Appeal from the Circuit Court for Carroll County; Boylan, Jr., C. J.
Brune, C. J., and Henderson, Horney, Marbury and Sybert, JJ. Marbury, J., delivered the opinion of the Court.
For some years prior to September, 1960 the Jameson-Barnsley Company, Incorporated (company or dealer), was engaged in the automobile business in Westminster, Maryland. In 1960 it was found that the company had suffered serious financial losses and was unable to meet its obligations. On September 19, 1960, the Circuit Court for Carroll County assumed jurisdiction and appointed the appellee, Stanford Hoff, receiver. The appellant, Commercial Credit Corporation, had been in the business of financing, at wholesale, automobiles for the dealer primarily by the use of trust receipts, pursuant to Code (1957), Article 95 1/2, Trust Receipts.
At the time of the appointment of the receiver, or shortly thereafter, it was discovered that the company had sold eight vehicles upon which appellant held trust receipts and that, except for a credit of $2500.00, no payments had been made to appellant upon these vehicles. The parties are in agreement that the appellant had complied with the Uniform Trust Receipts Act with reference to the execution of a trust receipt financing agreement and the filing of a statement of financing with the State Department of Assessments and Taxation, and further that the company gave to the appellant a power of attorney authorizing "any officer or employee" of appellant to execute the trust receipts on behalf of the company and that the signatures on each trust receipt were those of qualified persons. Also it was agreed that in every instance copies of the trust receipts prepared by appellant were promptly sent to the company.
On August 24, 1960, the company executed and delivered to Chrysler Corporation an "Assignment" from the company to the appellant of "all sums of money or credits now due or which hereafter may become due to Undersigned from Chrysler Motors Corporation, or any of its associated, affiliated and subsidiary companies * * *."
Promptly after his appointment the appellee notified Chrysler, and its several divisions, of his appointment as receiver for the company, but Chrysler, acting under the assignment, paid to appellant out of the credits due to the company varying amounts, which totalled $11,291.83. The parties on this appeal agreed that of this amount, $7,549.21 represented payments for parts and tools returned by the receiver to Chrysler under the provisions of an existing dealer contract between the company and Chrysler and that this amount should be paid to the appellee.
The appellant filed two claims in the receivership proceedings: Claim No. I -- Secured Creditor -- as entruster from the company (as trustee under Article 95 1/2) arising out of certain listed trust receipt transactions covering motor vehicles in the total sum of $20,955.75; and Claim No. II -- General Creditor -- in the total sum of $8,657.35.
The matter of these claims was submitted to the court below upon the pleadings, exhibits, and stipulation of counsel, and the action thereon and order passed by the chancellor form the basis for this appeal. After a careful review of the record and consideration of the briefs and oral argument, it is manifest that the chancellor was clearly in error in some of his rulings upon the claims and that those rulings must be reversed. It would unduly prolong this opinion and serve no useful purpose to discuss at length his determinations with reference to the individual items contained in either claim, so that we will give our view as to what his rulings should have been in remanding the case for the passage of an appropriate order.
Claim No. I -- Secured Creditor
By stipulation of counsel it was agreed that this original claim in the amount of $20,955.75 should be reduced by $5,000.00 as the result of a credit received by the appellant
from a third party since the filing of the claim, leaving a balance of $15,955.75. The disposition of this balance depends upon the status of trust receipts under the provisions of Article 95 1/2, § 10 (b), which provides that the entruster has the right to the proceeds or the value of any proceeds (whether such proceeds are identifiable or not) of the sale of goods entrusted, if said proceeds were received by the trustee within ten days prior to either application for appointment of a receiver of the trustee, or the filing of judicial insolvency proceedings by or against the trustee; or demand made by the entruster for prompt accounting; and to a priority to the amount of such proceeds or value. It was stipulated by counsel that the appellant-entruster on September 23, 1960, mailed a letter by certified mail to the company-trustee demanding payment upon the trust receipts. However, of the eight vehicles involved the proceeds of sale of only three were received within the critical ten day period prior to September 19, the date of the appointment of the receiver. These were two Dodges, and one Simca, upon which the total amount due was $3,807.11, so that this amount is the extent of the appellant's secured or preferred claim upon the assets of the insolvent company now in the hands of the ...