Baltimore Trust Co. v. George's Creek Coal & Iron Co.

Pearce, J., delivered the opinion of the Court. This is an appeal from a decree of the Circuit Court of Baltimore City dismissing a bill filed by the Baltimore Trust Company, a corporation of the State of Maryland, as receiver, against the George’s Creek Coal and Iron Company, also a corporation, of the State of Maryland, the ground of the dismissal being want of jurisdiction in the Court to entertain the proceeding. The bill alleges: First — That 58 shares of the capital stock of the defendant company stand in the name of Tilly Allen, of Kewr York, in trust, and has so stood since March 22nd, 1841, under the certificate therefor issued on that date. Second, — That on September 29th, 1911, The Baltimore Trust Company, administrator c. t. a. of the estate of Tilly Allen, deceased, filed an ex parte petition in the Circuit Court of Baltimore City, alleging the fact just stated, the death of the said Tilly Allen about August 38th, 1862, leaving a last will and testament, and the appointment of the petitioner as administrator c. t. a. of his estate; praying for the appointment .of a receiver to reduce to possession by demand, suit or otherwise, said 58 shares of stock and all cash, bonds or script' representing the same, to be administered to the best advantage of all concerned under the jurisdiction of said Court; and that the petitioner was accordingly appointed such receiver by an order of said Court passed September 29th, 1911.

Third — That pursuant to the authority contained in said order, the Baltimore Trust Company applied to the George’s Creek Coal and Iron Company for the issue of a new certificate for said 58 shares of stock to be made out in the name ²⁴ of the receiver, the original certificate having been lost or destroyed. Fourth — That said George’s Creek Coal and Iron Company, being advised by counsel that it was not its duty to issue such new certificate, refused to issue the same. Fifth — That the receiver was advised by its counsel that it was its duty to institute proceedings to require the issuance of such new certificate. The prayer of the bill was that an order should be passed requiring the defendant to issue and deliver to the receiver such new certificate, and to pay to the receiver all dividends due and unpaid thereon; and for an injunction restraining the defendant from issuing a new certificate for said 58 shares of stock, or from paying any new stock, bonds, scrip or cash payable or distributable thereon, to any party other than said receiver.

An order was accordingly passed requiring the defendant to show cause why it should not be directed to comply with the demand of the receiver. There was filed with the bill as an exhibit, and as part thereof, a copy of the petition above mentioned, the substance of which is necessary to be stated, in order to have a proper understanding of the whole controversy. This petition after making the allegations before, mentioned, further alleged that said certificate had been lost or destroyed, and the only evidence in the possession of the George’s Creek Coal and Iron Company, or information as to the form of said certificate, was the entry in the Stock Ledger, all of its other books and records having been destroyed by the great fire of Eebruary 7th and 8th, 1904. That said Tilly Allen by his last will and testament gave his entire estate to his son John Hazard Allen, who was made sole executor, a copy of said will being filed with the petition.

That John Hazard Allen died March 2nd, 1906, intestate and without issue, but leaving a widow, Mary C. Allen, residing at East Orange, Hew Jersey. That in the settlement of ²⁵ the estate of Tilly Allen made by said executor, no mention was made of said stock either in the inventory, or otherwise. That in 1910 one of the directors of the defendant company, for the purpose of ascertaining who was entitled to said stock, caused advertisement to be made in certain newspapers published in blew York City and in Brooklyn, asking for information concerning said Tilly Allen, and that Mrs. Anna Y. S. Hazard Allen responded thereto, and an exhaustive investigation was then made for the purpose of ascertaining the surviving relatives of Tilly Allen who might by possibility be entitled to said stock, and to ascertain whether any trust in respect thereto really existed and if so its character, and who were the beneficiaries. That the only practical result of such investigation was to disclose the fact that Tilly Allen left two" sons by a first wife, Mary Cutler, both of whom died many years ago, and that the probate records at their respective residences disclose no will or administration.

That by his second wife, Mary Hazard Merritt, who died in 1838, Tilly Allen left three children, two of whom have been dead many years, and John Hazard Allen before mentioned, who died intestate in 1906, leaving a widow, Mary 0. Allen, and that the only living persons having or being likely to have any information as to said stock are Mary 0. Allen and Anna V. S. Hazard Allen. That Mary C. Allen, widow of John Hazard Allen, knew Tilly Allen, but has no knowledge or information of any •stock held by him in trust, though she recalls that at the time of his death there was some talk in the family that he ■owned some worthless stock, the name of which she did not know or hear.

That Anna Y. S. Allen has no knowledge or information as to any stock owned or held by Tilly Allen as trustee, but that her father, John Yan Schoonhaven Hazard, was once a business partner of Tilly Allen ■ that her father failed in business about 1837, and afterwards said he could not on that account hold property in his own name, and that her mother- had said she had then given up her property, but ²⁶ that it -would come hack to her children; that it had never come back to them, and “she thinks it possible on speculation and surmise” that Tilly Allen may have held this stock upon some trust for them. That the inventory of Tilly Allen’s estate showed stocks in various companies, but that a number of those companies are now out of existence, and there is nothing to show whether these stocks were held by him in trust; that at the time of his death he was agent for one Anson G. Phelps, of Phelps, Dodge and Company, of Kew York City, but that no light has been obtained from that quarter. That beginning with 1864, 83 separate dividends have been declared on said stock, and in 1910, a reduction of capital stock was made, and several liquidation dividends were declared and paid to stockholders, and a distribution made to them of bonds and scrip, but all these in respect of said 58 shares of stock are retained by the defendant for whoever may be entitled thereto, and the total of said cash dividends is now $20,952.50 and the total value of such bonds and scrip is now $14,236.35, in all of which the petitioner asserts the defendant company has no claim or interest. That during all this period no one has ever laid claim to said stock and dividends or ever communicated with the defendant company in respect thereto.

