Spangler v. Dan A. Sprosty Bag Co.

Bailey, J., delivered the opinion of the Court. This is an appeal by Mary Louise Hall Spangler from an order of the Circuit Court for Baltimore County, in equity, overruling her demurrer to the bill of complaint of The Dan A. Sprosty Bag Company, a body corporate, and Mary Louise Sprosty and John B. Pymer, executors of the last will and testament of Dan A. Sprosty, deceased, filed against her and other defendants. The bill of complaint alleges that The Dan A. Sprosty Bag Company is a Maryland corporation, with its principal office in Baltimore City; that it is engaged in the business of buying, selling, manufacturing and renovating bags; that Dan A. Sprosty was, in his lifetime, the owner of all common stock and a majority of the preferred stock of the corporation and was in full and absolute control of the management of its business; that Sprosty died on July 25, 1943, leaving a will naming Mary Louise Sprosty and John B. Pymer his executors and that letters testamentary have been granted to them by the Orphans’ Court of Baltimore City; that Mary Louise Hall Spangler, also known as Louise Hall Spangler and L. H. Spangler, a resident of Baltimore County, was, prior to the death of Sprosty, carried on the payroll of the corporation as its employee and claimed to be its representative in the purchase and sale of bags; that after the death of Sprosty, the officers and directors of the company and the executors caused an examination to be made of the accounts of the company and thereby discovered that large sums of money and property had been fraudulently, illegally, unlawfully and wrongfully diverted from said business and had been delivered to, placed in the possession of or titled in the name of the defendant, Mary Louise Hall Spangler, as a result of her fraudulent, illegal, unlawful and wrongful acts by the ¹⁶⁹ exercise of threats, coercion, undue influence, control and dominion over Sprosty, whereby he was compelled and forced to join with her in the diversion of said funds and property; that beginning in the month of April, 1942, and continuing until the month of June, 1943, the total sum of $37,635.15 appears to have been so diverted, but that the plaintiffs believe funds, money and property of the company in a substantially greater amount have been also diverted to her, the exact amount thereof being unknown to them; that early in 1942 Sprosty became sick with a serious heart ailment and that from that time until his death he was almost constantly under the care of physicians and was frequently a patient in various hospitals; that he became mentally unstable and that at times he was not mentally capable of transacting business; that while he was in this condition the defendant, Spangler, exercised a dominant control over him and coerced him into diverting the said funds by threats of legal proceedings and of exposure of his illegal acts; that the only source from which Sprosty could obtain funds for such diversion was from the funds of the company; that the manner in which the said funds were diverted to her was as follows: “The said Dan A. Sprosty, now deceased, with the full knowledge thereof on the part of the defendant, Mary Louise Hall Spangler, would cause to be prepared, fictitious memorandum invoices, purporting to indicate that one L. H. Spangler of the City or Town of Tyrone, in the State of Pennsylvania, had sold to the plaintiff, the Dan A. Sprosty Bag Company, a certain quantity of bags and scrap and thereupon the check of the plaintiff, The Dan A. Sprosty Bag Company, would be issued to the defendant, the said Mary Louise Hall Spangler, but designated as L. H. Spangler in the check, for a portion or all of the amount shown to be due on said fictitious invoices, and where a check was issued for only part of the amount shown to be due, a subsequent check would be issued for the balance. ¹⁷⁰ That the merchandise alleged to have been sold to the plaintiff, The Dan A. Sprosty Bag Company, as set forth in said fictitious invoices, was never received by it and no consideration was ever received by the plaintiff, The Dan A. Sprosty Bag Company, for any of the checks drawn purporting to be in payment for merchandise set forth in said fictitious invoices. “That the defendant, Mary Louise Hall Spangler, was ordered by the said Dan A. Sprosty to be placed on the payroll of the plaintiff, The Dan A. Sprosty Bag Company, at a salary of Two Hundred Eight Dollars and Thirty-four Cents ($208.34) a month, for which payments the defendant, Mary Louise Hall Spangler, also known as Louise Hall Spangler and L. H. Spangler,. performed no services whatsoever for, or for the benefit of the plaintiff, The Dan A. Sprosty Bag Company. “That all of the aforegoing payments of funds of the plaintiff, The Dan A. Sjprosty Bag Company, whereby said funds were diverted to and fraudulently, illegally, unlawfully and wrongfully, transferred to the defendant, Mary Louise Hall Spangler, also known as Louise Hall Spangler and L. H. Spangler, which are known to the plaintiffs, were made by checks of the plaintiff, The Dan A. Sprosty Bag Company, drawn on its funds on deposit with the National Marine Bank and said checks were signed by the said Dan A. Sprosty, in his capacity as president of the plaintiff, The Dan A. Sprosty Bag Company. That the defendant, Mary Louise Hall Spangler, also known as Louise Hall Spangler and L. H. Spangler, when she received said checks, well knew that the funds so diverted and transferred to her were the funds of the plaintiff, The Dan A. Sprosty Bag Company, and said defendant further well knew and had full notice that no consideration passed from her to the plaintiff, The Dan A. Sprosty Bag Company, for any and all of said payments.” The bill then alleges that the defendant, Spangler, has disposed of and deposited the said funds as fol ¹⁷¹ lows: Purchased the leasehold interest in property-located at 618 Highland Avenue, Towson; purchased the fee simple interest in other property in Baltimore County, known as Lot No. 9, Normal Terrace; deposited a substantial portion thereof in checking and savings accounts with the defendants, Maryland Trust Company, The Towson National Bank, and The Second National Bank of Towson; deposited a substantial portion thereof in safe deposit boxes or vaults, registered in her name only or jointly with others, under the custody. and control of the aforementioned banks; deposited a substantial portion thereof in The Allison East End Trust Company of Harrisburg, Pennsylvania, and First Blair County National Bank of Tyrone, Pennsylvania, and in other banking institutions whose names are unknown to the plaintiffs; that Sprosty, from the funds of the company, purchased a Buick automobile for the sum of $1,566.67 and caused the same to be registered in the name of the defendant, Spangler; that the plaintiff company is entitled to have all of said funds, money and property returned to it, whenever the same may be found and in whatever form the same may now be invested; that the plaintiffs are not fully informed of all the funds, money and property so diverted and transferred to the defendant, Spangler, from the company and of the disposition made by her of it, and therefore submit that they are entitled to a full accounting and discovery thereof from the defendants ; that the defendant, Spangler, is now in full control and possession of said funds and property, and that the plaintiffs believe that the defendant, Spangler, will attempt to dispose of the same to bona fide purchasers or to secret the same or carry it beyond the jurisdiction of the court, unless she is restrained and enjoined from so doing; and that they are entitled to have the defendant, Spangler, declared to hold the title to the Buick automobile, as well as all other funds, money and property above referred to, as trustee for the plaintiff company and that she should be restrained ¹⁷² from selling, assigning, transferring, conveying or encumbering said property pending these proceedings.

