Summary
In Perlmutter v. Minskoff, 196 Md. 99, 75 A.2d 129, both the Rule and the Section above mentioned were involved; and Rule 19 and Article 16, § 193 (of the 1951 Code, 182 of the 1939 Edition), giving the court discretionary power to permit the plaintiff to amend his bill after a demurrer to it has been sustained, were also involved.
Summary of this case from Brucker v. BensonOpinion
[No. 211, October Term, 1949.]
Decided July 19, 1950.
Contracts — Suit By Sub-Contractor to Recover Final Payment on Three Construction Contracts from Three Individuals Trading as General Contracting Firm — Sub-Contractor Not Entitled to Decree Ordering Defendants to Make Final Payment — Receiver — Insolvency Not Sufficiently Alleged to Justify Appointment of — Sub-Contractor's Right to Mechanic's Lien Extended Only to First Ninety Per Cent of Contract Price — Lien on Final Ten Per Cent Payment Waived — Arbitration Agreement between Parties — Allegation That Defendants Had Refused to Abide By Decisions of Arbitrators Thereunder Was Demurrable — Extra Work Not Covered By Contracts — Sub-Contractor Not Entitled to Recover for, Where He Alleged That Payment Was Due When Final Payment on Contracts Was Due — Fraud — Allegations Were Insufficient to Constitute — Charge of Must be Supported By Facts Sufficient to Justify Inference of — Facts Were Not Such as to Justify Accounting or Discovery — Equity Jurisdiction — Complexity of Accounting Alone Is Not Sole Consideration to Give — Circuit Courts for Counties — Courts of General Jurisdiction under Maryland Constitution — Law and Equity Sides — Extent of Power of Legislature to Fix — Common Law Distinction Controls, until Fixed By Legislative Enactment — Adequate Remedy in Damages — Statute Restraining Court from Refusing Mandamus or Injunction on Ground Party Asking Same Has, Relates to Cases Where Damages, Not Debt, Are Involved — Did Not Give Equity Jurisdiction in Case at Bar — Equitable Lien — Sub-Contractor Did Not Have — Money Due Was Nothing More Than Debt — Amendment to Pleading — Discretion Given Chancellor to Allow or Refuse, Will Not Be Reviewed in Absence of Abuse — Discretion Not Abused in Refusing Further Amendment, Where Plaintiff Made Two Efforts to Set Up Good Cause of Action and Failed — Bill as Amended and Supplemented — All Well Pleaded Matters in, Are Admitted as True for Purposes of Demurrer — Injunction or Receiver — Creditor Before Judgment, Who Became Such under General Contract, Not Entitled to — Substantial Compliance — Terms of Agreement Not Fulfilled By.
All well pleaded matters in the bill of complaint as amended and supplemented are, for the purposes of the demurrer, admitted as true. p. 107
Substantial compliance does not fulfill the terms of an agreement. p. 107
In a suit by a sub-contractor against three individual defendants, trading as a general contracting firm, to recover the final ten per cent payment due on three construction contracts, plaintiff's allegation that defendants had breached the contracts, in that they had obtained four releases of liens from plaintiff on the promise to repay the withheld ten percent and then refused to repay the sum, was not sufficient to justify the issuance of a decree ordering defendants to pay plaintiff the final ten per cent, where the contracts provided that this final payment was to be made upon the acceptance and approval of the project by the Federal Housing Administration and plaintiff failed to allege that the project had been so accepted and approved or that he had completed his part of the contract. p. 107
Where a sub-contractor brought suit against three individual defendants, trading as a general contracting firm, praying for injunctive relief, the appointment of a receiver to take over the assets of defendants, an accounting, discovery, and a decree requiring defendants to pay plaintiff the amount claimed to be due on three construction contracts, there was not a sufficient allegation of defendants' insolvency to justify the appointment of a receiver, even though plaintiff alleged that defendants did not have sufficient funds to pay current obligations in connection with the construction, operation and maintenance of the housing project, on which plaintiff worked, and that defendants had no assets located within the court's jurisdiction and available to pay creditors. There were no allegations that there were no funds to become due when the project was fully completed, that defendants had no assets whatsoever with which to pay debts or that any of the construction mortgages on the project were in default when the supplemental bill was filed. p. 108
Where a sub-contractor expressly agreed, in his contract to perform all concrete, masonry and carpentry work on a housing project, to sign a waiver of liens before the final ten per cent payment on the contract price was made, in order to facilitate the obtaining of final compliance from the Federal Housing Administration, the sub-contractor's right to a mechanic's lien extended only to the first ninety per cent of the contract price, which apparently had been paid. p. 109