The petitioner then avers that it believes no trust ever existed in respect to said 58 shares of stock, but that the same belonged absolutely to said Tilly Allen, all of his debts having been paid by his executor. “That even if, by chance, some trust does exist with respect to such stock, then in the absence of any claim by anyone interested thereunder, it is the right and duty of the petitioner, as administrator c. t. a. of Tilly Allen, to take possession of the same, and to retain, preserve and protect it for account of the true owner. That the petitioner nevertheless realizes that the fact, that this stock stands in the name of Tilly Allen, in trust, raises a question as to its right to recover the same as administrator ²⁷ c. i. a. of Tilly Allen, but that there can be no doubt whatever of its duty as such administrator to protect said stock and fund and “to put in motion the proper machinery of the Court, to the end that the property may be ultimately distributed to those entitled thereto.” That if the property is permitted to remain in the hands of the defendant company, there will be a loss to the ultimate owners as no interest will be allowed upon the $20,952.50 representing cash dividends; and moreover that said company is now in liquidation, has distributed the greater part of its assets to its known stockholders and will shortly distribute the remainder, and will then have no assets at all, and no financial responsibility, and the petition closes with the prayer for the receiver which was granted as stated. A copy of said bill of complaint, exhibits and order, having been served on the defendant company, its answer was promptly filed admitting the preliminary allegations of the bill, but alleging that the appointment of the receiver having been made, as shown by the exhibit, in an ex parte proceeding, without any notice to the defendant of such application, and without opportunity to be heard in opposition thereto, that the order of appointment was improvidently made, and should be forthwith stricken out, and the bill of complaint be dismissed. The defendant, however, tendered itself ready, upon the xlismissal of the bill of complaint, to answer forthwith the allegations of the ex parte petition, if made in a bill of complaint filed in that Court by Baltimore Trust Company, administrator c. t. a., of Tilly Allen, deceased, to which the defendant should be made a party defendant; and in order to inform the Court what its answer would have been to said ex parte petition, if an opportunity to answer had been given and what its answer will now be if given an opportunity to answer the same, it proceeds to set out in detail what such answer would be.

It admitted the facts averred as such in paragraphs 1, 2, 3, 4, 5. It said it had no knowledge of the averments of paragraphs 6, 7, 8, 9 and 10 and neither ²⁸ admitted or denied the same, except the averment that no dividends were made before 1864, which it admits. It admits the averments of paragraph 11, relating- to the number of dividends declared, the reduction of the capital stock, and the distribution of bonds and scrip upon said 58 shares of stock, the amount of such dividends and of such bond and scrip, and their retention by the defendant for whoever may be entitled thereto, but it does not admit that the defendant has no claim to, or interest in said 58 shares of stock, and it alleges that the number of shares of stock now standing- in the name of Tilly Allen in trust, though originally 58 is now 116, the number of shares of all the stockholders having been doubled in recent years. It admits the averment of the 12th paragraph that during all these years, no demand has been made by any beneficiary for said stock, dividends, bonds or scrip, but denies the aveiment that the absence of such demand is any more evidence that said stock was not held in trust, than that it is owned by a relative or next of kin of Tilly Allen.

Answering the 13th, 14th, 15th and lYth paragraphs, as to the belief of the petitioner that the property in question belonged absolutely to Tilly Allen, as to the petitioner’s averment, that even if any trust exists, it is its duty to take possession thereof for the actual owner; as to the refusal of the defendant to issue and deliver a new certificate; as to the petitioner’s claim that though there is a question of its right to recover the property, it is yet its duty to put in motion the machinery of the Court for the distribution of the property to those entitled thereto; and as to the averment that the defendant ought not to be permitted to remain in possession of the property because no interest will be allowed on the cash dividends, and because the defendant is in liquidation, and its assets will soon be all distributed; the defendant says, that even if it were proper for a receiver to be appointed the petitioner would not be a proper appointment, because his interest and duty as administrator of ²⁹ Tilly Allen, is to assert the private ownership of said Allen, rather than the trust ownership in which it stands, and that any receiver appointed should he impartial upon that question ; and the defendant says it is ready forthwith to hare said stock, dividends, etc., invested under the order of the Court. Further answering, the defendant refers to certain proceedings pending in the same Court against it upon a hill filed by Edward E. Montell and others, stockholders of the defendant, in reference to the disposition of the stock standing on the books of the defendant in the name of Morris Robinson, agent (being the same stock which was the subject of controversy in Tyson, Adm. of Morris Robinson, v. The George's Creek Coal and Iron Company, 115 Md. 564 ), and says that for the reasons given in its answer in said case, it is not necessary that a receiver should be appointed in this case; but that all the questions herein can be determined under proceedings taken by this corporation under the direction of this Court without the appointment of a receiver, and without burdening the property representing the stock standing in the name of Tilly Allen, in trust, with receivers’