Chew v. Bank of Baltimore

Where the defendant omits to demur for multilariousness, the court may, sua sponte, take the objection and dismiss the bill, but whetherjthis will be done or not must depend on the nature of the case and the course of proceedings, at the time of the hearing. Where the trouble and expense which a demurrer for multifariousness, if well taken, would have prevented, have been incurred, and the case is. fully presented on the record, the court should not interfere and take the objection sua sponte. A party who sells bank stock and receives a consideration therefor, and gives a power of attorney for its transfer, will not be allowed, in equity, to defeat the rights of parties acquired under the transfer, solely upon the ground of the legal insufficiency of the instruments by which it was effected. A hill of sale of stock, with a power of attorney for its transfer, executed by a lunatic, may be avoided by the lunatic in a proceeding instituted for that purpose, and the bank held responsible for allowing the transfer to be made under such a power. From the current of authorities it seems that the acts of lunatics and persons non compos mentis are voidable and not absolutely void. Lunatics and persons non compos mentis are not hound by their contracts, even though no fraud or imposition has been practiced upon them. Where a bank permits a transfer of its stock to he made under a power of attorney it takes the risk of its validity; it is liable in case of a forged power, or of one executed by a feme covert or an infant. According to the established doctrine the acts of lunatics and infants are treated as analogous, and in this view the transfer of stock under a bill of saje and power of attorney from a lunatic may he avoided. In all such cases there may be no actual fault on the part of the hank, yet the legal conclusion results from the justice and expediency, in such transactions, of casting the loss on those who can best provide against it. A bank may refuse to recognize the power of attorney if not satisfied of its entire genuineness, and may require the personal attendance of the party for the purpose of determining such matters of fact as may give rise to disputes. In this case the transfer of stock, under a bill of sale and power of attorney, executed by a lunatic, was avoided, and it was held that the bank should pay simple interest on the dividends accrued on the stock since the transfer, from the time the bank knew of the lunacy.

Appeal from the Circuit Court for Baltimore City. The bill in this case, filed in the court of chancery, on the 15th of February 1849, by the appellants, against the appellee and one Chew Schnebly, alleges, that a writ de lunático inquirendo issued out of the court of chancery, under which, on inquisition taken on the 9th of June 1845, the complainant, Lowman Chew, was found to be a lunatic without lucid intervals, and to have been in the same state of lunacy from his nativity; that under these proceedings the complainant, Golds-borough, was duly appointed the committee of his person and estate; that said Chew is the only child and personal representative of Samuel A. Chew, late of Queen Anne’s county, who died intestate about the year 1840, and, as such only child, was, and is, entitled to the personal estate of said intestate remaining after payment of his debts; that a certain Chew Schnebly, of Washington county, obtained administration upon the personal estate of said intestate, and after paying all debts and expenses of administration, there remained in the hands of said administrator a clear surplus, consisting in part of ten shares of the capital stock of the Bank of Baltimore, each of the par value of $300, and which, at the time of the death of the intestate, and of administration granted upon his estate, were standing in the name of the intestate on the books of the bank; that on application of the administrator to the orphans court of Queen Anne’s county, at its August term, in the year 1844, that court ordered and directed the administrator to pay over to the legal representative or representatives of the intestate, the balance of the estate, including any bank stock that may be in his possession, and on the 23rd of that month and year, the administrator, with the permission and consent of the bank, and by an entry on the books of the bank, transferred said shares of stock into his name of Chew Schnebly, and since that time he has, with the consent and connivance of the bank, transferred said stock to some other person or persons unknown to complainants; that the first transfer was not authorized by said order, but, on the contrary, was made fraudulently and against the duty of the administrator; that at or before the time of this first transfer, the bank' had in its possession a copy of said order, and well knew and understood that said transfer was made without lawful war-( rant, and is, therefore, in construction of law, a party to the aforesaid fraudulent act of the administrator, and is liable to the complainants for the consequences thereof; that complainants have been informed that the bank pretends, that at the time of making this first transfer, the administrator, with a copy of the aforesaid