An allegation, in a bill filed by a sub-contractor against three individual defendants, trading as a general contracting firm, for the recovery of the final ten per cent payment due the sub-contractor, that the parties executed an arbitration agreement when a dispute arose between them and that defendants had "refused to abide by the decisions of the arbitrators thereunder or to arbitrate further in violation of the express terms of the arbitration agreement," was plainly demurrable, where the agreement provided that ninety per cent of all labor and material billed the preceding month was to be paid "on the 10th of each and every month, with the remaining 10% to be paid * * * upon final acceptance and approval by the Federal Housing Administration." Plaintiff admitted the payment of the ninety per cent due, and did not allege that he had completed his part of the contract or that the projects on which he worked had been finally accepted and approved by the Federal Housing Administration. p. 109
In a suit by a sub-contractor against three individual defendants, trading as a general contracting firm, for the recovery of payments for extra work performed by the sub-contractor, as well as the final payment on three construction contracts between the parties, plaintiff was not entitled to recover for the extra work performed, since he alleged that the payment therefor was due at the time the final payment on the three construction contracts was due, and according to the allegations of his bill of complaint final payment thereon was not yet due. pp. 109-110
Allegations, in a sub-contractor's suit against three individual defendants, trading as a general contracting firm, praying for injunctive relief, the appointment of a receiver to take over the assets of defendants, an accounting, discovery, and a decree requiring defendants to pay plaintiff the amount claimed to be due on three construction contracts, that defendants were hiding their assets, using various sets of books, and taking money out of the state, were insufficient to constitute fraud, where there were no allegations that defendants were insolvent, that plaintiff was a lien creditor, that defendants had made any fraudulent conveyances or that they kept different sets of books. p. 110
A charge of fraud must be supported by facts sufficient to justify the inference of fraud. p. 110
The facts in a sub-contractor's suit against three individual defendants, trading as a general contracting firm, praying for injunctive relief, the appointment of a receiver to take over the assets of defendants, an accounting, discovery and a decree requiring defendants to pay plaintiff the amount claimed to be due on three construction contracts, were not such as to justify an accounting or discovery, even though the accounting might have been complex. p. 110
Complexity of accounting alone is not the sole consideration to give equity jurisdiction. p. 110
A sub-contractor, who brought suit for money claimed to be due him under three construction contracts entered into between plaintiff and three individuals trading as a general contracting firm, had no equitable lien, for the money due was nothing more than a debt. p. 110
Code (1939), Art. 16, § 92, providing that "No court shall refuse to issue a mandamus or injunction on the mere ground that the party asking the same has an adequate remedy in damages * * *," relates to cases where damages, as contradistinguished from a debt, are involved, and did not give equity jurisdiction in a suit by a sub-contractor for money claimed to be due him under three construction contracts entered into between plaintiff and three individuals trading as a general contracting firm. pp. 110-111
A creditor, before judgment, who became such under a general contract, is not entitled to an injunction or a receiver. p. 111
Insofar as it does not violate the constitutional guarantee of trial by jury, there is no specific limitation upon the power of the legislature to fix the jurisdiction respectively of the law and equity sides of the circuit courts for the counties, which are courts of general jurisdiction under the Constitution of Maryland, Art. 4, secs. 1, 19. But until fixed by some legislative enactment, the limits of the respective jurisdictions of those two sides of the same court are fixed by the ordinary common law distinction between courts of law and courts of chancery. p. 111
The discretion given the chancellor to allow or refuse an amendment to a pleading, Code (1939), Art. 16, § 18, General Equity Rule 19, will not be reviewed in the absence of abuse. p. 112
Where plaintiff had made two efforts to set up a good cause of action, and failed, the chancellor did not abuse his discretion under Code (1939), Art. 16, § 18, General Equity Rule 19, in refusing to allow further amendment. p. 112
J.E.B.
Decided July 19, 1950.
Appeal from the Circuit Court for Prince George's County (MARBURY, J.).
