Polish-American Building & Loan Ass'n v. Dembowczyk

Digges, J., delivered the opinion of the Court. The appellee, Maryanna Dembowczyk, complainant below, on May 20th, 1933, filed her bill of complaint in the Circuit Court No. 2 of Baltimore City, wherein it is alleged that she opened two savings accounts with the appellant, the Polish-American Building & Loan Association, Inc., defendant below, the first on June 13th, 1927, with an initial deposit of $14.15, and received from the defendant savings account deposit book No. 3040, and the second on January 28th, 1928, with a deposit of $2,150, and received from the defendant savings account deposit book No. 3071, both of these books being filed as exhibits with the bill of complaint; that she has made demand upon the defendant for the various sums due her, which the defendant refused and still refuses to pay; that upon further demand for said sums on deposit by complainant’s counsel, they were advised by the defendant’s counsel that said sums so deposited were accepted as free share accounts, and that the notation “savings account” in the deposit books was a misprint, but complainant states that, since the issuance of said passbooks to her, books have been issued to other persons, bearing also the notation “savings account No.-,” and that at the time of the issuance of said books, there were numerous signs ²⁶¹ on the front of the defendant’s building, 2813 O’Donnell Street, inviting the public to open savings accounts and join the Christmas Savings Club; “that the defendant corporation, by its agents, servants, officers, and directors has practiced deception and perpetrated fraud upon your complainant, in that on the 3rd day of January, 1928, it issued its passbook to the complainant in the sum of $2,150, and that the said passbook specifically stated that the money was accepted as ‘savings account No. 3071,’ and the complainant was told by one Jaworski, the agent who issued said savings deposit book, at the time of its issuance, that the said savings deposit could be withdrawn upon demand, and that said savings deposit would bear interest at the rate of six per centum per annum; that the said defendant corporation has from time to time accepted further deposits upon this account, but upon demand being made by the complainant for her money on deposit under the aforementioned savings account, the defendant corporation, in contravention of the specific language used in the said passbook and representation made by above named agent, and the signs mentioned in paragraph 4 of this bill inviting the public to open savings accounts and upon all of which the complainant did rely, did claim that the account in question is not a savings account, but that the complainant was a free shareholder, and therefore subject to the rules and regulations pertaining to stockholders”; there then follows the same allegation in respect to the deposit and account contained in passbook No. 3040; that the complainant is advised, believes, and therefore avers that the defendant is paying large sums of money weekly to its stockholders, and is depleting its available cash to such an extent that there will be no funds on hand to pay complainant unless it is enjoined and restrained from paying to its stockholders. The prayers of the bill are, that the defendant be ordered to pay the balance of $696.58 with interest at six per cent, per annum from October 1st, 1932, and the sum of $3,713.45 with interest at six per cent, per annum from April 1st, 1932, to the ²⁶² complainant; that the defendant be restrained and enjoined from paying any money to stockholders, until said sums due the complainant are paid to her; and for general relief. On the 25th of May, 1983, the chancellor passed an order requiring the defendant to pay the sums mentioned in the bill of complaint, represented by the two passbooks referred to, with interest, to the complainant, and that the defendant be enjoined and restrained from paying any sums to its stockholders until the complainant is paid in full, unless cause to the contrary be shown on or before the 5th day of June, 1933.

On the last mentioned date the defendant filed a demurrer to the bill of complaint, wherein it is alleged, (1) that the complainant had not stated in her bill such a case as entitled her to any relief in equity; and (2) “that heretofore, to wit: on the 29th day of March, 1933, the complainant herein filed a bill of complaint against your respondent in Circuit Court of Baltimore City, embracing the same subject-matter and facts as are the basis of this suit, which bill of complaint is filed herewith and marked Respondent’s Exhibit No. 1 and prayed to be taken as a part hereof; that your respondent demurred and answered to the said bill of complaint so filed in the Circuit Court of Baltimore City, and the matter was set down for a hearing on the demurrer, and after long and thorough investigation, in which the court and counsel for both sides had taken part, by way of conferences in the judge’s chambers, the matter was argued in open court by both sides to the controversy, and after argument the matter was held sub curia by his Honor Judge Stump, and after due consideration, on the 5th day of May, 1933, the demurrer to the bill of complaint was sustained without leave to amend, and the bill was dismissed. The order of dismissal is filed herewith and marked Respondent’s Exhibit No. 2, all of which proceedings are evidenced by a certified copy of docket entries from the Circuit Court of Baltimore City, and marked Respondent’s Exhibit No. 3, all of said Exhibits are prayed to be taken as a part of ²⁶³ this demurrer, that the said order dismissing the bill of complaint in Circuit Court of Baltimore City has not been appealed and it is final and conclusive upon the complainant herein.” There was filed with the demurrer the exhibits referred to therein. On October 16th, 198B, the demurrer was overruled, with leave to answer. The defendant then filed an answer, wherein the same allegations set forth in the second paragraph of the demurrer are again made, and specifically denying the allegations of fact in the bill.

