Zielian v. Baltimore Plant Ice Co.

Judge Briscoe delivered the opinion of the Court. There are four appeals, in the record before us, and they are from separate decrees of Circuit Court No. 2 of Baltimore City in Equity. The controversy grows out of the liquidation of the affairs of the Baltimore Plate Ice Company, a New Jersey corporation, with its place of business in Baltimore City, and now in the hands of receivers. While there are four appeals taken from separate decrees or orders of the Court below, it is conceded, that they practically present but two controversies and these will be considered as on two appeals.

The appeals were entered upon the same day, but the first in number appearing upon the record is an appeal from the decree of July 20, 1910, overruling the exceptions of the appellant to, and ratifying the auditors’ account stated, passed on the petition of the Fairbanks Company, a corporation of the State of New Jersey, requiring the appellant, receiver, to bring into Court within fifteen days the sum of $7,650, with interest, being the amount of certain notes ⁶⁶⁰ issued by Mm as such receiver, to the Fairbanks Company, in excess of his authority, and in default thereof, authorizing and permitting the bonds of the receiver to be put in suit for the recovery of the amount of the notes. The second appeal is from a decree, passed on the fifth day of August, 1910, making final the decree of the 20th day of July, 1910, and directing the bonds of the receiver to be put in suit. The two remaining appeals are from decrees of the Court below, passed on the 20th day of July, 1910, and on the 5th day of August, 1910, overruling the appellant’s exceptions to and ratifying the auditor’s account requiring the receiver to bring into Court the sum of $3,942.52, with interest, within fifteen days, the amount being alleged funds of the Plate Ice Company, stated to have been wrongfully converted by him to his own use, also removing him as such receiver, depriving him of commissions and directing, in default, the bonds to be put in suit. The decree of August 5th, 1910, made final the order of July 20th, 1910, also removed the appellant, as receiver, denied Mm all commissions and compensation and directed the co-receivers to put the bonds in suit.

The facts as they appear from the record relate to both appeals and will be now briefly stated, for a proper understanding’ of the questions involved on the appeals and will be disposed of separately. On the 25th day of March, 1908, the appellant upon application of certain creditors. was appointed sole receiver of the Baltimore Plate Ice Company, and duly qualified as such. The decree did not provide for a dissolution of the corporation nor for the sale of its property, but the power Df the receiver seems to have been limited to the preservation of the properly of the corporation and to making it a productive and profitable business plant. The assets of the corporation consisted of a leasehold interest in certain property known as Eos. 7, 9, 11 and 13 Frederick street, Baltimore, upon which had been erected an ice ⁶⁶¹ factory and a machine building for the manufacture of ice, at a cost of thirty-five thousand dollars.

There was outstanding and issued at this date $24,000 of bonds, and its unsecured debts amounted to about $9,450.00. On July 16, 1908, the receiver was authorized by an order of Court (all of the bondholders and creditors con senting) to issue receivers’ certificates and notes to complete the ice plant. In pursuance of this order receivers certificates to the amount of $30,000.00 were issued and sold to complete the building and make the first payment on machinery and these were made a first lien on the assets of the company. Receivers’ notes to the amount of $26,300 were also issued to the manufacturers in payment for machinery, and these notes were made a second lien on the assets.

There was also issued by the receiver, in excess of his authority and not covered by the Court’s order, receivers’ notes (to be hereafter designated receivers’ notes, not authorized) to the amount of $17,406.66. The notes held by the Fairbanks Company and here in dispute are admitted to be a part of the notes, so issued, in excess. On the 2nd day of September, 1909, upon the petition of certain creditors of the Ice Company, Messrs. John P. O’Farrall, W. Burns Trundle and Leigh Bosnal, members of the Baltimore Bar, were appointed co-receivers, with the appellant.

On the 31st of July, 1909, the appellant receiver, filed the following report, showing the status of the affairs of the company and his administration of the office. Outstanding Obligations. 1. Receiver’s certificates..........................$30,000.00 2. Receiver’s notes............................. 25,341.13 3.

Bills payable................................. 18,445.53 4. Edgar Zielian.........,...................... 14,028.59 5. Accts. payable................................ 9,442.65 6. Ice account................................... 3,686.59 7.

Cash..................■...................... 330,17 $101,274.66 ⁶⁶² Disbubsements. Plant, machinery, buildings, etc...................$86,698.43 Furniture...................................... 486.05 Tools and fixtures............................... 86.61 Pay roll, telephone, rents, expenses, etc............. 7,885.07 Interest and exchange........................... 579.90 Commission for sale of Eec. Cert., etc.............. 1,345.00 Coal.......................................... 970.08 Oils.................................... 298.97 Insurance..............:....................... 604.00 Ground rent.................................... 1,125.00 $100,079.11 Accounts receivable.......................*.... 1,195.55 $101,274.66 It also appears that on the 12th of November, 1909, the receivers sold all the property of the company for $34,-500.00, and there remained for distribution the sum of $21,-504.00, to be paid on account of the authorized receivers’ certificates, being the first lien upon the company’s assets. On the 15th of November, 1909, on petition of the Fairbanks Company, a creditor of the Ice Company, and holding $7,650.00 of the unauthorized and overissued receivers’ notes, the Court below directed the receiver to bring into Court the sum of $7,650.00, to be paid the petitioner and that the receiver bonds be put in suit.

This brings us to a consideration of the questions raised on the appeals, from the decrees of the 20th of July and August 5, 1910, relating to the Fairbanks Company’s claim, being the amount of the notes held by them and which the auditor found were included in the unauthorized overissue of notes. Practically} the only question before the auditor was the fact whether the notes formed a part of the unauthorized issue. By the order' of the 3rd day of December, 1909, the papers were referred to the auditor “to state an account, ⁶⁶³ of all notes issued by tbe receiver in excess of tbe authority conferred by the orders of Court, and showing whether or not the receivers’ notes held by the Fairbanks Company were included in the unauthorized overissue. The report of the auditor on May 2nd, 1910, shows that he was unable to ascertain the total overissue, but that the Fairbanks notes were a part of them.

The Court in its decrees here appealed against not only ratified the auditor’s report as to the finding of the overissue, but it made this report a basis for the order, directing the receiver to bring the amount of the Fairbanks notes into Court to be paid to that' company and directed the bonds of the receiver to be put in suit. In other words, the Court held that because the auditor found that these notes were overissues, that the finding of this fact was a sufficient reason and ground for directing the money to be brought into Court, and to be paid to the holder of these notes. There was error, we think, in all three of the directions of this decree, because, it is well settled that an order of this character is in the nature of a final judgment and decree, and it will not be passed except upon such proofs and findings as will conclusively establish the party’s liability and that the money is due and payable by the party directed to bring it into Court. In Dillon v. Connecticut Ins.

Co., 44 Md. 396 , it is said, though the