Opinion ID: 2341546
Heading Depth: 1
Heading Rank: 4

Heading: The Coppage Appeal as to Prescott

Text: The trial court, incorrectly, we think, gave judgment in the original case to Prescott. He did so upon the ground that there was a lack of privity between Coppage and Prescott, and that the case did not fall within the facts and circumstances giving rise to a right to Coppage as a third party beneficiary. We believe that Coppage did stand in the position of a third party beneficiary under the facts and circumstances here existing. In the receivership case Medley was appointed receiver by an order of the Circuit Court for Montgomery County, that required him among other things to take possession of said assets and property and hold or dispose of them under the direction, supervision and further order of this Court. The order also required Medley, as Receiver, to mail a copy of the order of appointment to each    creditor of Maryland Thrift Savings and Loan Company. Prescott was appointed as special counsel to aid him [Medley] in the performance of his duties as receiver. This Court in Shillman et al. v. Hobstetter et al., 249 Md. 678, at page 687, et seq., 241 A.2d 570, 575 [1968], discussed at considerable length the doctrine of third party beneficiaries. We there pointed out that the intention of the parties to recognize a person or class as a primary party in interest as expressed in the language of the instrument and consideration of the surrounding circumstances as reflecting upon the parties' intention, are controlling factors in making the judgment whether there is or is not a class of persons meeting the definition of creditor beneficiary. In the instant case, the order of appointment of Medley, Receiver, itself makes clear that all creditors of Maryland Thrift were third party beneficiaries. The order of appointment of Prescott by necessary implication bound him to those creditor beneficiaries. Their acceptance of the duties thus imposed created conditions that gives Coppage standing to sue. When the two receiverships began, Maryland Thrift was indebted to Security for $78,000.00, evidenced by two notes in the amounts of $40,000.00 and $38,000.00, and dated respectively January 9, 1962 and January 17, 1962. Both Medley and Prescott knew, or reasonably should have known this. This is the beacon fact, in the light of which the course of action followed by Medley and Prescott in distributing the assets of Maryland Thrift must be charted. Neither Medley nor Prescott has ever attempted to show that this obligation has been fully paid. Both contend merely that they were justified in the belief that it had been paid. The facts and circumstances relied upon by Medley to justify that belief were fully stated in Coppage v. Maryland Thrift, supra. They were rejected by us as justifying the course he followed. Precisely the same facts and circumstances now are offered by Prescott with a single addition. He suggests that a telephone call to Peter Parker made after Medley had suggested inquiry be made about the difference between the amount of the book obligation of Maryland Thrift to Security ($78,000.00, plus interest) and the payments upon that obligation ($44,774.70 and $214.32) did provide the justification for such belief. Prescott's testimony relating to that telephone conversation shows that the discussion was carried on in broad general terms, without specific reference to the fact that $78,000.00 appeared on the books of Maryland Thrift as the amount of its indebtedness to Security or to the existence of two notes evidencing the same. While it is true that Prescott expressed the belief that he did not know there were two notes, it plainly appears of record that he was signatory to two petitions prepared by him and submitted to the court in the receivership case, both of which recited a total indebtedness of $78,000.00 evidenced by notes expressed in the plural. Thus it is plain that Prescott, like Medley, knew or should have known that Maryland Thrift owed a continuing obligation to a preferred creditor (Security) when distribution was made to creditors of lower priority. The briefs of Medley and Prescott have one curious aspect. Each charges that improper distribution of the assets of Maryland Thrift was occasioned by neglect and default of the other. We believe that the default was joint. We are not dealing with the respective rights of Medley and Prescott in individual claims against each other  where contributory negligence might prevent recovery by either. We have here instead an almost classic example of two persons united in combined default to another's harm. Prescott is jointly liable to Coppage.