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enables the Receiver to keep in constant and close touch with all affairs and transactions concerning the said building.
(f) The sale of this stock would result in the transfer of the entire management of the building out of the hands of the Receiver and maintain it in the hands of a complete and efficient management, which has in the past been conducting such management under the Baltimore Trust Corporation, which up to this time has owned and controlled all of the stock of the Baltimore Realty Trust, Inc. This in itself is of considerable importance to the receivership as it insures an efficient management and relieves the receivership of all responsibility and possible liabilities under an operating of renting and managing a building of such considerable proportions.
Wherefore your petitioner prays that an order may be passed authorizing and directing him to take the necessary steps to enter into the agreement herein recited with William L. Rigger, copy of which is hereto attached, and as in duty bound.
The petition of John D. Hospelhorn, Receiver of The Baltimore Trust Company, respectfully shows:
(1) That among the assets of the receivership which have come into his hands as Receiver is the entire capital stock of the Baltimore Realty Trust, Inc., which company owns, controls, and operates the property located at 21-31 East Baltimore Street, in the City of Baltimore, State of Maryland, known as the Baltimore Trust Building.
(2) That said building is subject to a mortgage bearing date the 27th day of February 1931, of three million, five hundred thousand ($3,500,000) dollars, with interest at the rate of five (5) percent to the Metropolitan Life Insurance Company, a corporation of the State of New York, having its principal place of business at 1 Madison Avenue, New York City.
(3) That heretofore, to wit, on or about November 23, 1936, the said mortgage entered into an agreement with your petitioner and the Baltimore Realty Trust, Inc., the effect of which was to waive and forego any deficiency decree against the Baltimore Realty Trust, Inc., of the Baltimore Trust Company in the event of foreclosure of said mortgage and the sale of said property as an amount not sufficient to pay the full face amount of the mortgage plus accrued interest. (4) That said agreement further provided that the interest on said mortgage should be reduced to four (4) percent and that the property should be managed by the Baltimore Realty Trust, Inc., and, except for a commission of three and one-half (3%) percent on the collections and certain other expenses specified in said agreement, the collections should be turned over to the Metropolitan Life Insurance Company to be used to apply against interest, and if there remained any amount in excess thereof, then such excess should be applied on account of the principal of said mortgage.
(5) That since that time the income from said building has not been sufficient to pay the interest on said mortgage so that there accumulated overdue interest from September 1, 1938, to date in the sum of approximately four hundred thousand ($400,000.00) dollars.
(6) That your petitioner has approached the Metropolitan Life Insurance Company, the mortgager, for a modification of the terms of payment of the principal and interest of said mortgage, one of the conditions of this modification agreement being that the interest from September 1, 1938, to March 1, 1941, shall be cancelled and that the interest on the principal sum remaining
unpaid shall be at the rate of 31⁄2 percent from March 1, 1941, to March 1, 1946, and 5 percent thereafter until maturity, March 1, 1951, payable monthly and at the rate of 6 percent on all past due installments of principal and interest until paid.
(7) In consideration of the cancellation of the interest unpaid from September 1, 1938, to March 1, 1941, the Baltimore Realty Trust, Inc., agrees to pay the Metropolitan Life Insurance Company all of the net income from March 1, 1941, to March 1, 1946, inclusive, and from March 1, 1946, to pay semiannual installments of principal of fifty thousand ($50,000) dollars each to September 1, 1950, and to pay the balance due on said loan, together with interest thereon, on March 1, 1951, all of which is set forth fully in a proposed agreement between the parties, copy of which is hereto attached and prayed to be taken as a part hereof.
(8) That said agreement further provides that the agreement, dated November 23, 1936, whereby the Metropolitan Life Insurance Company waived and renounced any rights to take or obtain a deficiency decree in the event of foreclosure of the property and the sale thereof at a price insufficient to pay the full amount of the mortgage debt and past due interest, is to remain in full force and effect so far as it provides for the waiver of such a deficiency decree.
(9) That your petitioner, Receiver of the Baltimore Trust Company, as the owner of all of the capital stock of the Baltimore Realty Trust, Inc., has been asked to join in the proposed agreement between the Baltimore Realty Trust, Inc., and the Metropolitan Life Insurance Company as referred to herein and as specifically attached hereto, so as to give his consent to the payment of the net income from the mortgaged property to the said Metropolitan Life Insurance Company, and other provisions contained in said agreement.
