Baltimore & Ohio Railroad v. Brown

MoSherry, J., delivered the opinion of the Court. To understand the questions brought before us on these appeals we must restate briefly some of the facts which are to be found in Balto. & Ohio Railroad Co., et al. vs. Cannon, 72 Md., 493 , and Balto. & Ohio Railroad Co. vs. Employes’ Relief Assoc’n, 77 Md., 566 , where the cases, out of which the pending controversy has arisen, are reported. There are two questions which we now have to deal with; and they are, first, out of what fund are the counsel fees claimed by the appellees, Messrs. Brown, Gaither and McFarland, to be paid; and secondly, what sum should be allowed these gentlemen as compensation for then services ? ⁴⁴⁴ In 1880 the Baltimore and Ohio Employes’ Relief Association was formed, and in 1882 it was incorporated by the General Assembly of Maryland.

By the monthly contributions of its members, and by the amounts added by the Baltimore and Ohio Railroad Company, a fund was created out of which sick, accident and death benefits were paid; and in 1884 a pension feature, for the assistance of aged and infirm, employes, was provided. All the obligations of the Relief Association were guaranteed by the Railroad Company. The funds thus collected, and now to be distributed, amount to several hundred thous- and dollars. Under the original scheme, before the pension feature was added, the Railroad Company agreed to pay, and did pay, all the operating expenses of the Relief Association, amounting to about twenty-five thous- and dollars per annum; but subsequently, and as one of the conditions of the formation of the pension feature, the Railroad Company and the Relief Association, through the latter’s board of managers, entered into an agreement whereby the Railroad Company obligated itself to contribute annually twenty-five thousand dollars to the pension feature, provided the Relief Association would thereafter pay its own operating expenses.

Thus the amount previously paid by the Railroad Company to defray the operating expenses of the Relief Association was transferred to the new feature, and in consideration thereof the Relief Association assumed the payment itself of its own operating expenses. This was consummated on July the fifteenth, 1884. In 1888 the charter of the Association was repealed — the repealing Act, however, becoming effective on April the first, 1889. Just prior to this Act going into effect, nineteen thousand and two hundred of the twenty thousand, three hundred and sixty-five members of the Association, in consideration of certain covenants made on the part of the Railroad Company, assigned in due form to the Baltimore and Ohio ⁴⁴⁵ Railroad Company, in trust for the new Relief Department organized by it, all them interest in the funds of the Employés’ Relief Association.

The obligations undertaken by the Railroad Company are set forth in its agreement with the Relief Association, dated March the twenty-ninth, 1889; and amongst other things it expressly stipulated that if any member should refuse to join the new Relief Department, the value of his membership and interest in the old association should be ascertained by a competent actuary, and pa-id in money. Eleven hundred and sixty-five of the members did not make any assignment of them interests, and did not join the new Relief Department, and so became entitled to the surrender value of them interests in the, old association. Shortly after the dissolution of the Relief Association, and long before its affairs were, or could have been, wound up, a bill in equity was filed by Conley, and afterwards another by Cannon, two of the non-assigning or dissenting members, against the Baltimore and Ohio Railroad Company and the Baltimore and Ohio Employés Relief Association, alleging that the agreement of March 29th, 1889, between the Railroad Company and the Relief Association, was void and ultra vires, and praying that receivers might be appointed to take charge of and distribute the assets of- the dissolved corporation. Upon the bill and answers in the Cannon case receivers were appointed, but upon appeal this Court reversed that order. 72 Md., 493 .

In November, 1889, a bill was filed by the Railroad Company against the Relief Association, and each and all of the eleven hundred and sixty-five non-assigning members, asking the Circuit Court of Baltimore City to assume jurisdiction over the trusts created by the agreement of March 29th, 1889, and over the distribution of the assets of the extinct Relief Association. . In November, 1890, all the then pending cases touching these controverted matters were, by order of Court-, consolidated. A protracted controversy followed, which ⁴⁴⁶ was finally decided by this Court. 77 Md., 566 . The counsel who throughout this litigation, and under an order passed by the Circuit Court on December 19th, 1890, represented Conley and Cannon, and such of the other non-assigning or dissenting members as made themselves parties to the proceedings, now claim to be paid their fees out of the fund in Court, for their professional services; and this claim is one of the subjects of the pending appeal.

