64 Md. 166 | Md. | 1885
delivered the opinion of the Court.
In order to the proper understanding of this case, and the questions raised on the two appeals in the record, it is necessary that we state briefly flow and for what objects the proceedings were commenced, and in what order they were conducted.
The People’s Passenger Railway Company of Baltimore City negotiated two different loans, and for their security executed two several mortgages or deeds of trust, of all its property of every kind and description. The first of these instruments was executed to Jacob Tome as trustee, on the 29th of July, 1879, to secure the payment of a loan of $100,000, with interest, for which coupon bonds were issued by the company, the interest payable semi-annually. And in case of default, for the period of two months, in the payment of either interest or principal, as it should become due, the deed provides that “the said trustee shall, and will, upon the written request of the holders of one-fourth in amount of the said bonds outstanding, and upon which such default to pay the said interest or principal shall have been made, enter upon and talce possession of the railroad, real and personal estate and premises hereby mortgaged, or agreed or intended so to be, and shall and will thereupon himself, or by such agent or agents as he may appoint, operate, manage, control, and use the said railroad, real and personal estate and premises, — possession of which may be so taken, to the best advantage,' — and appropriate the net income and proceeds to be derived therefrom, after deducting expenses, to the payment in full,” first of the interest, and then of the principal of the bonds secured by the mortgage; or the trustee might, iipon request of the holders of one-fourth in amount of the outstanding bonds, proceed under the
The second mortgage or deed of trust was executed by the company to John A. Hambleton and John C. King as trustees, on the 5th of April, 1880, of all its property of every description, (being' the same embraced in the preceding mortgage to Tome,) to secure a further loan of $75,000, created by the issue of coupon -bonds, the interest payable semi-annually. This mortgage was made, by express terms, subject to the prior mortgage t-o Tome ; and it also provided, that if the company made default for three months after demand of the semi-annual interest due on the bonds, the trustees should, upon request of the holders of one-fourth of the bonds outstanding and in respect to which default had been made, proceed under the order or decree of a Court of equity to sell the mortgaged property, and apply the .proceeds of sale to the payment of interest and principal of such outstanding bonds. In less than three years after the last of these loans had been effected, the company became greatly embarrassed and made default in the payment of the interest due on the second mortgage bonds. Indeed it was so completely insolvent that it- could not proceed in the operation of its road. In this state of things, the trustees in the second mortgage filed a bill on the 15th of January, 1883, alleging the default in the payment of interest due on the second mortgage bonds, and the insolvent condition of the company. To this bill, while the existence of the first mortgage was alleged, neither the trustee nor the holders of the bonds under that mortgage were made parties, nor was it in respect of any rights of those holding the first mortgage bonds that relief was prayed. The bill charged that the plaintiffs, under the terms of the second mortgage, were entitled to sell the mortgaged property, and to have a decree for such sale, by reason of the default
Under this order of sale the property was offered, but there was no bid received; and the trustees so reported.
After the sale was ratified, the receivers made their report, showing what had been received and what expended during the time the property was in their hands ; and they prayed to be allowed such compensation for their services as the Court might deem proper. Applications for the allowance of counsel fees were also filed; and upon the receivers’ report, and the applications for counsel fees, the Court, by what would appear to have been an order passed without notice to the parties to be affected, ratified the receivers’ report, and directed that there should be allowed and audited certain counsel fees ; and in the next
Under this order the auditor proceeded, and by his statements returned into Court, the amount of commissions allowed on the receivers’ disbursements of $16,479.60 is $1,318.36: and on the amount of the first mortgage bonds, principal and interest, $106,000, the amount of commissions is $8,480.00; making a sum total of $9,798.36, for commissions to the receivers and trustees. This amount, together with counsel fees, taxes, costs and charges, and reimbursement to receivers allowed, make an aggregate sum of $19,927.80; and after applying the $6,000, the amount realized from the sale of the property, there remained a deficiency of $13,927.80, to be assessed to the first mortgage bonds, according to the order of the Court. To the report of the auditor, T. Ed. Hambleton, in his own right as a first mortgage bondholder, and as one of the receivers, excepted, both as to the amount allowed and
The first question presented to this .Court is -as to the right of the appellants to appeal'from the final order or decree of the 30th of Dec. 1884. It is contended that they have no such right. But it is very clear that the appeals were properly taken from that order or decree, and not from the preceding order of the 3d of July, 1884. In respect to the commissions, and reimbursement to the receivers, there was nothing definitively decreed that could be enforced, until the making of the decree of the 30th of Dec. 1884. It was not until then that the matter of the preceding decretal order was put in form to be enforced against the parties whose rights were to be affected, and therefore the last order or decree was the effective one, and that from which the appeals could be rightfully taken. And with respect to the question made as to whether the appellants have taken the appeals in the
The questions presented by the appeals are, 1st. Whether it bo according to any settled principle or rule of practice in this State, that commissions should be allowed in a combined or collective form, such as was adopted in this case; and, 2nd. Whether it was competent, under the circumstances of this case, to award commissions either to the receivers, or to the trustees making the sale, and other charges and expenses, in respect to the first mortgage bonds, and to make assessments thereon for payment; and in default of payment, to direct the whole mortgage debt and security thereof to be sold, and the same to be transferred to tlie purchaser.
But while such is the rule in regard to the allowance of commissions to trustees, the rule for compensating receivers is not of that same invariable character as in the case of trustees, owing to the different nature of the services to be performed. Therefore it was held by Chancellor Johnson, in the case of Abbott vs. The Steam Packet Co., 4 Md. Ch. Dec., 310, that it had not been the uniform practice of the Court to allow receivers of insolvent corporations and private partnerships a commission of eight per cent., the
2. But the principal question presented by these appeals, is that in regard to the right of the Court to assess the first mortgage bonds to pay the commissions and expenditures allowed to the receivers and trustees.
It is contended by the appellees that Tome, as the representative of the first mortgage bondholders, was a party to the proceedings, and that, therefore, the fund represented by him was not only liable to be decreed upon, but was liable for the commissions and disbursements that were allowed to the receivers and trustees. Whether this be so or not depends upon circumstances. It is certainly true, as a general rule, as contended by the appellees, that where a subsequent mortgagee or other incumbrancer
Seeing then that the receivers were appointed solely at the instance and for the benefit of the second mortgage bondholders, and that the trustees who sold the property were appointed to sell exclusively for the benefit of the same parties, and not for the benefit of the first mortgage bondholders, upon what principle is it that the first mortgage bondholders should be made to pay the commissions and expenses allowed, or any part of them, to such receivers and trustees? We must confess we are ata loss to understand how it can be done, upon any principle of justice or reason. None of the first mortgage debt has been realized by sale, and that incumbrance remains intact. It is said, however, that the property was purchased at the sale for the benefit of the holders of the first mortgage bonds, and that therefore they were benefited by the sale. But we do not perceive how that fact, supposing it to be true, can justify the charging those bondholders with the commissions and other expenses in question. The objects in filing the original bill were to have receivers appointed, and a sale of the property decreed, and. that too without the consent or co-operation of the trustee of the first mortgage bondholders, and both objects of the suit were gratified strictly in conformity to the prayer of the bill. The property having been sold for the benefit of the second mortgage bondholders, it was a right
It follows from the views we have expressed that the final order or decree of the 80th of Dec. 1884, and the preceding order of the 3d of July, 1884, must be reversed, in so far as the first mortgage bonds are assessed for the purpose of raising a fund of $13,921.80, to make good the deficiency as shown by the auditor’s statements, referred to in the final decree from which these appeals are taken.
Decree reversed, and cause remanded.