The answer further alleges that the books issued to the complainant have printed in them the constitution of the defendant corporation, in the English and Polish languages ; that on the inside of the books appear the words: “That the accounts are subject to the rules and regulations of this association”; that the complainant did not comply with the rules and regulations set out in the defendant’s constitution and printed in the books of the complainant, pertaining to withdrawals; that the defendant is now operating on a pro rata basis under section 171A of article 23 of the Code of Public General Laws of Maryland (as added by Acts 1933, ch. 47) ; and that it is ready, willing, and able to pay the complainant her pro rata share at its regular meetings, provided she complies with the rules and regulations as set forth in its constitution. Subsequently testimony was taken in open court, after which the chancellor passed, on December 5th, 1933, the following order: “It is hereby ordered this 5th day of December, 1933, by the Circuit Court No. 2 of Baltimore City, that the complainant, Maryanna Dembowczyk, be and is hereby declared to be a general creditor, and not a free share holder or stockholder, of the defendant corporation, the Polish American Building and Loan Association, Incorporated, in the amount of six hundred and ninety-six dollars and fifty-eight cents ($696.58) and three thousand seven hundred and thirteen dollars and forty-five cents ($3,713.45), with interest at six per-cent (6%) per annum, from October 1st, 1982, and April 1st, ²⁶⁴ 1932, respectively, being the sums due her on savings deposit books Nos. 3040 and 3071 respectively, and it is further ordered that the complainant, as a general creditor, shall be paid in full, with interest at six per cent (6%) until so paid in full, before any payments are made to free share holders or stockholders of this building association. And it is further ordered that the said defendant corporation be and is hereby enjoined and restrained from paying the banks or any other general creditors, if any, on its indebtedness except on a pro rata basis with the complainant, provided, however, that nothing herein contained shall affect the right of the banks to foreclose on any collateral that it may have in its hands.” It is from this order that the appeal here is prosecuted. The record presents two questions for determination: First, the question of res adjudicata; and, second, the question of whether or not the complainant is a savings depositor or a free share holder of the defendant corporation.

Considering them in the above order, the contention of the appellant is that the demurrer to the bill should have been sustained, because the facts stated in the second paragraph of the demurrer constitute res adjudicata as to the present case. That question cannot be raised by demurrer to the bill, unless on the face of the bill there are facts set forth which would amount to res adjudicata. In other words, the demurrer only goes to the facts apparent upon the face of the bill. There is no mention whatever in the bill of complaint of any prior litigation between the parties in respect to the subject-matter embraced in the present case; and the demurrer was properly overruled.

The same question, however, is presented by the answer, which contains the allegations made in the demurrer, and is equivalent to a plea of res adjudicata at law. The exhibits filed and testimony taken on this point show that on March 29th, 1933, the appellee filed her bill of complaint in the Circuit Court of Baltimore City against the appellant, which contained similar allegations to the present bill of complaint, and, in addition, allegations , of the corporation’s insolvency, and ²⁶⁵ gross mismanagement by its directors and officers in the operation thereof; that it would be to the best interest of the creditors and savings account depositors that a receiver be appointed to take charge of the assets of the defendant corporation, under the supervision of the court, and that an injunction issue restraining the officers and agents of the defendant corporation from in any way disposing of its books, papers, or assets, and directing them to deliver and turn them over to the receiver. A demurrer was filed to that bill, and the chancellor sustained the demurrer and dismissed the bill of complaint on May