Baltimore & Ohio Railroad v. Flaherty
Baltimore & Ohio Railroad v. Flaherty
Opinion of the Court
A majority of-the Judges who heard the argument of this case are of opinion that the order appealed against should be reversed, and that the petition of the appellee should be dismissed. We are of that opinion for two reasons : First. Because the Circuit Court of Baltimore City did not heretofore assume jurisdiction and control over the whole fund mentioned in the proceedings, but only over that portion thereof which belonged to the non-assigning members of the extinct Relief Association ; the other part of the
delivered the opinion of the Court.
From the views which we entertain of the various questions arising on this appeal and the conclusions to which we have arrived and heretofore indicated in th& per curiam opinion filed, it will not be necessary for us to do more than state briefly the reasons which have controlled us in arriving at the result announced. This Court has heretofore on three different occasions been called upon to consider and pass upon the conflicting interests and views of the members of the Relief Association and the appellant company. The cases will be found reported in 72 Md. 493; 77 Md. 566, and 79 Md. 442. This appeal is taken from an order of the Court entered on an intervening petition of the appellee filed in the consolidated cases, directing the appellant company as trustee to pay into Court on or before the 29th of January, 1897, to be deposited to the credit of the case, the sum of $390,273.04, subject to the further order of the Court, &c. The primary question which this appeal presents is, did the lower Court under the facts and pleadings in this case have the jurisdiction requisite to make the order appealed from ? We have already said that it did not. Without going into a detailed statement of the various
The appellant contends that the rights and obligations which existed between the appellant company and the 1,165 defendants, whose rights were passed upon in 77 Md. 566, were not created or determined by the agreement of March 29th, 1889, and had nothing to do with the regulations of the relief department. These rights and obligations arose as between the appellant company and said defendants by reason of the fact that the former had come into possession of the assets of the old association, in which the defend
On the 29th of February, 1896, the appellant company passed into the hands of receivers appointed by the Circuit Court of the United States for the District of Maryland. The fourth paragraph of the order of said Court appointing said receivers reads as follows : “ That the said receivers be further fully authorized and instructed to continue the operation as heretofore, of the several features of the relief department of said defendant, in accordance with the regulations adopted by the president and directors of the said defendant for the government of same; to continue to collect, and receive, and to disburse the funds of said department in its several features, as provided by said regulations, and generally to fulfill and discharge all the duties and obligations of said defendant in connection with said reli ef department.” Mr. Smith in his recent work on ReR
In Beverley v. Brooke, 4 Gratt. 187, the Court says, “ By the order of appointment the Court takes the whole subject into its own hands ; and ultimately disposes of all questions, whether legal or equitable, growing out of the proceeding.” To the same effect are Covell v. Heyman, 111 U. S. 176; Heidritter v. Elizabeth Oil Cloth Co., 112 U. S. 294; Leadville Coal Co. v. McCreery, 141 U. S. 475; Hyland v. The James Roy, 59 Fed. Rep. 784; Ga. R. Co. v. Atlanta & F. R. Co., 49 Fed. Rep. 608. The State and Federal Government, while they are distinct parts of a complete system, are each supreme within the limits of the authority confided to them ; each government is possessed of a judiciary power commensurate with its own objects and purposes, and partaking of its supreme authority; and the exercise of the judicial power in each is confided to the tribunals of the respective governments, and they can never come in conflict while they exercise only the authority which rightfully belongs to each. These tribunals are invested with the general as well as incidental powers necessary to the complete administratipn of justice. It is needless to pursue this inquiry further. If there was error in the passage, by the
Order reversed with costs.
