Maryland Apartment House Co. v. Glenn , 108 Md. 377 ( 1908 )

This is an action of assumpsit upon the common counts for work and labor done, in a suit brought in the Court of Common Pleas of Baltimore City, by the appellee against the appellant company, to recover a commission for obtaining a loan for it of $70,000 from the Title Trust and Guarantee Company of Baltimore. There is filed with the declaration a bill of particulars showing the nature of the plaintiff's demand, and it is as follows:

1903 and 1904 To this amount payable by the defendant to the plaintiff for work and labor done by the plaintiff for the defendant at the instance and request of M. and J. Brandt, its agents and representatives, in securing a loan of $70,000 for the defendant on its mortgage $1,750.00 — with interest until paid.

The defendant pleaded never indebted and never promised as alleged.

The case was tried before the Court, sitting as a jury, and from a judgment in favor of the plaintiff, the defendant has appealed.

The questions brought here for our consideration are presented upon two bills of exception, one to the refusal of the Court to admit certain testimony offered upon the part of the defendant, and the other to the ruling of the Court in granting the plaintiff's prayer, as modified, and in rejecting all of the defendant's prayers.

The prayers it will be observed make no reference to the pleadings but were granted upon the evidence and facts in the case, so we are confined to the evidence to which they refer and are precluded from considering the state of the pleadings. The rule is well settled, that suitors must recover according to theallegata and probata. Stockton v. Frye, 4 Gill 406; Giles v. Fauntleroy, 13 Md. 126; Fletcher v. Dixon, 107 Md. 420.

There was no error, we think, in sustaining the objection to the testimony set out in the first bill of exception. The testimony sought to be introduced appears to have been irrelevant and immaterial to the issue between the parties, but its rejection could not have injured the defendant's case because the defendant company had the benefit of the fact, in the testimony of the witness Glidden, who testified on cross-examination that the Brandts have not been paid at all but that they do hold some stock in the corporation which they obtained from George H. Thomas as a commission for securing the contract for the construction of the apartment house for the said Thomas.

The vital questions in the case arise upon the prayers, and it will be necessary to state somewhat in detail the facts disclosed by the record, in order to have a clear understanding of their application.

The Court granted the plaintiff's prayer, with a certain modification, which will hereafter be set out, but rejected the four prayers offered by the defendant.

It will be seen that the defendant's prayers presented the converse of the proposition contained in the plaintiff's prayer as granted, and a consideration of one will practically dispose of the others.

The facts, upon which the instructions were asked, appear to be these:

The appellant company was incorporated under the General Incorporation Laws of the State on the 19th of March, 1903, and subsequently, on March 31st, 1903, its certificate of incorporation was amended by increasing its capital stock to two hundred thousand dollars. The incorporators were Messrs. Jacob Brandt, John Henry Keene, John Glenn, Jr., Henry S. King, George H. Thomas, Edward H. Glidden, of Baltimore City, and John H. Wight, of Baltimore County. The corporation was to be managed by seven directors and the incorporators were named as such for the first year.

The object for which it was formed is stated to be for the purpose of buying, selling, mortgaging and leasing or otherwise dealing in lands, or other property, and also for the purpose of carrying on in the city of Baltimore the industrial business of conducting an apartment house in all its branches.

The firm of M. J. Brandt, of Baltimore, were among the promoters of the organization and according to the evidence, the firm was authorized to negotiate a loan of $70,000 on the bonds of the appellant company, to be incorporated. Mr. Glidden was employed as the architect to build the apartment house on a lot to be purchased from Messrs. Keene and Wight, provided the matter could be financed.

On the 13th of February, 1903, Messrs. Brandt, who were promoting the plan, entered into negotiations with the appellee to secure a loan of $70,000 from the Title Guarantee and Trust Company. This was subsequently effected by the appellee with the Trust Company and the loan was secured by a duly executed mortgage, dated the 8th of May, 1903. The contract between the appellant and the appellee is evidenced by the following letter.

"Baltimore, Maryland, March 6, 1903.

John Glenn, Jr., Esq.,

Dear Sir: We enclose herewith letter to the Title Guarantee and Trust Company making application for a loan of $70,000 on the new apartment house to be erected on the lot at the northeast corner of St. Paul and Preston streets.

Will you be kind enough to hand this to Mr. Miller and have company to take action?

We agree to pay you a commission of two and one-half per cent. on the amount of the loan secured. This payment to be made as money on $70,000 loan, is paid over to the company.

Yours very truly, M. J. Brandt, Promoters."

It is admitted that the money as secured by the appellee was accepted by the appellant company and was used in the construction of the apartment house; that it was paid according to the terms of the mortgage, and was obtained through the services of the appellee, and that no commissions have been paid him or to M. J. Brandt, on account of the services rendered.

There is evidence tending to show that all of the directors except one or two knew of the employment of the appellee to negotiate the loan and that all of them knew it before the first of June, when the first instalment upon the mortgage became due. It also appears that at a meeting of the board of directors held on the 6th of April, 1903, the matter of the loan was discussed and the following resolution was passed.

"Whereas it is necessary to the fulfillment of the purpose of the company to obtain a loan of not less than $70,000, and therefore, it is to its interest to adopt the agreement made in its behalf by M. J. Brandt with the Title Guarantee and Trust Company in reference to the loan. Now, therefore, be it resolved, That the Board of Directors be and they are hereby authorized to accept and adopt for the Company, the agreement entered into on its behalf by M. J. Brandt and the Title Guarantee and Trust Company."