Suit by Morris Perlmutter against Leo Allen Minskoff, Henry H. Minskoff and Jerome Minskoff, individually and trading as the M. P. Construction Company, Parkway Terrace, Inc., the Chase National Bank, the Home Life Insurance Company of New York, bodies corporate, and the Federal Housing Commissioner, praying for injunctive relief, the appointment of a receiver to take over the assets of defendants Leo Allen Minskoff, Henry H. Minskoff and Jerome Minskoff, individually and trading as the M. P. Construction Company, and defendant Parkway Terrace, Inc., an accounting, discovery and a decree requiring defendants Leo Allen Minskoff, Henry H. Minskoff and Jerome Minskoff, individually and trading as the M. P. Construction Company and defendant Parkway Terrace, Inc. to pay an amount claimed to be due on three construction contracts. From a decree sustaining a demurrer to the bill of complaint, and dismissing the bill, as amended and supplemented, plaintiff appeals.
Decree affirmed.
The cause was argued before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON and HENDERSON, JJ.
Hal C.B. Clagett and Warren E. Magee, with whom were Sasscer, Clagett Duley on the brief, for the appellant.
Nicholas Orem, Jr., with whom were T. Howard Duckett and Duckett, Gill Anderson on the brief, for Parkway Terrace, Inc.
H. Winship Wheatley, Jr., with whom were H. Winship Wheatley and John J. Wilson on the brief, for the Home Life Insurance Company.
This is an appeal by Morris Perlmutter from a decree sustaining appellee's demurrer and dismissing appellant's bill of complaint as amended and supplemented, without leave to further amend. In referring to appellees and defendants in this case we are not referring to Home Life Insurance Company, which is primarily a stakeholder. The appellant claimed money due under contracts.
The bill, as amended and supplemented, alleges the following facts which are taken in part from the facts as summarized by the appellant, and in part from the amended and supplemental bill.
"The individual appellees were in truth and in fact utilizing the various bodies corporate named and the M P Construction Company as schemes for hiding and secreting their assets and to prevent creditors from obtaining payment of their just claims. Appellees obtained construction loans to construct the Parkway Terrace Project. These loans were insured by FHA. Appellees acquired nineteen acres of land in Maryland for the project. Appellees used the front M P Construction Company as a `dummy' general contractor."
"Appellant entered into three agreements to perform all concrete, masonry and carpentry work on the Parkway Terrace Project." Appellant has completed or has substantially completed all of the terms and conditions of the aforesaid agreements. "Appellees have breached said contracts. * * * The funds involved are construction funds insured by FHA on the construction of the Parkway Terrace Project. When disputes occurred between appellant and appellees an arbitration agreement was executed between the parties. Appellees have refused to abide by the decisions of the arbitrators thereunder or to arbitrate further in violation of the express terms of the arbitration agreement."
"Although the individual defendants, Leo Allen Minskoff, Henry H. Minskoff and Jerome Minskoff, may have certain capital assets which a Certified Public Accountant, on or about March 1, 1949, has valued at $1,793,469, nevertheless the fact remains that said defendants do not have sufficient funds to pay current obligations now due and payable in connection with the construction, operation, and maintenance of said Parkway Terrace Project, and none of said hidden assets are within the control or under the jurisdiction of this Court, other than the equity, if any, of said defendants in said Parkway Terrace Project."
"Appellees obtained four releases of liens from appellant on the promise to pay the withheld 10% of the construction funds on Sections A and D to appellant when obtained by appellees. Appellees used the two releases on Sections A and D, obtained the 10% withheld on Parkway Terrace, Section A, Inc., and Parkway Terrace, Section D, Inc., but breached the agreement to pay appellant his 10% and refused to pay this sum to appellant. Appellant seeks to have appellees enjoined from using the remaining releases to obtain the remaining 10%, because of this breach of faith, and alleges if appellees use these remaining releases of liens and obtain the balance due they will dissipate, secrete and hide said funds and remove them from the jurisdiction. Further appellees are hiding their assets, are using various sets of books to hide and secrete their assets, and an accounting is necessary of the various books and accounts of appellees, and that such an accounting will show fraud and a wrongful diversion of the funds allocated to this project for construction purposes." It is alleged that appellees' outstanding obligations, including $167,340.87 due appellant, exceed $475,000.
The appellant asks for injunctive relief; the appointment of a receiver to take over the assets of the defendants, for an accounting, for discovery, and a decree requiring appellees to pay the amount claimed by the appellant. Filed with the bill, among other exhibits, are the three contracts and the supplemental arbitration agreement entered into by the appellant, as subcontractor, with the three individual Minskoffs, appellees, trading as M P Construction Company, as general contractor.
