Woodland v. Wise

Urner, J., delivered the opinion of the Court. The appellee in this case leased a banking room to the Danners’ Trust, Banking and Deposit Company of Baltimore City for a term of two years ending April 30th, 1908, at the annual rental of twenty-five hundred dollars payable in equal monthly instalments in advance. On October 9th, 1907, the Court below, at the suit of a creditor appointed ³⁶ receivers for the company on the ground of its alleged and admitted insolvency. No provision was made in the order, and no action has since been taken, for the formal dissolution of the company.

At the time of the appointment of the receivers there wa^ due and unpaid one monthly installment of rent which had become payable on October 1st, 1907, in advance under the terms of the lease. Application was promptly made by the appellee for permission to distrain for this installment, buu pending an order nisi for that purpose it was paid by the receivers under leave of the Court. Simultaneously the receivers and the appellee entered into an agreement in writing which provided that the leased premises be surrendered by the former to the latter on or before October 31st, 1907; that certain effects of the company, which it was not then expedient to remove, should be left on the premises, subject to removal on ten days’ notice with the understanding, that the receivers, as such, should not be liable for any rent accruing after October 31st, and that the appellee’s lien on the property not removed should be released; that neither the acceptance of the October rent from the receivers, nor the possession of the premises by the appellee should waive such claim as he might have against the estate of the lessee company for the loss in rent or otherwise, under the lease, from November 1st, 1907, to the date of the re-rental of the premises at the same rent, or the date of the expiration of the termand that the appellee might immediately advertise the property for rent, hut his efforts to that end should not he construed as a waiver of his rights against the estate under the lease. In February, 1908, the appellee, having failed to secure a new tenant, filed his claim as a general creditor of the estate for six months’ rent, amounting to twelve hundred and fifty dollars, accruing from November 1st, 1907, to April 30th, 1908.

None of the assets had then been distributed. The first auditor’s account was filed on June 2nd, 1908, about a month after the term created by the lease had expired. This account disallowed the appellee’s claim, and he filed ³⁷ exceptions to its ratification on that ground. As only a partial distribution was involved in the account it was ratified without prejudice to the appellee’s right to have his exceptions heard and the proper relief granted in connection with future distributions.

A second auditor’s account was filed in February, 1909. It also disallowed the appellee’s claim, and his exceptions were renewed. Subsequently the Court below passed an order sustaining the exceptions and directing the allowance of dividends to the appellee as a general creditor to equalize him with other claims of that class. The present appeal is from that order, and it is taken by other creditors whose dividends will be affected by the admission- of the appellee’s claim.

It appears from an agreed statement in the record that the receivers vacated the leased premises before October 31st. 1907, and that the appellee made all possible efforts, but without success, to re-rent the property prior to the expiration of the term. The sole question to be considered is whether the appellee’s claim as a general creditor was properly allowed. The appointment of receivers for an insolvent corporation does not work its dissolution, in the absence of a judicial declaration to that effect; Ordway v. Central National Bank, 47 Md. 239; Chemical Bank v. Deposit Co., 156 Ill. 528 ; nor does it determine the rights of any of the parties concerned. Gaither v. Stockbridge, 67 Md. 224 ; 23 Amer. & Eng.

Encyc. Law, 1041. In the present instance, therefore, the liabilities of the insolvent but undissolved corporation were not affected by the receivership, and its assets were thereby merely impressed with a trust for its creditors. The claim here in dispute is based upon the stipulations of a lease which was in full force and effect at the inception of the receivership.

The abandonment of the demised premises by the tenant and the entry and re-letting by the landlord did not relieve the former