Dissenting Opinion
dissented and delivered the following opinion:
The charter of the Baltimore and Ohio Employees’ Relief Association was repealed by the Act of 1888, chapter 527. It was provided by this Act that it should go into effect on the first day of April, eighteen hundred and eighty-nine. We have already had before us on three several occasions controversies which have ensued in consequence of the repeal of this enactment. The cases are reported in 72 Maryland, 493; 77 Maryland, 566; and in 79 Maryland, 442. The greater portion of the facts which bear on the questions now before us are stated in the opinions which were filed in the cases mentioned. Nevertheless some repetition is unavoidable for the purpose of explaining the present case, and of showing the grounds of the opinion which we have formed,
A couple of days before the day appointed for the ex
It has been maintained by the appellant that the Court had no jurisdiction to pass this order. We shall examine this question. Cannon’s bill was filed in behalf of all the persons interested in this fund who chose to become parties to the suit, and it prayed' the decision of the Court on the responsibilities of the Baltimore and Ohio Railroad Company to all of them. . This Court decided that the case did nbt justify the appointment of a receiver; but it was fully recognized that Cannon had a right to demand an adjustment of the interests of the members of the Relief Association. Conley’s bill does not appear in the transcript of the record, but we are given to understand that it was of similar import with Cannon’s. The bill of the Baltimore and Ohio Railroad distinctly brought before the Court the rights of all the parties concerned in the affairs of the Relief Association. As has been stated, all these cases were consoli-' dated. Consequently every question was before the Court which was validly presented in each of them, and the Court had all the jurisdiction which could be derived from all the cases combined. The Railroad Company, by virtue of the contract hereinbefore mentioned, being possessed of the funds and assets of the Relief Association for the purpose of carrying out the objects of the agreement, duly represented in the litigation all the members who had made assignments. It was its duty to hold the property for the benefit of the assigning members after the payment of the liabilities properly chargeable on it. It is a necessary consequence that it had the right and power to protect it by representing the members in any litigation which might arise, and it was its duty to do so. This consequence is also evident from the absolute impossibility of bringing the twenty thousand assigning members into Court as parties litigant to defend the fund. In Kerrison v. Stewart, 93 United States, 160, it was held that where a trustee represents his beneficiaries in all things relating to their common interest in the
A question has been made as to the right of Flaherty to proceed by way of petition. The large sum of money already mentioned had been audited to the Railroad Company in trust for the benefit of the relief feature of the relief depertment. Flaherty was one of the members of the relief department. The moneys held by the Railroad Company in trust for it, were under the jurisdiction of the Court; and of course Flaherty had a right to apply to the Court to secure the fund if it should be in danger. And there could be no more appropriate method of making such an application than by petition. All the other members of the relief department were in Court as parties by representation in the person of their trustee, the Railroad Company. It would cause a most useless and unjustifiable accumulation of costs to file an original bill for the purpose of bringing before the Court the matters which were already on record in the litigation between the parties concerned in the subject on which the action of the Court was desired. There is no rule of practice in this State which sanctions such procedure. Without considering any vexed questions of practice which have been the subject of controversy in other jurisdictions, we are content to abide by the rule which has been established by the wisdom and thoughtful providence of our predecessors. In Hayes v. Miles, 9 Gill & Johnson, 198, it was said: “A petition may not in all cases be the proper course to reach a fund in chancery: as where new parties are to be made, not necessary to have been made to the original bill, and where the investigation may involve inquiries calculated, by protracting the cause, to delay others, not having an interest in such controversy. -But we think it may be safely stated as a general rule, that a petition is the proper mode of affecting a fund in equity where no other parties are to be brought in to litigate the application, than such as are, or
Flaherty’s petition alleged that the funds which had been allotted to the Baltimore and Ohio Railroad Company by order of the Court in trust for the relief department had not been invested, but had been borrowed by the Railroad Company to be carried as a part of its floating debt. On the thirtieth day of Nov., 1895, an entry was made on the books of the Baltimore and Ohio Railroad Company shewing a money credit of $364,666.56 in favor of the relief department. This amount is $25,606.48 less than the sum» of money with which the B. & O. Railroad was charged in the audit and does not include the securities. The ninth regulation of the relief department is in these words: “ All moneys and securities of the department, with the exception of the mortgages made to secure loans from the savings feature, shall be entrusted to the official custody of the treasurer of the company, to be held subject to proper requisitions. All such securities will be held in the name of the company in trust for the relief department. Interest at the rate of four per cent, per annum will be paid on the monthly balances for cash deposited with the treasurer for the several features of this department, including in such balances the amount of checks not presented for payment or unclaimed on the last day of the month.” It is important to ascertain in whose custody the moneys and securities were at the time the petition was filed. Mr. Ijams, the treasurer of the Railroad Company, was examined as a witness. He testified that he had been the treasurer, for thirty-seven years. We make an extract from his testimony as it appears in the record:
“3rd Int. During your connection with the Railroad Com*119 pany as treasurer, have the moneys deposited by the Relief Association up to March 31st, 1889, and by the relief department since that time been kept separate from the moneys of the B. & O. Railroad Company ?
A. I presume so ; that is a question the auditor will have to answer.
4th Int. In what banks were the moneys of the B. & O, Relief Department kept prior to the time of the receivership ?
A. There was no separate bank account kept by the B. & O. Relief Department; they were kept right in with the other moneys of the B. & O.
5th Int. Did you have in your hands the securities belonging to the relief department ?
A. I was the custodian of the boxes in which they were contained.
6th Int. Do you know what securities belonging to the relief feature of the relief department were in your possession at the time of the appointment of the receivers ?
A. I do not know the contents of the boxes.
yth Int. Who has the authority to open these boxes ?
A. The chairman of the relief committee, Aubrey Pearre, and the chief clerk of the relief department, John P. Hess.
8th Int. Did you or not in August, 1895, receive any orders from any official of the Railroad Company to hold a large sum of money for the benefit of the relief department ?
A. I do not recollect of receiving any.
9th Int. Do you remember of receiving any order to transfer or hold any sum of money amounting to $300,000 or $400,000, for the benefit of the relief department, since the first day of August, 1895, up to the time of the appointment of the receivers for the B. & O. Railroad Company ?