The relief prayed for is as follows: (1) That the defendant, Spangler, account for all funds, money and property of the plaintiff company diverted and transferred to her; (2) that she be ordered and directed to make full and complete discovery of all funds, money and property received by her from the plaintiff company; (3) that the court decree that all the funds, money and property which the court may adjudge and determine to have been fraudulently, illegally, unlawfully and wrongfully transferred to her, and all property titled in her name, purchased with such funds, is the property of the plaintiff company, and direct her to pay, transfer, assign, convey and deliver the same to the plaintiff company, and, upon her failure so to do, declare the claims of the plaintiff company to be liens upon the property now titled in her name, and appoint trustee to sell said property and apply the proceeds in settlement of such claims or to assign, transfer and convey said funds, money and property directly to the plaintiff company; (4) that she be enjoined and restrained, pending these proceedings, from assigning, transferring, conveying, encumbering or in any manner disposing of said funds, money and property; (5) that, pending these proceedings, the defendants, Maryland Trust Company, The Second National Bank of Towson and The Towson National Bank, be enjoined and restrained from permitting the defendánt, Spangler, to withdraw or remove any funds, money or property now in their possession or custody or over which they now exercise any form of control; (6) that the said banks be ordered and directed to make discovery of all accounts, both checking and savings, and of all safe deposit boxes or vaults maintained with them by her, either individually or jointly with others, or of any other funds, money or property in their possession, custody or control; (7) that the defendant, W. Lee Elgin, Commissioner of Motor Vehicles, pend ¹⁷³ ing these proceedings, be enjoined from permitting the assignment or transfer of the title to said Buick automobile; (8) and for general relief. There were filed as exhibits with the bill a certified copy of the will of Sprosty, a certificate of letters testamentary granted to his executors, a certified copy of the assignment for the leasehold interest in the property at 618 Highland Avenue, and a certified copy of the deed for Lot No. 9, Normal Terrace. The defendant, Spangler, demurred to the whole bill and to each and every paragraph thereof. The chancellor overruled her demurrer and she has appealed.

The question for our decision is the sufficiency of the bill of complaint. The grounds for her demurrer may be conveniently grouped as follows: (1) That the bill does not sufficiently allege specific instances of fraud to warrant the relief it prays. (2) That the plaintiffs have an adequate remedy at law. (3) That the alleged fictitious invoices have not been filed as exhibits with the bill.

(4) That the plaintiff company is guilty of laches. (5) That the bill is multifarious as to subject matter and parties defendant. (6) That there is a misjoinder of plaintiffs. The basis of all the relief sought in this case is the fraud of the defendant, Spangler.

It is the settled rule that a bill seeking any relief on the ground of fraud must distinctly state the particular facts and circumstances constituting the fraud and the facts so stated must be sufficient in themselves to show that the