Plitt v. Greenberg

Barnes, J., delivered the opinion of the Court. This case involves the question of whether the plaintiff has met his burden of proof in establishing a prima facie case of unjust enrichment. On April 23, 1960, the appellant, Clarence M. Plitt (Plitt), filed a declaration and election for a jury trial claiming damages in the amount of $38,333.34, which sum represented the proceeds of a check dated April 25, 1957, subsequently negotiated to the appellee, Theodore E. Greenberg (Greenberg). On November 9, 1964 Plitt amended his declaration and alleged a cause of action in debt, fraudulent misrepresentation and unjust enrichment.

A jury trial was had and at the conclusion of the appellant’s case, the appellee filed a motion for a directed verdict. An appeal was taken from a judgment for the defendant and for costs entered after the granting of that motion. Plitt had been represented for several years in various finan ³⁶² -cial transactions by Melvin R. Blacker (Blacker). Prior to 1958 Blacker, a lawyer, was a member of the Baltimore City Bar.

On April 25, 1957 Plitt issued a check in the sum of $38,333.34 to M. R. Blacker and D. G. Blacker (his wife). Blacker endorsed the check and the endorsement of his wife was forged. Plitt, ignorant of the forgery, then endorsed the check under the following special endorsement: “Pay to the order of the First National Bank of Balto. for wire transfer to the Central National Bank Richmond, Va. for credit Theodore E. Greenberg.” Plitt testified that he had been led to believe that he was making a loan to Greenberg as rvell as to the Blackers, so that Plitt could look to Greenberg and the Blackers for repayment. Plitt had never met Greenberg, but Plitt had had several financial contacts with him in the past.

As security for the loan, Plitt received a forty-five thousand dollar note from. Alsage Realty Corporation payable to the Blackers. Plitt was to hold this note as collateral until Blacker •could receive replacement collateral from Greenberg in Richmond. Alsage Realty was a paper corporation with no assets; and no collateral or other security was ever received from Greenberg.

On previous occasions Blacker had given Plitt notes purported to have been from Greenberg. Many of them were forgeries. Blacker was subsequently disbarred, criminally prosecuted, convicted and imprisoned as a result of the various illegal financial machinations which he had carried on. The Blackers are now divorced.

On October 3, 1961, the Blackers were adjudged bankrupts in the United States District Court for the Eastern District of Virginia; and Plitt, unable to obtain repayment of the $38,333.34 from them, proceeded against Greenberg. In addition to Plitt himself, Greenberg was the only other witness called on behalf of the appellant. Greenberg acknowledged receipt of the $38,333.34 into his checking account, but he stated that he thought the money had come from Blacker. Greenberg testified that Blacker had been his brother-in-law and that in the past he had made several loans to Blacker, aggregating some two hundred thousand dollars. ³⁶³ It is Greenberg’s contention that on April 15, 1957 Blacker had represented to him that he, Blacker, wished to make an investment hut did not want his name to appear in connection with the transaction.

In order to accomplish this result, Blacker gave Greenberg a personal check dated April 17, 1957 in the amount of $38,333.34 which was deposited to Greenberg’s account in the Central National Bank of Richmond, Virginia. Blacker’s check was returned for insufficient funds. Blacker promised Greenberg that he would wire money to make the check good. On April 25, 1957 Greenberg received the proceeds of Plitt’s check for $38,333.34 into his account.

Green-berg testified that he had given Blacker an equal amount for the $38,333.34 which he received, that he had no knowledge the money came from Plitt, and he thought that he had been dealing exclusively with Blacker. There is no evidence that Greenberg knew that the funds which were wired to his account from Blacker originally came from Plitt. There are no grounds for an action of fraudulent conversion against Greenberg. Plitt relies on Code (1957) Art. 27, §145 which provides: “When any person shall be convicted of any statutory felony or misdemeanor, for the false or fraudulent obtention or embezzlement, secreting or making way with goods, chattels, valuable effects, money or securities, the court before whom any such conviction shall be had may award restitution to the real owner thereof ; provided, however, that no bona fide holder thereof shall be obliged to surrender up. the same.” The provisions of §145 are clearly inapplicable to this case if for no other reason than that criminal proceedings against Blacker involving Plitt’s check were never instituted.

Rasin v. State, 153 Md. 431 , 138 Atl. 338 (1927) ; Downs v. Baltimore, 111 Md. 674 , 76 Atl. 861 (1910). Plitt, however, does possess a colorable cause of action grounded on a theory of unjust enrichment or restitution. Although Greenberg may not have known that he had received the proceeds of Plitt’s check into his account, and no express, contract for debt existed between Plitt and Greenberg, the law implies a debt “whenever the defendant has obtained posses ³⁶⁴ sion of money which, in equity and good conscience, he ought not to be allowed to retain.” State, use of Employment Security Board v. Rucker, 211 Md. 153, 158 , 126 A. 2d 846 (1956). According to the Restatement, Restitution §123: “A person who, non-tortiously and without notice that another has the beneficial ownership of it, acquires property which it would have been wrongful for him to acquire with notice of the facts and of which he is not a purchaser for value is, upon discovery of the facts, under a duty to account to the other for the direct product of the subject matter and the value of the use to him, if any * * In an action for unjust enrichment the burden is on the plaintiff to establish that the defendant holds plaintiff’s money and that it would be unconscionable for him to retain it.