A. I do not.”
Mr. Pearre was also examined as a witness. We make an extract from his testimony :
“1st Int. Are you a director of the Baltimore and Ohio R. R. Co. ?
A. I am a director of the Baltimore and Ohio R. R. Co.
*120 2nd Int. Were you a member of the board of directors through the month of Sept., 1895 ?
A. Yes, sir.
3rd Int. And continuously from that time until now ?
A. Yes, sir.
4th Int. Have you been during the past year a member of the committee of management of the relief department?
A. I have, sir.
5th Int. Do you have charge of the investment of funds held by the railroad in trust for the relief department ?
A. The committee on the relief department has charge of those investments.
6th Int. Can you state what investments your committee has made of the funds audited to the Baltimore and Ohio Railroad Co. in the Baltimore and Ohio Employees’ Consolidated Cases, by the report of the auditor finally ratified September 14th, 1895 ?
A. We have only invested $2,500 in City of Brunswick Bonds.
7th Int. Where is the balance of that money now deposited ?
A. With the treasurer of the Baltimore and Ohio R. R. 8th Int. Do you know in what banks it is deposited ?
A. I do not.
9th Int. Can you state whether, at the time this auditor’s report was ratified, any separate account was opened in any bank by the Railroad Company in which this special fund was deposited ?
A. I cannot.
loth Int. Did your committee make any report advising that such a special account be opened ?
A. No, sir.
1 ith Int. Do you know whether the treasurer can now point out where this particular fund is to be found, or whether it was merged in the general cash balances of the R. R. Co. ?
A. I cannot; I do not know.
12th Int. What officer is possessed of this knowledge ?
*121 A. That I do not know.
13th Int. What inquiries have you made as to the whereabouts of this trust fund under your charge ?
A. We have made no special inquiries. All the funds of the relief department passes through the hands of the treasurer. I do not know whether they are separated or not.” He also testified that he had been chairman of the committee on the relief department six or eight years. It is shown by the testimony of Mr. Ijams that on the thirtieth day of Nov., 1895, the balances of the Railroad Company in bank amounted to $1,306,869.90; but of this amount certain deposits in the hands of the Maryland Trust Company and of the United States Trust Company were made for special purposes, and were not subject to check for any general use of the Railroad Company. These deposits amounted in the aggregate to $1,387,500.00; so that the Railroad Company had overdrawn its account in bank and had nothing in the hands of its treasurer which could be applied to the payment of the credit on its books in favor of the relief department. So it is shown that the Railroad Company has broken its covenant with the Relief Association, whereby it agreed that all the property, assets, credits, &c., of the association which were to be conveyed to it should be kept distinct and separate from the property of the company held for its railroad purposes. Neither has the ninth article of the regulations of the relief department been observed, which required that the moneys should be entrusted* to the official custody of the treasurer of the Railroad Company to be held subject to proper requisitions. The Baltimore and Ohio Railroad Company committed a breach of trust of a very serious character. The trust fund confided to it has disappeared, and it is not showm in the evidence what has become of it. The relief department is one of its agencies established, regulated and controlled by it. A construction cannot be given to the ninth article of the regulations, issued March 15th, 1889, which would’release the Railroad Company from its solemn contract under seal made on the twenty-
Flaherty’s petition in this case was filed on the twenty-sixth day of February, 1896. Subsequently to this petition proceedings were instituted in the Circuit Court of the United States for the District of Maryland, whereby all the property of the Baltimore and Ohio Railroad Company was placed in the hands of receivers. When a Court once
Reference
- Full Case Name
- THE BALTIMORE AND OHIO RAILROAD COMPANY v. JOHN FLAHERTY
- Cited By
- 1 case
- Status
- Published
- Syllabus
- Relief Association—Dissolution—Parties— Receivers—Jurisdiction. An incorporated Railroad Relief Association, shortly before the repeal of its charter, assigned to the Railroad Company all of its assets, to be administered by it for similar purposes. The Association had more than 20,000 members, and all of them, except about 1,000, assigned their interest to the Railroad Company. Under a bill in equity, to which the Association and Railroad Company and the non-assigning members were parties, orders were passed by which the surrender value of the interests of the non-assigning members were ascertained and paid to them and the balance of the fund paid over to the Railroad Company, which conducted a relief department. The Railroad Company was some years afterwards placed in the hands of receivers, by an order of the Circuit Court of the United States. A party, who was a member of the relief department of the Railroad Company, filed a petition in said equity case, asking that the Railroad Company be ordered to pay into Court the amount audited to it for the relief department. Held, 1. That the Court had never assumed jurisdiction over the administration of the whole fund of the Relief Association, but only over that portion of it which belonged to the non-assigning members and that consequently petitioner was not entitled to obtain the relief asked for by means of a petition filed in the above-mentioned case. 2. That since the Railroad Company had been placed in the hands of receivers by a Federal Court, and that Court had ordered the receivers to continue the operations of the relief department as before, the petitioner must ask relief against the Railroad Company in that tribunal.