(10) That your petitioner, before executing said agreement, desires an order of this Honorable Court authorizing and directing him so to do, believing, however, the execution of such an agreement is very much to the advantage of the Baltimore Realty Trust, Inc., and conseqnently to him, as the owner of all of the stock of said Baltimore Realty Trust, Inc., in that it not only reduces the rate of interest to be paid in the future from the rate established, in the mortgage, that is to say, up until March 1, 1946, but it also, while retaining the provision that in the event of foreclosure of the mortgage no deficiency decree can or will be taken which might become a claim in the receivership of the Baltimore Trust Company, cancels a claim of approximately $400,000 representing unpaid and past due interest on said mortgage from September 1, 1938, to March 1, 1941, and further, during the continuance of this agreement such equity as there may be in the building, if any, will be preserved to the Receiver.
Wherefore your petitioner prays that an order be passed by this Honorable Court authorizing and directing him to sign and execute the agreement between the Baltimore Realty Trust, Inc., and the Metropolitan Life Insurance Company herein referred to, a copy of which is made a part thereof and as in duty bound, etc.
DEAR SIMON: I beg to remind you that as early as November 25, 1942, the Receiver of the Baltimore Trust Company formally notified your client, then known as Baltimore Realty Trust, Inc., of his claim to hold the premises on the sixth floor of the Baltimore Trust Building rent free. On December 8, 1942, your client wrote the Receiver in part as follows:
"In reply, please be advised that we shall expect immediate payment of our duly mailed invoices to you for the space you are now occupying; further, we request that you vacate the premises on or before January 1, 1943, unless you will
agree forthwith to lease the space now occupied by you on a yearly basis at an agreed rental; otherwise we feel compelled to take such action as will in our opinion adjudicate the issue involved."
Nevertheless, after a lapse of more than four months, no steps have been taken by your client.
On December 18, 1942, the Receiver wrote to your client in part as follows: "I am holding possession of the premises in the O'Sullivan Building under an order of Judge O'Dunne sitting in the Circuit Court No. 2 of Baltimore City, and shall continue to hold possession, free of rent, unless and until ordered otherwise by Judge O'Dunne. If, however, you conceive that you have any rights in the premises, my counsel will be very glad to cooperate with your counsel in submitting the question to the Court."
On December 22, 1942, your client replied to this last letter as follows:
"I note your Counsel will be very glad to cooperate with our Counsel in submitting the question to the court. Your attitude in this respect is very much appreciated and I am directing our Counsel to be governed accordingly." Nevertheless no action has been taken.
Sometime between the date of this last letter and February 17, 1943, I had a telephone conversation with you and requested you either definitely to abandon your claim or to take such steps as might be necessary to present the question to Judge O'Dunne. On March 4, 1943, I wrote to you in part as follows:
"If you have decided that you have an arguable case, I should be very glad to cooperate with you in presenting the matter to Judge O'Dunne in some proper form as speedily as possible, but I think you will agree with me that your claim either ought to be abandoned or promptly submitted for judicial determination."
In reply to this letter you wrote me under date of March 5, 1943, that you had no further instructions from your client, but that you were bringing my last mentioned letter to its attention and would advise me on receipt of its reply. Nevertheless this is the last I have heard from you. In the meantime, your client on the first of each month persists in sending a bill for rent to Mr. Hospelhorn. As I wrote you, these monthly bills are an annoyance to the Receiver, and simply cause irritation without accomplishing anything.
At any rate, I do think your claim, for your own sake, ought to be either presented to the Court promptly or else definitely abandoned, for the defense of latches is running against you.
The first suggestion which the Receiver had of any claim of your client for rent is contained in a letter of its Vice-President dated November 18, 1942, about a week after the Receiver final distribution account was finally ratified. The pendency of this account and distribution was widely publicized in the newspapers. It must have been known to your client. Nevertheless it allowed the Receiver to make the final distribution without setting up its claim. The Receiver distributed virtually all the assets in his hands, with the exception of a comparatively small reserve set up to meet the expenses of winding up the receivership. In estimating those expenses, no allowance was of course made for any claim of the Baltimore Realty Trust, Inc., and there are no funds to meet your client's claim, even if it should be established.