order, likewise presented to the bank an instrument of writing purporting to be signed by Chew, whereby, he, in consideration of a large sum of money, alleged therein to have been paid him by said Schnebly, sells and transfers .said stock to said Schnebly, and authorises him to transfer the same on the books of the bank, and on application made, on behalf of complainants, to the bank, they have received from the bank, as copies of said transfer, order and bill of sale, the papers filed as exhibits with the bill; that complainants do not know, and cannot admit, that said bill of sale was signed, sealed or delivered by Chew, and put the defendants on proof of its execution, if that shall be deemed necessary to their defence. The complainants further charge, that, at the date of said paper, and for many years before, and ever since, Chew was, and has been, a lunatic of unsound mind, and without lucid intervals, and, therefore, incapable of binding his interests by any such instrument, and that such his mental imbecility wjrs well Irno^AQ^i^ajak before and at the time of the transfer first made as aforesaid, and if said paper was, in fact, ever executed by Chew, such execution was obtained by fraudulent practices and undue influence exercised over him by said Schnebly, or some other person or persons in his interest or employment. They further aver, that no part of the sum of money mentioned in said paper, as the consideration for such pretended sale or assignment, was ever paid by the said Schnebly to or for the use of Chew, but on the contrary, at and before the grant of administration to him, Schnebly well knew that Chew was a lunatic and of unsound mind as aforesaid, and incapable of managing or disposing of his property, and complainants are advised, that by reason of such mental imbecility of Chew, said instrument, if ever executed by him, is absolutely null and void, and if said stock still stands in the name of Schnebly it ought now to be transferred into the name of Chew, and if it has been by Schnebly disposed of to persons being or pretending to be purchasers, without notice, Schnebly and the bank ought to be required to procure and transfer into the name of Chew other shares of stock of the bank, equivalent at par to said ten shares of $300 each. The complainants are informed and charge, that ever since the date of said first transfer the bank has divided half yearly dividends of profits of large value, but of what amount in particular, and whether the same have been retained by the bank, or paid over to Schnebly or other person or persons, they know not, and can only ascertain by discovery of the bank. The bill then prays that the defendants may answer the matters herein clmrged, and especially may discover whether said stock now stands in the name of Schnebly on the books of the bank, and if not, at what time the same was transferred, and to whom, and in whose name it now stands, and if it stands in the name of Schnebly that he may be compelled to transfer the same to the name of Chew, and if it has been transferred to other persons, then that Schnebly and the bank may be compelled to procure, at their cost, and transfer into the name of Chew, stock of the bank equivalent at par to said ten shares of the value of i$300 each , and that the bank may likewise be required to account for and pay over to the complainant, Goidsborough, as committee as aforesaid, the dividends of profits of the bank which have been declared on said stock, and such further dividends as may be declared thereon, until such stock shall have been re-transferred as aforesaid, and for general relief. The bill of sale, order of court and transfer, filed as exhibits with the bill, are as follows: 11 Know all men by these presents, that I, Lowman A. Chew, of Queen Anne’s county, State of Maryland, for and in consideration of the sum of twenty-six hundred and fifty dollars to me in hand paid by Chew Schnebty, of Washington county, and State of Maryland, at and before the sealing and delivery of these presents, the receipt whereof I do hereby acknowledge, have granted, bargained and sold, and by these presents do grant, bargain and sell unto the said Chew Schnebly, ten shares of the capital stock of the Bank of Baltimore, standing in the name of Samuel A. Chew, deceased, to have and to hold the said stock above bargained and sold, or intended to be, unto the said Chew Schnebly forever. And I do hereby constitute and appoint Chew Schnebly my true and lawful attorney, for me and in my name to receive and transfer the said ten shares in the capital stock of the Bank of Baltimore, to himself or any other person. In test!mony whereof, I have hereunto set my hand and affix my seal, this 1st day of May 1844. Lowman A. Chew, ( Seal.) Signed, sealed and delivered in the presence of— Samuel M. Pettitt.” “Maryland, Sct:—Queen Anne's County, Orphans Court, August Term, 1844. On application of Chew Schnebly, administrator of Samuel A. Chew, late of Queen Anne’s county, deceased, ordered that he pay to the legal representative or representatives of the said deceased, the balance of the estate, including any bank stock that may be in his possession.” “In testimony that the aforegoing is a true copy taken from the