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Feinberg v. George Washington Cemetery Inc.

Decided: October 11, 1961.


Five appeals in one record from the Circuit Court for Prince George's County; Digges, J.

Brune, C. J., and Henderson, Hammond, Prescott and Sybert, JJ. Henderson, J., delivered the opinion of the Court.


Five appellants severally appeal from judgments entered upon jury verdicts against them for compensatory damages in the sum of $117,126.00, and punitive damages in varying amounts. A remittitur was ordered and filed, reducing the amounts of punitive damages. The declaration, in effect, alleged an unlawful conspiracy by the operators of competing cemetery companies, and their attorneys and agents, to wreck the business of the appellees; that pursuant thereto, and by means of a purported forfeiture of the pledged capital stock of the appellees owned by one Houser, the appellants ousted the rightful officials of the appellees and exercised full management and control of the business of the appellees during the period from January 9, 1959 to May 23, 1959; that during said period and thereafter the appellants maliciously damaged the business of the appellees and their contractual and business relations with others.

Many of the facts and circumstances as to the purported forfeiture were set out in the prior opinion of this Court in {PA}

Page 396} Litteral v. Houser, 221 Md. 403. We there held that Houser, the purchaser of stock owned by the Millers, had a right to redeem his own and the purchased stock, which had been pledged to secure the purchase price, in case of default, and that he had made timely efforts to do so. We affirmed a decree in favor of Houser, as to the ownership of the stock. We noted that Litteral, the assignee of all the rights of the Millers in the stock purchased by Houser, had joined the appellee corporations as parties plaintiff in his bill of complaint for an injunction and accounting, and had assigned error in their dismissal. We declined to consider the point, however, because Houser had agreed that the corporations, if found to be necessary parties, could be joined as defendants on remand. But before any action was taken with regard to an accounting on remand, this action at law was instituted by the corporations.

The first questions raised on this appeal are whether the demurrers of Litteral and Browner to the declaration were properly overruled, and whether their motions to dismiss because of the pending equity proceeding were properly denied. We will consider these questions together. The argument as to the demurrers seems to be that whatever rights of action may have accrued to Houser, the sole stockholder, by reason of the wrongful attempt to acquire his stock, such acquisition did not give rise to an action by the corporations. These appellants rely upon Llewellyn v. Queen City Dairy, 187 Md. 49, but we think the case is distinguishable. There the declaration was based upon the theory that certain options to purchase stock, obtained by directors through misrepresentation, gave rise to a cause of action by the corporation, on behalf of minority stockholders. It was held that the corporation was not a proper party to an action predicated upon misrepresentation or fraud upon stockholders, and not upon damage to the corporation. In the instant case we think the allegations of damage to the corporations, by mismanagement after the acquisition of control, are sufficient to state a cause of action. It is true, of course, that the mere allegation of a conspiracy is not enough, although the fact of conspiracy may be a matter of aggravation. Kimball v. Harman, 34 Md. 407, 411.

But here there is a clear statement of mismanagement and damage to the corporations by the persons in control. This is the gist of the action, and the mere fact that the damage is not particularized cannot, we think, open the declaration to demurrer. Cf. Sumwalt Co. v. Knickerbocker, 114 Md. 403, 413.

We find no merit in the claim that the action was precluded by the pendency of the equity case on remand. It is true that the decree affirmed on appeal had, by stipulation, provided for an accounting for all monies claimed to be due by one side to the other. Such accounting would necessarily be limited to the claims of the respective parties arising out of the only disputed issue as to the ownership of the shares of stock. The question posed, but not decided, as to whether the corporations were necessary parties, was confined to that limited issue. It did not encompass the present issue as to mismanagement and injury to the corporations in their own right. Even if we assume, without deciding, that such an issue could have been litigated in the equity case, we are referred to no authority which would preclude the appellees from resorting to an action at law, in which punitive and not merely compensatory damages could be claimed. Even if the appellees were obliged to make an election of remedies, they elected in favor of an action at law, and the record does not show that the appellants raised any objection at that time.

The appellants preserved no objection to the court's elaborate and careful charge to the jury, or to the introduction of evidence as to compensatory damages, except in connection with the asserted loss of a contract with the Washington Suburban Sanitary Commission, and evidence offered by the witness, Tripp, in connection therewith. There was, however, an objection to the instruction as to punitive damages, on the ground of the insufficiency of the evidence of malice, and objections to the exclusion of evidence in mitigation of such damages.

Tripp was produced by the appellees and testified that he was a designing engineer employed by the Sanitary Commission. He testified that there had been a proposal to extend a sewer line through the appellees' property and a report prepared

by his department. The Commission had tried unsuccessfully to negotiate the purchase of a right of way prior to January 5, 1959. He had prepared a report estimating the cost of carrying the line through the property, and also the cost of carrying it around the property. Without objection, he stated the figures contained in this report. Installation by way of the alternative route would cost some $29,000 more than by way of the direct route, since it would require the installation and maintenance of a pumping station. He testified that the Commission never made an offer to the appellees, and never "formulated a figure for the purchase of a right of way. The Commission had no power of condemnation over cemetery property." Over objection, he was then permitted to state: "In my opinion, based on my experience with the Commission, I feel that the ...

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