Howard v. United States, 125 F. 2d 986 (5th Cir. 1942) ; American Newspaper, Inc. v. United States, 20 F. Supp. 385 (D. S. D. N. Y. 1937); Eatwell v. Beck, 41 Cal. 2d 128 , 257 P. 2d 643 (1953); Messner v. Union County, 34 N. J. 233, 167 A. 2d 897 (1961); First National Bank at Cody v. Fay, 80 Wyo. 245 , 341 P. 2d 79 (1959). “It is immaterial how the money may have come into the defendant’s hands, and the fact that it was received from a third person will not affect his liability, if, in equity and good conscience, he is not entitled to hold it against the true owner.” Empire Oil Co. v. Lynch, 106 Ga. App. 42 , 126 S. E. 2d 478, 479 (1962). See also Peoples State Bank v. Caterpillar Tractor Co., 213 Ind. 235 , 12 N. E. 2d 123 (1938); Spengeman v. Palestine Building Assoc. of Hudson Co., 60 N. J. Law 357, 37 Atl. 723 (1897) ; Brubaker v. County of Berks, 381 Pa. 157 , 112 A. 2d 620 (1955); Fain v. Neal, 97 Ga. App. 497, 103 S. E. 2d 437 (1958).

It has been held that a plaintiff could recover money from even an innocent transferee who was without knowledge that he possessed the plaintiff’s money. In re Brereton’s Estate, 388 Pa. 206 , 130 A. 2d 453 (1957); Restatement, supra. However, if a transferee came into possession of a plaintiff’s money in good faith after paying a good and valuable consideration for it, then the plaintiff could not prevail and recover back the funds in that transferee’s possession. Ohio Casualty Ins.

Co. ³⁶⁵ v. Smith, 297 F. 2d 265 (7th Cir. 1962); National City Bank v. Continental Natl. Bank & Trust Co., 83 F. 2d 134 (10th Cir. 1936); Evangeline Iron Works v. Lyons, 233 La. 307 , 96 So. 2d 578 (1957); American Express Co. v. Anadarko Bank & Trust Co., 179 Okl. 606 , 67 P. 2d 55 (1937). In order to make out a case of unjust enrichment, the burden rested upon Plitt to prove that the proceeds of his check, which were deposited into Greenberg’s account, were received without the payment of valuable consideration from Greenberg to Blacker. See Bank of Marshall County v. Boyd, 308 Ky. 742 , 215 S. W. 2d 850 (1958) ; El Kouri v. Toma, 200 Okl. 354 , 194 P. 2d 872 (1948).

Greenberg’s unequivocal testimony was to the effect that he had paid Blacker in exchange for the $38,333.34 which had come into his account. Greenberg’s bank statement from the Central National Bank of Richmond, Virginia for the month of April, 1957, the critical period in this case, was introduced into evidence at the trial and is set out in this opinion as follows : Checks listed in order of payment, read across Deposits Date Balance Balance brought forward Apr. 1, ’57—1,405.74 392.85 Apr. 3 ’57 1,798 59 35.00 27.47 Apr. 5 ’57 1,746 12 11.61 103.00 Apr. 8 ’57 1.631 51 16.300.00 Apr. 9 ’57 17,831 51 16,200.00 Apr. 10 ’57 1.631 51 39.68 Apr. 11 ’57 1,601 83 26.68 5.30 Apr. 12 ’57 1,569 85 6.00 156.40 30.83 936.93 Apr. 15 ’57 3,313 .55 225.00 10.00 Apr. 17 ’57 2,078. 55 10.00 Apr. 18 ’57 2,068 55 5,333.34 38.333.34 Apr. 19 ’57 35,068 .55 30.000. 00 Apr. 22 ’57 5,068 .55 5,333.34 Apr. 23 ’57 10,401 89 200.00 50.00 Apr. 24 ’57 10,151. 89 38,335.60 3.96 38.333.34 Apr. 25 ’57 10,145 67 5,335.60 RS Apr. 26 ’57 4,810 07 23.000. 00 2.23 13.819.00 Apr. 29 ’57 4,373 .16 OD 4,980.00 Apr. 30 ’57 606 84 ³⁶⁶ Greenberg testified that he had given Blacker a check for $38,333.34 in exchange for the check from Blacker. Blacker’s check is represented on the Greenberg bank statement by a deposit in the amount of $38,333.34 dated April 19th. Greenberg maintained that his check to Blacker cleared the Central National Bank on April 25th as evidenced by a debit for $38,335.60 appearing on his bank statement for that date.

Greenberg had been requested to produce that check, but he has been unable to do so. It is clear, moreover, from the bank statement and from a letter of the bank addressed to Greenberg and introduced into evidence at the trial, that the debit of $38,335.60 dated April 25th does not represent the passage of a check through the Greenberg account, but was a charge against Green-berg’s account