Baltimore & Ohio Railroad v. Cannon

Fowler, J., delivered the opinion of the Court. The sole question for our consideration in this case is, whether the prayer for the appointment of receivers, ⁴⁹⁵ contained in the bill filed by the appellee, should have been granted. The case was heard below on bill and answer, and the exhibits filed with them, and resulted in an order appointing receivers as prayed. From this order this appeal has been taken.

The case is not altogether free from difficulty, and was argued with marked ability. The view we have taken, however, will render it unnecessary to consider some of the important and interesting questions discussed at the hearing. In 1880 the employes of the railroad company formed a voluntary relief association, and in 1882 it was incorporated by an Act of the General Assembly of Maryland, (chap. 358,) which declares the objects of the association to be “to extend relief in cases of sickness, injury, old age, and death, to the employes of the Baltimore and Ohio Railroad Company and their families, to receive deposits on interest from said employés and their wives, and to loan them money at lawful rates of interest, in order to provide them with or to improve homesteads, and generally to promote their welfare/’’ The charter provided that it should be a condition precedent to the making of any engagements by the association that the railroad company should guarantee the performance of the obligations Of the association, and that it should make no contracts beyond such guarantee, nor after the repeal of the resolutions authorizing the same. In accordance with this provision of the charter the railroad company adopted a resolution, June 14th, 1882, guaranteeing all the obligations of the association.

The relief association rapidly increased in membership, and continued to flourish until March, 1889, when it had about twenty-one thousand members. But for reasons not disclosed by the record, the Legislature of Maryland, at its session of 1888, passed an Act (chapter 527) the first section of which repealed the ⁴⁹⁶ charter of the relief association, and the second section thereof provided that the Act should go into effect April 1st. 1889. Although some question was made below as to the validity of this Act, it seems to have been conceded in the argument here that it is constitutional, and that its effect was to dissolve the said association at the time therein named. Consequently, the relief association having been deprived of its charter by the Legislature, the railroad company in Mai*ch, 1889, just before the law repealing said charter took effect, rescinded its resolution of June 14th, 1882, by which it had guaranteed the performance of the engagements of said association, and ordered that the rescinding resolution should go into effect upon the expiration of the charter.

It being, then, evident to all persons interested therein that the relief association must cease to exist, and it being necessary to take care of the interests of the many thousands of its members who relied upon it as the sole source of insurance for their families in case of death, and there being also many members who were entitled to sick benefits, it can readily be seen that the members of sirch an association would not quietly witness its destruction, and that of their great interests therein without making an effort to continue its existence, and thus secure to themselves and families the advantages which they enjoyed by being members thereof. We find, therefore, that the committee of management of the relief association, aided by the railroad company, took steps to avert the injury which must follow the dissolution and winding up of the association in any other method than that afterwards provided for in the agreement between said association and the railroad company. Accordingly, on the 29th of March, a few days before the charter was to expire, the association agreed to transfer, and did actually transfer, all the assets, credits ⁴⁹⁷ and securities of its relief feature to the said railroad company, and the latter covenanted to hold and apply the same to the liabilities of said association in connection with the business of its relief feature, and thereafter for the benefit and advantage of the new association, which was to take the place of the old, and also, that in case any members of the said old association should refuse to become members of the new association, the value of their respective memberships and interests in the old association should be ascertained and paid to them in money. It would thus appear that the association and the railroad company made every reasonable effort to protect all classes of members, as well those who should desire to become members of the new association, as those who might wish to receive in money the value of their interests in the dissolved corporation at the time of its dissolution under the said Act of Assembly.

The appellee belongs to the latter class, and his contention is that the agreement and transfer above referred to is void, and that of the appellant that it is valid and operates as a deed or declaration of trust. And the appellant so treats it in its answer, alleging, in effect, that it holds the assets of said association in trust for the payment of the appellee's claim, and of all other valid and just claims against said association. Not only so, but the said railroad company itself filed a bill against said association, and all the dissenting members thereof, for the purpose of obtaining the aid of a Court of equity in ascertaining and paying the value of the interest of each such member in money. Now, under these circumstances, it is contended that it is the duty of a Court of equity, on the case made here on bill and answer, to appoint receivers to take possession of all the assets of the said relief association,