minutes of the proceedings of the orphans court of Queen Anne’s county, I have hereto subscribed my name and affixed the seal of my office, this 13th day of August, Anno Domini, 1844. Test,—Lem’l Roberts, Reg. Wills.” “4001. Being duly authorised, I do hereby transfer to myself ten shares of the stock heretofore standing in the name of Samuel A. Chew. Witness my hand, this 23rd day of August 1844. (Signed,) Chew Schnebly, Adm’r. Test:—Zeb. Waters." “ The above is a true copy of transfer on the book of the Bank of Baltimore. Zeb. Waters, Book-Keeper. Bank of Balto., July 8th, 1848.” The answer of the bank, sworn to by its cashier, neither admitting nor denying such of the allegations of the bill as they have no knowledge of, admits the fact of the transfer of the stock upon the demand of Schnebly, and the exhibition and deposit of the order of the Orphans court of Queen Anne’s county, and the bill of sale aforesaid, but positively denies all knowledge or notice of the alleged fraudulent practices of Schnebly, or of the want of consideration for said bill of sale, and avers that the transfer of the stock was admitted on the demand of Schnebly in good faith on their part, in reliance upon the legal validity of the documents then produced, and under the full belief that they authorised said transfer, and that they never knew, heard, or suspected, that Chew was a lunatic until long after the time of said transfer. The answer further states that the stock was transferred by Schnebly on the 24th of August 1844, and that transfers thereof have since been made, so that they cannot tell in whose names any of it now stands, and that the dividends that have been declared thereon, have since been duly and regularly paid to the persons in whose names the stock stood at the time without notice, actual or constructive, of any claim thereto by any other person or persons. It having been charged, by a supplemental bill, that Schnebly resides out of the State, an order of publication issued, and failing to answer a decree taking the bill pro confesso as against him, was passed on the 23rd of June 1853. The cause was subsequently transferred to the Circuit court for Baltimore city, and was submitted as against the bank upon bill, answer, and the admissions 1st. That the copy of the bill of sale, exhibited with the complainant’s bill, is a true copy of the original, and that the same may be read in evidence by either party, and shall have the same effect as if the original thereof was produced and its execution duly proved. 2nd. That at the time of the execution of said paper, and of the transfer of the stock mentioned therein, and for some time prior thereto, the said bowman Chew was non compos mentis, and it is agreed that,-at the hearing of this cause, either party may read in evidence the proceedings on the petition in lunacy, against said Chew, and that a decree for the complainants as against, the bank shall be entered as by consent, so that the cause may be expedited on appeal. The proceedings in lunacy referred to, sustain the allegations of the bill in regard to them, and show that Chew was about twenty-three years of age on the 9th of June 1845, the time of taking the'inquisition. On the 1st of June 1855, the court (Krebs, J.) passed a decree that the defendants, or one of them, forthwith transfer or cause to be transferred, to the complainant, Chew, thirty shares of the stock of the bank, of the par value of $100 each, and account for the dividends thereon since the 23rd of August 1844, to the time of the transfer directed to be made, and referring the case to the auditor to state the account. From this decree the bank appealed, and, after the cause was argued, in part, in the Court of Appeals, that court, on the 22nd of May IS57, by agreement of counsel, remanded the case for further proceedings, without reversing or affirming the decree. Testimony of many witnesses was then taken on the part of the complainants, very clearly showing that during his whole life, Lowman Chew was of unsound mind, incapable of making a valid contract, and that his whole appearance, language and conduct, showed imbecility of mind, if not idiocy, which any one of ordinary observation could detect at once; that he was subject to frequent and furious paroxysms of maniacal excitement, which increased in frequency and violence with increasing years, and he has been confined in Mount Hope Hospital, as a lunatic, since the 15th of November 1849. The cause having again been submitted for hearing, the court, on the 4th of June 1858, passed a decree dismissing the bill as against the bank, and from this decree the complainants appealed. After the appeal was taken, the bank, by its solicitor, filed a copy of the docket entries in a suit in the Circuit court for Queen Anne’s county, upon the administration bond of Chew Schnebly, brought in the name of the State for the use and at the instance of the trustee of Lowman Chew. These entries show that the suit was instituted at November term 1845, of that court, and, under a demurrer to the replication filed at November term 1848, was continued from that time from term to term, till November term 1856, when it was again continued, that being the last entry in the case.