Under such circumstances, I submit that your client is clearly estopped from asserting any claim now. However, if you think you have any claim, all that I ask you to do is to prepare and file your petition immediately.
Carbon copy to, Hospelhorn, Wright & Michael.
ARTHUR W. MACHEN.
In the Circuit Court No. 2 of Baltimore City :
The honorable the JUDGE OF SAID COURT.
No. 20433A 44A, 826/1935
Filed October 21, 1943
Your Petitioner, O'Sullivan Building, Inc., respectfully shows: (1) John D. Hospelhorn, Receiver of the Baltimore Trust Company, has been for a considerable time past, and is now, in possession of valuable office space in the building formerly known as the Baltimore Trust Building, pursuant to an
ex parte order signed by this Honorable Court on July 11, 1941, which provides in part:
"The Receiver is to have free rent for such space in the Baltimore Trust Building as may be necessary for the use of the receivership until March 1, 1946." (2) Since the date of the aforementioned order, your petitioner has become the owner of these premises and has sustained considerable monetary loss by reason of the rent free occupancy by the Receiver.
(3) Your petitioner had no knowledge of the aforesaid order and had no opportunity, prior to its passage, of objecting to the order providing for the Receiver's rent free occupancy.
(4) Further, the office space now occupied by the Receiver is greatly in excess of what is necessary for his present requirements inasmuch as final distribution to creditors has been made and the operations of the Receiver have been greatly contracted, and it is unnecessary for the Receiver to occupy this valuable space when less space will meet his needs.
Wherefore your petitioner prays that an order be passed (a) requiring the Receiver to vacate the rent free office space now occupied by him in your petitioner's premises;
(b) (in the alternative, if the Court should hold that the petitioner is bound by such order) requiring the Receiver to accept such lesser space, if any is required, as may be strictly necessary. And as in duty bound, etc.
SIMON E. SOBELOFF,
Ordered October 21, 1943, by Judge O'Dunne, the Receiver to show cause within 30 days, why the relief prayed in the proposed order should not be granted. Provided a copy of the proposed order, with a copy of this order be served on the Receiver or his solicitor on or before October 26, 1943.
October 21, 1943, Arthur W. Machen, of Counsel for the Receiver, assents to the above order, provided no less than 30 days be allowed for showing cause, and a copy of the order as signed is delivered to him within 5 days after it is passed.
Circuit Court No. 2, Baltimore City:
44A, 826 of 1935, No. 20433A
State of Maryland v. The Baltimore Trust Company.
File Number 1118, filed November 17, 1943
The answer of John D. Hospelhorn, Receiver of the Baltimore Trust Co., to the Petition of O'Sullivan Building, Inc., formerly Baltimore Realty Trust, Inc., filed herein on or about the 21st day of October 1943.
This Respondent, answering says:
1. The Respondent admits the allegations of the First Paragraph of said Petition, except that he denies that the order of July 11, 1941, therein mentioned was passed ex parte. Further answering said paragraph, the Respondent says that the facts are as follows:
At the time of the Bank Holiday in 1933, the Baltimore Trust Co. was the holder of all the capital stock of the Petitioner, a corporation incorporated under the laws of Maryland then entitled the Baltimore Realty Trust, Inc., and also the holder of a promissory note of the Petitioner in a very large amount, to wit, the sum of $5,170,815.64. The Petitioner then held, and still holds, the title to the large office building at the southwest corner of Baltimore and Light Streets, in the City of Baltimore, on the lower floors of which the banking house of said Trust Company was situated, the upper floors being rented or offered for rent to sundry tenants. After the receivership of the Baltimore Trust Co., which occurred on January 5, 1935, this Respondent, being the owner of all the capital stock of the Petitioner, occupied, rent-free such space in the Baltimore Trust Building as was necessary for the purposes of the receivership. In or about the early part of July 1941, a certain William L. Rigger, then President of the Petitioner, with the approval and consent of this Respondent, was desirous of purchasing from this Respondent the capital stock of the Petitioner and of securing an extension of time for payment of Petitioner's note then held by this Respondent, but this Respondent was unwilling to make such sale or grant such
extension unless assured of the rights to occupy, free of rent, such space in the Baltimore Trust Building as might be necessary for the probable duration of the receivership. Accordingly, said William L. Rigger, individually and as President of the Petitioner, agreed to these terms, as evidenced by a letter from him to the Respondent dated July 8, 1941, copy of which is of record in this case and filed as an exhibit with the Petition filed herein by this Respondent on or about the 11th day of July 1941. Said Rigger was not only then President of the Petitioner, but was also in the act of becoming the owner of its entire capital stock. Accordingly, the present Respondent on or about July 11, 1941, filed its Petition in this case, setting out all the terms of the agreement as aforesaid, and thereupon your Honor passed the Order of July 11, 1941, approving said sale on the terms above mentioned, including the provision for rent-free occupancy by the Respondent of the premises necessary for the receivership in said Baltimore Trust Building until March 1, 1946.
