125 Md. 595 | Md. | 1915
delivered the opinion of the Court.
The record in this case contains three appeals from an order of the Circuit Court for Baltimore City by which certain exceptions which had been filed to an auditor’s account were • overruled, and that account finally ratified and confirmed. One of these appeals was taken on behalf of the State of Maryland, another on behalf of the Mayor and City Council of Baltimore, and the third by William Force Scott, general assignee in bankruptcy, acting especially for James Watson Webb and for Tilley Allen, and Charles B. Peabody and Henry O. Little, substituted trustees under a deed of
Motions have been made to dismiss the appeals "of tbe State of Maryland, and of tbe Mayor and City Council of Baltimore and in our opinion these motions should be granted. Tbe question involved in these two appeals are tbe same, but in view of tbe large amount of litigation to which tbe fund in this controversy has given rise, it seems proper to review, as concisely as may be, tbe facts out of which tbe litigation has arisen, and then consider tbe questions of law presented by tbe claim made on behalf of tbe City and State.
In 1838 there was issued by tbe George’s Creek Coal and Iron Company a certificate for 100 shares of its stock in tbe name of “Morris Robinson, Agent,” and in 1841 there was issued a certificate for 41 shares of tbe same stock in tbe name of “Telley Allen, in Trust.” There was no entry whatever upon tbe books of tbe George’s Creek Company to indicate for whom Morris Robinson was agent, or for whom Telly Allen was trustee, or the nature of the trust. Neither at tbe time of tbe issue of these certificates, nor for a long period thereafter, was tbe stock a paying one. No dividend of any description was declared or paid to tbe stockholders until tbe year 1864, and from that time on dividends were regularly declared and paid to tbe stockholders, once or twice in stock, but generally in cash. No one, however, appeared to claim any of tbe dividends declared upon tbe stock so standing in tbe names of “Robinson, Agent,” or “Allen, in Trust.” Tbe certificates of tbe stock dividends and tbe cash of tbe cash dividends remained in tbe bands of tbe George’s Creek Company up to tbe time of tbe dissolution of that company, and in tbe course of tbe forty-odd years which elapsed from tbe time when tbe declaration of dividends was begun, tbe aggreate of those dividends amounted to tbe very considerable sum for tbe two holdings of, approximately, $90,000.
Tbe next step in tbe litigation was tbe case of tbe Baltimore Trust Co. v. The George’s Creek Coal and Iron Co., 119 Md. 21. That suit was brought by tbe Baltimore Trust Company as receiver, for tbe Tilley Allen stock, and in that case tbe pleadings alleged tbe belief of tbe plaintiff that no trust ever existed in respect to said stock, but that tbe same belonged to bim individually. Tbe receiver bad been appointed without notice to the George’s Creek Company, and in that case it was held, first, that tbe pleadings did not disclose any sufficient reason for tbe appointment of a receiver without notice to tbe George’s Creek Company; and, second, that tbe plaintiff bad not shown any such legal or equitable interest in tbe subject-matter of tbe petition as to warrant it in asking for tbe appointment of a receiver.
Tbe third suit was a bill filed by certain stockholders of tbe George’s Creek Company asking that tbe Circuit Court of Baltimore City assume jurisdiction over tbe dissolution of that company, steps looking to that end having been previously taken by tbe corporation without judicial proceedings, and asking, further, that receivers might be appointed to take charge of and distribute tbe assets of tbe corporation.
A further attempt to secure the stock and accumulated dividends in the “Robinson, Agent,” branch of this case was made in a bill filed in Circuit Court No. 2 of Baltimore City, by Charles B. Peabody, et al., Trustees, against the George’s Creek Coal and Iron Co., reported in 120 Md. 659. This case was. brought upon the theory that the stock m question was the property of James Watson Webb, that said Webb was indebted to the Bank of the United States in the sum of $3,090 upon his note dated May 23, 1839, and that the stock which stood in the name of “Robinson, Agent,” had been delivered as collateral security for this note at the time of its negotiation with the Bank of the United States, and that it passed to the trustees of that bank under the deed of June 7th, 1841, was uncollected by them and passed by their deed of May 21st, 1855, to Samuel Jaudon and others, the stock being a part of the unadministered assets of the bank. That subsequently on December 31, 1866, all of the then unadministered assets of the Bank of the United States were disposed of by Jaudon and others, trustees, to George Peabody, and that on September 28th, 1869, George Peabody transferred to George Peabody Russell and other's, as trustees, all of the remaining assets of the United States Bank
In the case of Peabody against the George’s Creek Co., 120 Md. 659, this Court held that the evidence adduced, failed to show sufficiently that the 100 shares of George’s Creek stock had passed to George Peabody in December, 1866, and, therefore, the plaintiffs in that action failed to recover the stock and dividends which had been declared on it.