Of course, all well pleaded matters in the bill of complaint as amended and supplemented are for the purposes of the demurrer admitted as true. Safe Deposit Trust Company v. Coyle, 133 Md. 343, 351, 105 A. 308.
As to appellant's allegation that the appellees have breached the contracts in this case, each contract is for an entire project, Park Terrace Apartments Sections A, B, C and D. The contracts cannot be divided into sections. The claim in this case and the dispute arise over the final 10 percent payments. All three of the contracts provide that the 10 percent payment now in dispute is to be paid upon approval by the Federal Housing Administration. There is no allegation in the bill that the work has been accepted by and approved by the Federal Housing Administration. Nor does appellant allege that he has completed his part of the contract. He says: "That your Orator has completed, or has substantially completed all of the terms and conditions required of him under and by virtue of the terms of the aforesaid Agreements." Substantial compliance does not fulfill the terms of an agreement. Of course, under the terms thereof, there must be full compliance before the final amount payable under the contracts is due.
The bill does not allege that the appellees are insolvent. Appellant alleges that the appellees "do not have sufficient funds on hand or due them under the terms of the construction loans pertaining to said projects to pay the obligations which are justly due and owing by said defendants in connection with the construction of said Parkway Terrace Project." The bill does not allege that there are no funds to become due when the project is fully completed. It is further alleged that the appellees "have, and own no assets known to your Orator, and located within the jurisdiction of this Court, except the Parkway Terrace Project described in the pleadings in this cause." Appellant does not state the appellees have and own no assets with which to pay debts. He qualifies such a statement by limiting the assets to those located in the State of Maryland. The only real allegation of insolvency alleged, is that the appellees "are insolvent and have no assets located within the jurisdiction of the Court which are available to pay just creditors * * *." The insolvency here alleged is qualified to assets "available" in Maryland. There is no allegation that the appellees do not have assets elsewhere. It is further alleged in the supplemental bill: "For the entire month of November, and as of December 6, 1949, said defendants * * * were in default under the terms of the construction mortgages on three of the Sections involved in said project * * *." The supplemental bill was filed December 16, 1949. There is no allegation that these mortgages were in default at the time of the filing of the supplemental bill. In fact that allegation having been put in the past tense the contrary is indicated. Finally we find on the question of insolvency that it is alleged in the supplemental bill that the defendants "may have certain capital assets which a Certified Public Accountant, on or about March 1, 1949, has valued at $1,793,469.00 * * *." There is no allegation that defendants did not have these assets at the time of the filing of the supplemental bill. We find therefore that insolvency of the appellees is not here alleged.
As to the allegations in reference to appellant signing release of liens as to the final 10 percent due, we find that all three contracts contained the following: "The Contractor (Morris Perlmutter) agrees to sign the Waiver of Liens before he receives his final payment, it being understood that the Contractor shall receive his final payment when the Owner (Appellees) receives his final compliance from F.H.A. The Contractor agrees to sign the Waiver of Liens before final payment in order to facilitate the Owner receiving his final compliance from F.H.A. Any extras which the Contractor might have shall also be paid at the final payment." Therefore, appellant originally expressly contracted to sign these waivers of liens. Dipaula v. Green, 116 Md. 491, 494, 82 A. 205. By the express terms of the contract, appellant's right to a mechanic's lien extended only to the first 90 percent of the contract price, which apparently has been paid. No mechanic's lien had been filed by appellant.
After disputes had occurred between the parties here an arbitration agreement was executed. An examination of this arbitration agreement shows that it reiterates the fact that 90 percent of all labor and material billed the preceding month was to be paid "on the 10th of each and every month, with the remaining 10% to be paid by the Owner (Appellees) to the Contractor (Perlmutter) upon final acceptance and approval by the Federal Housing Administration". As it is admitted that the 90 percent due has been paid and, as previously stated herein, there is no allegation that the "Contractor" has completed his part of the contract and that the projects have been finally accepted and approved by the Federal Housing Administration, the allegations about this arbitration contract are plainly demurrable. As to payment for extra work, according to the allegations of paragraph 2 of the amended and supplemental bill "the sum of $36,602.25 for extra work, labor and materials ordered and requested by the said defendants, but not included in the terms of the aforesaid three construction agreements, which sum for extras, according to the terms of the aforesaid three construction contracts, `shall also be paid at final payment'". As previously set out, according to the allegations herein final payment is not yet due.
