Court Opinion

ID: 7915549
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:10:30.416534+00
Date Added: 2024-06-11T16:32:46.914216
License: Public Domain

Smith, J.,

dissenting:

I would reverse.
Maryland Code (1957, 1973 Repl. Vol.) Art. 23, § 66 (i) came into the Maryland scheme of things with the passage of a general revision of the corporation laws in 1951, see H. *633Brune, Maryland Corporation Law and Practice § 316 (rev. ed. 1953), long after the passage of the predecessor of Code (1957, 1969 Repl. Yol., 1973 Cum. Supp.) Art. 81, § 277, one of the tax sections here involved. See Hammond v. Phila. Elec. Pwr. Co., 192 Md. 179, 63 A. 2d 759, 6 A.L.R.2d 298 (1949), for a history of that tax section. The prior law did provide for approval by two-thirds of each class of stock outstanding and entitled to vote, but articles of sale were not required to be recorded. See H. Bruñe, Maryland Corporation Law § 166 (1933).
We have heretofore viewed § 66 (i) as primarily intended for the protection of stockholders. For instance, in Oregon Ridge v. Hamlin, 253 Md. 462, 466, 253 A. 2d 382 (1969), Chief Judge Hammond observed for the Court that “[i]t [was] obvious . . . that § 66 of Art. 23 of the Code was not complied with. Nevertheless we think Judge Raine was right in refusing to allow Dorsey and Oregon to benefit from this failure.” He went on to say:
“Two stockholders’ meetings of Oregon were called by Dorsey after Eastern took over and not only was the new arrangement not repudiated by Oregon, it seemingly was accepted and agreed to be implemented by an accounting — never furnished — of Oregon’s stewardship (or lack of it) while it nominally was the producer. As Judge Bruñe for the Court said in Baumohl v. Columbia Jewelry Co., 209 Md. 278, 286, in indicating that the conduct of the complainant there would estop him from the right to complain of failure to comply with §§62 and 66 of Art. 23 of the Code: ‘we think that the appellants have failed to state a case for the interposition of an equity court.’ ” Id. at 467.
In Beccio v. Tawnmoore Apartments, 265 Md. 297, 289 A. 2d 311 (1972), a suit was filed on June 20, 1969, under the Uniform Fraudulent Conveyance Act (Code (1957) Art. 39B). The deed which the suit sought to set aside was dated June 24, 1968. It covered substantially all of the property and assets of the corporation. There was no compliance with the *634provisions of Art. 23, §§ 66, 70 relative to execution and filing of articles of sale until September 11, 1969, after the suit was filed. It was contended that for this reason the June 24,1968, conveyance was ineffective. We there said:
“Relative to a statute such as this Mr. Justice Roberts said for the Supreme Court of the United States in Royal Ind. Co. v. Amer. Bond Co., 289 U. S. 165, 53 S. Ct. 551, 77 L. Ed. 1100 (1933):
‘The question is purely one of the internal management of the corporation. Creditors have no standing to plead statutory requirements not intended for their protection. If the stockholders’ rights had been infringed, and they chose to waive them, a creditor could not assert them in opposing an adjudication [as a bankrupt].’Id. at 171.
In United States v. Jones, 229 F. 2d 84, 58 A.L.R.2d 778 (10th Cir. 1955), cert. den. 351 U. S. 939, 76 S. Ct. 835, 100 L. Ed. 1466 (1956), the court said:
‘Under the great weight of authority, statutes requiring numerical stockholder approval of a mortgage or transfer of substantially all of the corporate assets are “for the protection of the stockholders and have nothing to do with the interests or rights of creditors.” ’ Id. at 86.
citing Royal Ind. Co. To the same effect are Greene v. Reconstruction Finance Corporation, 100 F. 2d 34, 36 (1st Cir. 1938), and George H. Gilbert Manuf. Co. v. Goldfine, 317 Mass. 681, 686, 59 N.E.2d 461 (1945), to mention but a few cases. See in this regard annotation ‘Who may assert invalidity of sale, mortgage, or other disposition of corporate property without approval of stockholders,’ 58 A.L.R.2d 784 (1958).
“For purposes of this case we need go no further than to hold that where a transfer at the outset had *635the consent of 99% of the stockholders (Morton’s 98 shares plus his father’s one share equaled 99%), where the formal articles of transfer have since been executed and recorded, and where the Maryland statute, as Judge Menchine pointed out in ruling on motion for summary judgment, has imposed no time limitation for compliance, a creditor will not be heard to attack the tardy compliance.” Id. at 302-03.
In my experience as a title searcher I have seen instances in which individuals about to convey property have learned, to their chagrin, that they obtained nothing from their grantor, that their grantor actually did not own the land which he purported to convey. Applying the logic of the majority here, an individual who finds that he did not receive title to anything in a deed to him would be able to go back and apply for refund of the taxes paid at the time of the recordation of his deed. I do not think such was the intention of the General Assembly.
As I see it, when this deed was presented to the Clerk of the Circuit Court for Dorchester County for recordation it appeared on its face to be a valid conveyance. It did not purport in any way to be a quit claim deed. The grantee made the decision to record the deed. The tax was thus due.
Judge Eldridge authorizes me to state that he concurs in the views here expressed.