Frostburg Building Ass'n v. Stark

Robinson, J., delivered the opinion of the Court. Although the general principles which govern Courts of equity, in granting injunctions and in the appointment of receivers may be considered well settled, yet it is not easy to lay down a positive or unvarying rule applicable to all cases. After all, it is a matter resting somewhat in the discretion of the Court, to be determined upon all the facts and circumstances surrounding the case. In the exercise however, of a jurisdiction so summary in its character, and which deprives one of his property without a hearing upon a mere ex parte application, Courts cannot be too cautious, otherwise an injury may be done the defendant in many cases, for which the subsequent restoration of the property may afford no adequate compensation. If it be practicable, the defendant ought to have an opportunity to put in his answer, and if this cannot be done, it is the duty of the complainant, not only to show that he has an interest in the property in dispute, but that the interference of the Court is absolutely necessary to preserve it from loss and injury. Blondheim vs. Moore, 11 Md., 365 ; Triebert vs. Burgess, 11 Md., 452; Nusbaum vs. Stein, 12 Md., 315 ; Owen vs. Homan, 4 House Lords, 1032, per Lord Cranworth. Now in this case the application is made on the part of shareholders in a building association, and they allege [346] that the directors have grossly and fraudulently mismanaged the affairs of ,the association and have wilfully and corruptly disregarded its charter and by-laws, that they have permitted the secretary to embezzle the sum of two thousand eight hundred and sixty dollars and forty cents, and the treasurer the sum of nine thousand eight hundred and sixty-seven dollars and fifty-six cents, and have further allowed one of the directors to take from the funds belonging to the association, the sum of one thousand and three hundred dollars, and this too without any security and'although he held no stock for the same. The bill also charges, that the directors have refused to take any steps to recover the amount thus due by the defaulting officers, that they are now doing business without a treasurer and without a bonded secretary, that the said gross mismanagement, fraud and negligence still continues; and that although the association has been in existence long enough to have redeemed all its shares, it is now tw.enty-four thousand and seven hundred dollars in debt and is hopelessly insolvent. The complainants also file with the bill and as an exhibit thereto, the report of a committee appointed by the stockholders to investigate the affairs of the association, from which it appears they were unable to find any record of the minutes of the proceedings of the board of directors, and the committee were obliged to procure all the small due books held by the members, and from them ascertain as best they could, the business transactions and financial.condition of the association. The report of the committee fully sustains the specific allegations' in regard to the defalcations of the secretary and treasurer, and also the charges of mismanagement and entire disregard of the by-laws on the part of the directors. Such then being the case presented by the bill and proof, we think the Court was justified in granting an injunction .and in appointing a receiver to take charge of [347] the assets and property of tbe association. If tbe averments in tbe bill were untrue, the appellants should have filed their answer, and then made a motion to dissolve the injunction and discharge the receiver. (Decided December 20th, 1877.) Order affirmed.