Appellant contends that the appellees are hiding their assets and using various sets of books. The allegations of the bill are merely that the appellees are taking money out of the State. As previously pointed out there is no allegation of insolvency. Nor is there any allegation that the appellant is a lien creditor or that appellees have made any fraudulent conveyances. There is no allegation that appellees keep different sets of books. As to the removal of funds out of the State we still find the allegation as previously set forth that appellees may have capital assets of $1,793,469. There are not sufficient facts here alleged to constitute fraud. It has been often stated by this Court that a charge of fraud must be supported by facts sufficient to justify the inference of fraud. Blondheim v. Moore, 11 Md. 365, 374; Hubbard v. Hubbard, 14 Md. 356; Kinsey v. Drury, 141 Md. 684, 691, 119 A. 646. The facts here are not such as to justify an accounting or discovery. Possibly the accounting here is complex. But complexity of accounting alone is not the sole consideration to give equity jurisdiction. Johnson Higgins v. Simpson, 165 Md. 83, 88, 166 A. 617; Coster v. Arrow Building Loan Ass'n, 184 Md. 342, 350, 41 A.2d 83.
In this case appellant appears to be a general creditor. Uhl v. Dillon, 10 Md. 500, 69 Am. Dec. 172; Obrecht v. Ensor, 162 Md. 391, 393, 159 A. 899. According to the allegations he has no equitable lien. Here, appellant's claim appears to be for money due under contracts. This money due seems to be nothing more than a debt. Appellant contends that by virtue of Code, 1939, Article 16, § 92, he should not be left to his remedy at law, but should be granted an injunction. However, that Section provides: "No court shall refuse to issue a mandamus or injunction on the mere ground that the party asking for the same has an adequate remedy in damages * * *." (Emphasis supplied.) The claim here is for money owing as the result of a contractual obligation. There is no claim here for damages. Appellants rely on Universal, etc., Corp., Inc. v. Felser, 179 Md. 635, 22 A.2d 448. The claim in that case was for damages and therefore it is not in point here. This Court pointed out in the case of Frederick County Nat. Bank v. Shafer, 87 Md. 54, 58, 39 A. 320, 321, that this statute "has relation to cases where damages, as contradistinguished from a debt are involved." Conner v. Groh, 90 Md. 674, 684, 45 A. 1024. A creditor, before judgment, who became such under a general contract, is not entitled to an injunction or a receiver. Blake v. Gorsuch, 166 Md. 647, 654, 171 A. 862; Mathias v. Segaloff, 187 Md. 690, 696, 51 A.2d 654.
At the argument in this Court, appellant strenuously contended that in order to do justice in this case the difference between law and equity should be ignored and jurisdiction should be assumed by the equity court. It was said in Fooks' Executors v. Ghingher, 172 Md. 612, at page 625, 192 A. 782, at page 788: "Under the Constitution, the entire judicial power of the state is vested in the circuit courts for the counties, certain courts in Baltimore City, orphans' courts, the Court of Appeals, and justices of the peace. Const. art. 4, § 1. In the counties the circuit courts are courts of general jurisdiction, Id. § 19, and, in so far as it does not violate the constitutional guarantee of trial by jury, there is no specific limitation upon the power of the Legislature to fix the jurisdiction respectively of the law and the equity sides of such courts. But until fixed by some legislative enactment, the limits of the respective jurisdictions of those two sides of the same court are fixed by the ordinary common law distinction between courts of law and courts of chancery."
The appellant contends that, if the present bills in this case are held to be demurrable, he should be given a further right to amend. The chancellor, of course, had the right to allow an amendment. Code, 1939, Article 16, § 18. General Equity Rule 19. He availed himself of this right in allowing an amendment and a supplement to the bill. This is discretionary with the chancellor. Article 16, § 182, 16, § 1939 Code. It has been stated many times by this Court that the discretion given the chancellor to allow or refuse an amendment will not be reviewed in the absence of abuse. Funkhouser v. Mooers, 179 Md. 266, 269, 18 A.2d 205; Dougherty v. Dougherty, 187 Md. 21, 29, 48 A.2d 451. The chancellor in this case stated that, as the appellant had made two efforts to set up a good cause of action and had failed, further amendment should not be allowed. The chancellor doubtless thought that amendment could make no difference in the result. Kernan v. Carter, 132 Md. 577, 585, 594, 104 A. 530. We do not find that the chancellor in this case abused his discretion. He left appellant without prejudice to bring a suit at law, which he has done. The decree will be affirmed as we find no error.
Decree affirmed, with costs.