute order directing the receiver to pay Plakatoris $5,500 ahead of all other claims, including Municipal, State ²²⁷ and Federal taxes. On August 12, 1952, the auditor filed an amended account, which allowed Plakatoris $5,500. The City and the State filed exceptions to that account.

The Court overruled the exceptions and the City appealed. On April 23, 1953, the Court of Appeals decided that, since the City did not file exceptions to the amended account within the time required by the Rules of the Supreme Bench of Baltimore City, although it received notice of that account, it was too late for the City to object to Plakatoris’ claim. Thus the order allowing Plakatoris a preference of $5,500 was affirmed. City of Baltimore v. Bainder, 202 Md. 307 , 96 A. 2d 17 .

On May 26, 1953, the receiver petitioned the Court below to authorize him to pay Mr. Saxon a counsel fee for additional services rendered by him. The receiver alleged that Mr. Saxon had performed services as his attorney from March 16, 1950, to May 7, 1951, and that on May 7, 1951, the Court authorized him to pay Mr. Saxon $2,000 as his counsel fee. The receiver then alleged that Mr. Saxon had performed the following additional services since that time: (1) appeared in Court on April 25, 1952, and argued in favor of the exceptions filed by Plakatoris to the auditor’s account; (2) appeared in Court on October 6, 1952, and argued against the exceptions filed by the City, State, and Federal Government to the auditor’s amended account; (3) examined the designation of record filed by the City for its appeal; (4) examined the City’s brief and appendix; and (5) filed a brief and argued the case before the Court of Appeals. Acting upon that petition, the Court ordered the receiver to pay Mr. Saxon $1,800 as compensation for his professional services.

The auditor thereupon filed a second amended account, which allows Mr. Saxon $1,800 and Plakatoris only $3,874.56. Plakatoris excepted to that account, and the Court overruled his exceptions. From that order Plakatoris