The case of Scott against the George’s Creek Co. was instituted in the United States District Court for Marylandsee 202 Fed. 251, and the purpose of that suit was to recover the Tilley Allen stock, upon the theory that Allen had been adjudicated a bankrupt by the United States District Court of the Southern District of New York in 1812, and that Scott as official or general assignee iñ bankruptcy was entitled to any of the property of the bankrupt not theretofore reduced to possession by a bankrupt assignee; it further raised the question of the bona fides of the trust, claiming substantially that there was no trust in fact, but that such designation was for the purpose of concealing the property from Allen’s creditors, and that it in reality belonged to Allen individually. Mr. Scott, likewise in his capacity of official and general assignee in bankruptcy, claimed an interest in the “Morris Robinson, Agent,” stock, upon the theory that such stock had been the property of James Watson Webb, that Webb was also a bankrupt, and that Scott as official assignee in bankruptcy was entitled to the Webb stock, or at least so much of that stock and its accumulations as might remain after
The case of Montell and others against the George’s Greek Go. was then proceeded with, and culminated, under an order of the Circuit Court of Baltimore City, in an auditor’s account by which the funds belonging to the stockholdings of “Robinson, Agent,” and “Allen, in Trust” (and which was then in the hands of Gittings, the receiver appointed by that Court) was finally distributed and disposed of. This account was filed on July 17th, 1914, and on July 25th, 1914, the State of Maryland intervened by petition and exceptions to the account. In the petition it avers that the State was entitled to the entire amount of both funds under section 135 of Article 93 of the Code, avering that the true owners of the stock long since died, and that no widow, surviving husband or relations within the fifth degree counting down from the common ancestor has come forward to claim any part of the said funds. On October 17th, 1914, the City of Baltimore intervened by exceptions and petition, alleging that it was entitled to both funds, under the same section of the Code as that upon which the State based its claim, and fi£rther under the provisions of the City Charter, sections 808-812. The exceptions of the State and City being overruled, the present appeals were taken.
The claims asserted to these funds by the State and by the City of Baltimore can appropriately be considered together, since they are both based upon the same provisions of the Code, the effect of which is, that if those claims are valid, the
The initial difficulty with the claim now presented on behalf of the State and City of Baltimore lies in the fact that neither Morris Robinson or Tilley Allen were residents of this State at the time of their death, but both were domiciled in New York, and in the existing lack of proof as to who was the principal of Robinson, or who was or were the cestui que trustent of Allen, it is impossible to say to the school commissioners of what county or the City of Baltimore the money should be paid, and the statute makes no other disposition of such a fund.
A further difficulty is presented by the fact that Tilley Allen, if he had any right to or interest in the stock personally, left a will, while the statute relates to cases of intestacy only. With regard to Robinson, administration was granted on his estate in 1909 by the Orphans’ Court of Baltimore City, and the section of the Code directs the payment of moneys, where the intestate left “no widow or relations of the intestate within the fifth degree” to the Board of School Commissioners of the county wherein letters of administration shall be granted. But this section becomes operative only upon the assumption that the stock in question was the individual property of Robinson, and in Tyson, Adm., v. George's Creek C. & I. Co., 115 Md. 564, this Court held that the property in the stock was not his, individually. But even if these difficulties could be overcome there are other and serious obstacles to the establishment of the right of the State and City to the funds.