2. This Respondent denies the allegations of the second paragraph of said Petition of O'Sullivan Building, Inc., formerly Baltimore Realty Trust, Inc., and says on the contrary that the Petitioner had been the owner of said Baltimore Trust Building for many years anterior to 1941. The Respondent also says that any pecuniary loss which the Petitioner has sustained by reason of the Respondent's occupancy of the premises in said building, free of rent, was compensated for by the extension of time for payment of the Petitioner's promissory note until March 1, 1946, which note was for a very large sum of money, to wit, more than $5,000,000.
3. This Respondent denies the allegations of the third paragraph of said Petition, and says on the contrary that the Petitioner, then known as Baltimore Realty Trust, Inc., had full knowledge of the said Order both before and after its passage, and was indeed substantially a party to the proceeding by reason of the filing as an exhibit with said Petition of the said letter to this Respondent dated July 8, 1941, from William L. Rigger, who was then President of the Petitioner and was in the act of becoming the owner of its entire capital stock. Subsequently, to wit, on September 1, 1942, the said William L. Rigger, President of the Petitioner and owner of its entire capital stock, wrote this Respondent a letter, copy of which is hereto attached as part of this answer, expressly con-firms your Petitioner's rights to the rent-free occupancy of the said premises. The minutes of a meeting of the Board of Directors of the Petitioner held on the 31st day of August 1942, show the confirmation of this agreement and contain the following passage:
"A letter from this corporation to the Receiver of the Baltimore Trust Co. re rent-free space in the building was read and approved (see copy following these minutes)."
attached to the minutes is a copy of said letter dated September 1, 1942.
4. Subsequently, the Petitioner, which is a body corporate incorporated under the laws of the State of Maryland, by due proceedings had in accordance with such laws, amended its Charter by changing its name from "Baltimore Realty Trust, Inc." to "O'Sullivan Building, Inc." The Articles of Amendment of the Charter were filed with the State Tax Commission of Maryland on October 9, 1942.
5. Answering the fourth paragraph of the said Petition, this Respondent denies that the space now occupied by him is greatly in excess of what is necessary for his present requirements. Although the Respondent has passed his account, making what is expected to be a final distribution to creditors, nevertheless he has a need, for storage and clerical purposes. of considerable space. He has a vast amount of records relating to sundry trusts held by the Baltimore Trust Co. for which this Respondent has been unable as yet to get any successor trustee appointed. He also is required to maintain a mass of records, cancelled checks, etc., in connection with unclaimed distributions made by him, or by the Baltimore Trust Co. while under the custody of the Bank Commissioner under the terms of the Emergency Banking Law of 1933. The Respondent, in making his: final distribution, relied upon the said provision for rent-free occupancy of the premises in the Baltimore Trust Building, and made no provision for reservation: of money sufficient to pay for such space as he may need up to March 1, 1946. Under date of November 18, 1942, Mr. W. P. Wilkerson, Vice President of the Petitioner, wrote this Respondent a letter, copy of which is hereto attached as part of this answer, demanding rent for the premises occupied by this Respondent. To this letter the Respondent replied under date of November 25, 1942, denying any liability for rent, copy of which is likewise hereto attached as part of this answer. Commencing February 1, 1943, the Petitioner has been sending to the