The agreement here referred to appears from a letter from M. J. Brandt to the Title Company dated the 6th of March, 1903, and from the latter to the former dated the 12th of March, 1903, set out in the record. And on March 12th, 1903, the appellee received the following letter from M. J. Brandt, in acknowledgment of his connection with the negotiations with the Title and Trust Company.

March 12, 1903.

John Glenn, Jr., Esq.,

Dear Mr. Glenn: We are in receipt of your letter of March 12, 1903, enclosing letter of the Title Guarantee and Trust Company accepting our proposition in our letter of March 6, 1903.

Yours truly, (Signed.) M. J. Brandt Promoters.

These are the prominent and material facts in the case and are the basis for the rulings of the Court upon the prayers.

The plaintiff's prayer, as modified, we think, correctly presented the law of the case. It is as follows:

If the Court shall find from the evidence that M. J. Brandt, acting as promoters for parties who afterwards became the incorporators of the defendant undertook to procure for it a loan of $70,000, or thereabouts upon a mortgage of its apartment house and ground, upon which the same was to be erected, and that said M. J. Brandt in the performancc of their said undertaking as such promoters engaged the plaintiff to procure the said loan for the use and benefit of the defendant, and that the plaintiff accepted such employment and did procure for the defendant the said loan under such employment, and that the defendant accepted and received the same and applied it to the construction of said apartment house; and if the Court shall further find that the defendant has never paid any compensation whatever to the plaintiff, and that said M. J. Brandt have never paid any compensation to the plaintiff for his services in negotiating and procuring said loan, then the plaintiff is entitled to recover from the defendant such sum as the Court shall find to be reasonable compensation for his said services, not exceeding two and a-half per cent. upon the amount of said loan of $70,000, with interest in the discretion of the Court.

In the case of Grape Sug. and Vin. Co. v. Small,40 Md. 395, a somewhat analogous case, this Court said: If the company, after its incorporation was complete, accepted the work done under the contract, it will be estopped, both in law and in equity from denying its liability, on account of the same. In other words, the appellant will not be permitted to accept the work done and materials furnished by the plaintiff under a contract made prior to the recording of the certificate and at the same time deny its liability under it.

In Preston v. Liverpool c. Railroad Co., 7 Eng. Law and Equity, 124, the Chancellor held, that where projectors of a company enter into contracts on behalf of a body not existing at the time of the contract, but to be called into existence afterwards, then, if the body for whom the projectors assumed to act, does come into existence, it cannot take the benefit of the contract without performing that part of it which the projectors undertook that it should perform, that is, the projectors are treated, for that purpose, as agents of the company so afterwards called into existence.

Mr. Alger, in his work on Promoters, and the Promotion ofCorporations, p. 210 and 224, in treating of the liability of corporations for these contracts says: "When, however, the contract is made in the name or in behalf of the projected corporation, or is treated as a proposal to such corporation, then in the absence of other controlling circumstances, acceptance of benefits under the contract justifies the inference that the corporation has accepted or adopted it."

"If the corporation has power to pay for the service and expenses necessary to bring it into existence, and has actually taken the benefit of such service and expenditures by entering upon the corporate enterprise, and if, as a fact, the work was not done or the expense incurred gratuitously or upon the credit of a third party, but with the expectation that the corporation when formed would make payment, it would seem that the corporation ought in equity to be holden for payment to a fair and reasonable amount."

In Little Rock and Fort Smith Railway Co. v. Perry,37 Ark. 191, the Court thus announces the law. From all the authorities, it seems clear that, in order to recover, in an action at law, the plaintiff must show either an express promise of the new company, or, that the contract was made with persons then engaged in its formation, and taking preliminary steps thereto, and that the contract was made on behalf of the new company, in the expectation on the part of the plaintiff, and with the assurance on the part of the projectors, that it would become a corporate debt, and that the company afterwards entered upon and enjoyed the benefit of the contract, and by no other title than that derived through it.

And JUDGE PAXSON in delivering the opinion of the Court inBells Gap Railroad Co. v. Christy, 79 Pa. St. 59, says, that the principle is well established in England, and to some extent recognized in this country, that when the projectors of a company enter into contracts in behalf of a body not existing at the time but to be called into existence afterwards then if the body for which the projectors assumed to act does come into existence, it cannot take the benefit of the contract without performing that part of it which the projectors undertook that it should perform. And if such acts are necessary to the organization and its objects and are subsequently accepted by the company and the benefits thereof enjoyed by them, they must take such benefitscum onere and make compensation therefor.

We think the plaintiff's prayer in view of the principles here announced was free from error, and correctly stated the law applicable to the facts of the case.

The facts of the case are sufficient to furnish evidence from which the Court, sitting as a jury could find that the negotiation of the loan by the appellee was necessary to the organization of the corporation and its objects, that the money was accepted, and the benefits thereof enjoyed by it. The prayer left to the Court sitting as a jury, to find the facts, set out in the record, essential to a recovery and as we find no error in the rulings of the Court, upon the prayers, the judgment will be affirmed.

Entertaining this view of the case, we find it unnecessary to discuss the defendant's prayers, as the whole law of the case was properly and correctly submitted by the plaintiff's prayer.

Judgment affirmed with costs.