The motion to dismiss involves a consideration of the nature and extent of the interest of the State and the city
The case of Matthews v. Ward, 10 G. & J. 443, was decided by Judge Archer in 1839, and in that case the property was held to have escheated to the State, because its former owner had died without heirs or Jem, and for the reason, as- stated in Casey v. Inloes, 1 Gill, 506, that the State was ultimas haeres and takes the property for the benefit of all. These cases differed, however, from the one under consideration, in that it was- apparently established that the former owner of the property had. died “without heirs or Tein,” a condition which is not presented by the record in "this case. In this connection it is to be observed that there has been no proceeding instituted by either State or city looking to the forfeiture to the State of the property in this case, al
But if it he assumed that the intervention of the State and <eity in the present case be regarded as a sufficient judicial proceeding, under the decisions! of the Supreme Court of the United States referred to, the question still remains, whether the State by an application of the doctrine parens patriae can lay a valid claim to the fund now in question, and in the consideration of this it will be well also to consider what the effect was of the decree by which the corporation was dissolved. In the able briefs filed by the city and State, special reliance was placed upon the cases of the Severn & Wye Raillway Co., 1 L. R. Ch. Div. (1896) 559; Coulter v. Robertson, 24 Miss. 278 and Fox v. Horah, 36 N. C. 358. The first of these cases deals primarily with the question whether or not, where a corporation declares a dividend, it becomes a trustee for the stockholders as to such dividend, and holds that it does not, and that limitations will run as against the stockholder from the declaration of the dividend. The rule adopted in that case, certainly so far as the question of limitations is concerned, is not that which has been followed in this country. Here the rule is that there must be a demand by the stockholder for the dividend, and that limitations will run only from the time of the demand made. In dealing with the dissolution of a corporation it is held that at the common law upon the dissolution, its real estate reverts to the original owners or their heirs, and that its personal property vests in the state or sovereign, and all debts due to it and from it were extinguished by operation of law. This rule of the common law was adopted in Indiana m the case of the State Bank v. The State, 1 Blackf. 267; 12 Am. Dec. 234; but that case was subsequently overruled by the case of the State v. Bailey, 16 Ind. 46, upon the authority of Bacon v. Robertson, 18 How. 480. In the case of Coulter v. Robertson, supra, the same common law doctrine was recognized
The Supreme Court of North Carolina held in Fox v. Horrah, supra, that the English common law doctrine before stated, was in force in that State, and that decision was approved in Malloy v. Mallett, 6 Jones Eq. 345. But the force of these decisions as an authority for the doctrine, was completely nullified in the case of Von Glahn v. DeRosset, 81 N. C. 467, which while it did not in terms overrule the prior decisions, held that those cases had been decided by the application of strict legal principles, but that the harshness of the doctrine would be entirely overcome by the application of equitable principles, which were applied in the case then before the Court.
The Supreme Court of the United States has never recog- • nized the existence in this country of any such rule of law as that claimed to have been the rule of the English common law in reference to the property of a dissolved corporation; on the contrary that tribunal uniformly held that the property of such a corporation constituted a trust fund for the payment of its creditors and for distribution among the stockholders. Greenwood v. Freight Co., 105 U. S. 13, in which case there had been a repeal of the Charter of the company, the Court said: “The rights of shareholders of such a corporation to their interests in the property are not
In Lauman v. Lebanon Valley R. R. Co., 30 Pa. St. 42, it is said: “The dissolution works a change in the form of the interests of its members, by destroying the stock and substituting the thing which the stock represented, that is, a legal interest in the property, and leaves the members to such a division of this.” This property no law can take from its owners and transfer to another without compensation, nor appropriate to the use of the State without due process of law. This entire subject is fully and carefully considered in the case of the People v. O'Brien, 111 N. Y. 1; 7 Am. St. Rep. 684, and full note thereto appended.
The case of the American Loan and Trust Co. v. Grand Rivers Co., 159 Fed. 775, presents many points of similarity to the case under consideration. There certain property had been sold under a foreclosure of mortgage, and a distribution ordered and made of the proceeds of the sale, among the bond holders rateably. Some of the amounts audited for distribution lay unclaimed for more than ten years, when the question arose as to the proper distribution of the funds unclaimed, and among the claims to it presented and was on behalf of the United States, as property without an owner; but it was held properly distributable among, the remaining bond holders who had not been paid in full, otherwise to the general creditors, otherwise to the stockholders.
From the consideration of the authorities, it inevitably follows that no title or interest in the property of the George’s Creek Coal and Iron Company could pass to the State of Maryland or the City of Baltimore, either under the statute
The appeal of the City and State will accordingly be dismissed, and since the appeal of Scott, assignee in bankruptcy, was conditional upon the establishment of at least a participation by the Oity and State in the funds now involved, that appeal will also be dismissed.
Appeals in Nos. 36, 37 and 38 dismissed, the costs to be paid out of the funds in the hands of the receiver.