The whole fund brought into Court for distribution is $514,905. Of this sum the Baltimore and Ohio Railroad Company, as the assignee of the nineteen thousand and two hundred members, is entitled to ninety-four and one-half per cent., and the eleven hundred and sixty-five dissenting members are entitled to five and one-half per cent., or about twenty-eight thousand dollars. ' The Court below allowed as counsel fees to these gentlemen, jointly, the sum of twenty-four thousand dollars, to be paid out of the whole amount in Court for distribution; whereby ninety-four and a half per cent, of their fee was ordered to be paid by or out of the funds of the Baltimore and Ohio Railroad Company, which company they did not represent, and but five and a half per cent, of it was required to be paid by the parties whom they did represent. From this order both the Railroad Company and Messrs. Brown, Gaither and McFarland have appealed — the former on the ground that it is not liable for, and should not be forced to pay, any part of the fees of its adversary’s counsel; and the latter because the amount allowed them is less than the sum they claim.

We said in McGraw, et al. vs. Canton, et al., 74 Md., 559 , quoting with approval Hand vs. Railroad Co., 21 South Car., 178 , and Wilson vs. Kelly, 30 South Car., 483 , “that one cannot legally claim compensation for voluntary sendees to another, however beneficial they may have been, nor for incidental benefits and advantages to ⁴⁴⁷ one flowing to him on account of services rendered to another by whom he may have been employed. Before legal charge can be sustained there must be a contract of employment, either expressly made, or suj>erinduced by the law upon the facts.” See Neighbors, et al. vs. Maulsby, 41 Md., 481 . When compensation is allowed out of a common fund for expenses incurred and services rendered in behalf of the common interest, it is upon the principle of representation or agency. Wilson vs. Kelly, supra.

Thus it will be seen that such charges are allowed, not simply- and alone because services have been rendered which have been beneficial to the common interest,, but upon the ground that they were rendered by the authority of those having the common interest exercised by the representative, the compensation for which was to be chargeable to the fund protected or recovered.” Hand vs. Railroad Co., supra. If, then, the learned, able and accomplished lawyers who claim the right to be compensated out of the common fund, now in Court for distribution, occupied during the prior litigation to which we have alluded, the same relation towards the owners of the whole of the fund that they confessedly held towards the eleven hundred and sixty-five members who did not assign, there could, we think, be no doubt that their claim should be allowed. But the Railroad Company representing the nineteen thousand and two hundred members, who joined the new Relief Department-, was in a position of antagonism to most of the demands made in behalf of the non-assigning members; and whatever was gained as the fruit of the litigation for these dissenting members was not equally gained for the Railroad Company, but actually wrested from it; with the exception of that which was conceded by it. So that the attitude of the eleven hundred and sixty-five members was directly hostile to the Railroad Company, and the nineteen thousand and two hundred members whom it represented; and there was, in con ⁴⁴⁸ sequence, no community of interest between them.

There could therefore be no presumption that these gentlemen whilst acting for the eleven hundred and sixty-five members were also, at the same time, representing the Railroad Company, which they were in fact vigorously antagonizing. A reference to some of the facts will make this more apparent. Had the object of the Conley and the Cannon bills prevailed, the new relief department which the Railroad Company by its agreement of March 29th, 1889, with the Relief Association undertook to provide for, would have been utterly destroyed ( 72 Md., 498 ); and whilst in consequence of its destruction the dissenting members might have realized no greater percentage of the assets of the original Relief Association than they will now get, the nineteen thousand and two hundred members who joined the new relief department would have been deprived of their sick, accident and death benefits, and many of them would doubtless have been unable, by reason of injuries or ill-health, to pro cm e insurance of the same character elsewhere. Had the attack made by Conley and by Cannon on the relief department been effective, the persons who would have been injured by the proceeding would have been the nineteen thousand and two hundred members whose interests the Railroad Company was directly representing and protecting when it successfully resisted the effort to place all the assets in the hands of receivers, and frustrated the attempt to wind up and dissolve the department itself.

We are at a loss to see how