Wheaton Triangle Lanes, Inc. v. Rinaldi

Marbury, J., delivered the opinion of the Court. Prescott, J., concurs in the result. In May, 1961, the capital stock of Wheaton Bowling and Recreational Center, Inc., later known as Wheaton Triangle Lanes, Inc. (Wheaton), was owned fifty per cent each by brothers LeRoy M. Rinaldi (LeRoy) and Nicholas E. Rinaldi (Nicholas). They also owned the same ratio of stock interest in two other corporations, Rinaldi Enterprises, Inc. (Rinaldi), and Queenstown Duck Pin Bowl, Inc. (Queenstown).

There were intercorporation account balances and both of the stockholders were substantial creditors of Wheaton. Disagreements had arisen between the two brothers and they agreed to separate their interests. On May 18, 1961, the brothers entered into an agreement for settlement of their differences and for separation of their ownerships. In substance, Article A of this agreement provided that Nicholas should become the owner of all the stock of Queenstown, and that all debts owed by that corporation to LeRoy or the other two corporations should be payable to Nicholas; that LeRoy should become the owner of all of the stock of Wheaton and Rinaldi corporations, and that all debts of those two corporations owed to Nicholas or to Queenstown should be payable to LeRoy; and that LeRoy should pay Nicholas $85,000.

The agreement also included the specific representation and warranty of Nicholas that any liabilities that he had incurred for the account of Wheaton and Rinaldi and not recorded on their ledgers did not exceed $250. It is significant that the agreement stated that: “Representations and warranties made in this agreement shall survive settlement.” Article C of the agreement provided for exchanges of releases by the parties and all the corporations. A modifying agreement dated August 15, 1961, amended Article A to make a note for $100,- ⁵²⁸ 000 the cash consideration, to postpone settlement to September 1, 1961, and to make Article A of the original agreement conclusive and binding on all parties. Final settlement was effected on October 4, 1961, and general releases executed which provided that the obligations assumed and the rights of indemnity arising out of the settlement agreement should be fulfilled.

Glenmont Lanes, Inc. (Glenmont), in June 1960 was owned fifty per cent by Nicholas and fifty per cent by Alphonse E. Leemans. On June 7, 1960, Glenmont loaned Wheaton $4,000 evidenced by a check, and since this amount has never been repaid, Glenmont filed a declaration against Wheaton on May 17, 1962, to recover the loan. The defendant, Wheaton, filed its plea and counterclaim; and after trial, judgment was rendered for the plaintiff Glenmont, both on the original declaration for $4,000 and on the counterclaim, which judgment is not the subject of this appeal. Defendant, Wheaton, as a third-party plaintiff in the same proceeding filed a third-party claim against Nicholas and Queenstown, of which Nicholas was also president.

The third-party claim for money had and received alleged that if any money had been loaned by Glenmont, it had been paid over to Nicholas as president of Wheaton for it, but he had never paid such money over to Wheaton or accounted for it; that he had instead caused a $4,000 check payable to Wheaton to be recorded on the books of that corporation as a debt owing to Nicholas individually. The claim alleged that because the obligation had been incorrectly credited as owed to Nicholas, the amount of the debt had been mistakenly repaid by Wheaton to Nicholas by direct payments or by payments made by Queens-town, charged to Wheaton, as an account receivable on the books of Queenstown and reimbursed to Queenstown in the settlement of accounts between the two corporations as part ■of the settlement agreement. The third-party defendant pleas of Queenstown and Nicholas each relied on the releases given by Wheaton in consummation of the settlement agreement. The plea of Nicholas also relied on an assignment of all the •claims of Wheaton against Queenstown.

At the trial on the original declaration and the third-party claim, the evidence showed that the Glenmont check for $4,000 ⁵²⁹ dated June 7, 1960, payable to Wheaton was signed by Nicholas and bore no endorsement by Wheaton, but that Wheat-on’s depository bank had affixed the endorsement: “Credited To The Account of The Within Named Payee ENDORSEMENT GUARANTEED SUBURBAN TRUST COMPANY WHEATON, MARYLAND.” The check was brought to the Wheaton office by Nicholas, who was at that time president of both corporations, but he could not remember to whom he gave it. The ledger entry on Wheaton’s books for the $4,000 loan did not show a liability to Glenmont, but rather a credit for the same amount to Nicholas. At the time of the delivery of the releases and consummation of the settlement agreement, according to LeRoy’s testimony, he did not know of the claim of Glenmont for the asserted $4,000 loan. In Wheaton’s checkbook, there appeared on a stub a deposit entry: “n/r-6/8 $4,000.00” the initials meaning Nicholas Rinaldi.

Wheaton’s bookkeeper, Mrs. Santini, testified that she did not remember who told her to make the entry. Both Nicholas and LeRoy denied directing her to make it. The bank statement of Wheaton for the period of May 31, 1961 to June 30, 1961, showed the deposit in its account on June 9 of $4,000 with the notation “N/R”. The certified public accountant for Wheaton testified that he placed those initials on the bank statement, and that it meant that Nicholas had put the $4,000 into the bank account.

He explained