Beachey v. Heiple

Boyd, C. J., delivered the opinion of the Court. This is an appeal from a decree sustaining a demurrer to, and dismissing an amended and supplemental bill of complaint, filed by the appellants against the appellees and others. The original bill made the Ajax Consolidated Coal Co., the Mortgage Guarantee Company, Aaron E. Heiple and Harvey M. Berkley, defendants, and the amended and supplemental bill made the State Bank of Maryland, the Walker-Wadsworth Company, A. B. Osgoodby, Mary L. Maemullen and James Connell, defendants, in addition to those in the original bill. Mary L. Maemullen, James Connell, A. B. Osgoodby, the Walker-Wadsworth Company, and the 'State Bank of Maryland demurred to the amended bill, alleging as reasons for the demurrers: (1) That the plaintiffs had not stated such a case as entitled them to relief; (2) multifariousness and (3) that the Court was without jurisdiction, and the Ajax Company demurred on the ground of multifariousness. ⁶⁸⁵ We will state at some length the facts alleged in that bill.

The three plaintiffs and Berkley, all of whom were residents of Somerset County, Pa., each contributed $541.67, and purchased coal in lands in that county, subject to a mortgage for $4,238.32, described in a deed dated October 29, 1902, in which Harvey M. Berkley, trustee, was the grantee. The deed vras taken in his name “for convenience and other reasons.” He was a lawyer of high standing, in whose honesty and integrity the plaintiffs had every confidence, and he attended to the legal details- of the transaction. The terms of the trust are alleged to be that Berkley should dispose of the property for the benefit of the four interests and distribuí e the proceeds in four equal portions to himself and the three plaintiffs, they being equal owners. During the summer of 1913, Berkley, as trustee, with the consent of and acting for the plaintiffs, sold the property to the Ajax Consolidated Coal Company, a corporation of Pennsylvania, whose principal office was in the City of Baltimore.

Berkley reported to the plaintiffs that the consideration for the sale was $1800 cash, bonds of the Ajax Company of the par value of $15,000 and a note of that company for $3,100, secured by $5,000 of bonds. The bonds were a part of an issue of the Ajax Company for $250,000, secured by a deed of trust, or mortgage to the Mortgage Guarantee Company of Baltimore, as trustee, but the plaintiffs charge that, in addition to the cash, the note and the bonds mentioned, Berkley received and the Ajax Company paid for said property $65,000 bonds of that issue—that being the true consi deration received by Berkley and paid by the company. They allege that they did not know of the payment of the $65,000 of bonds- until long after the original bill was filed and shortly before the amended bill was filed. In order to conceal from the plaintiffs the true consideration received and in consummation of the fraud, Berkley convoyed the property to the Ajax Company, Mary L. Maernullen and James Connell, as tenants in common; Mary L. Macmullen, who is a resident of Norfolk, Va., had no interest or part in the property and paid no consideration for it, ⁶⁸⁶ but received tbe conveyance in payment of a pre-existing debt due her or her father’s estate by Berkley, although the plaintiffs believe she was innocent of any intention to- wrong them; Connell is a resident of Pennsylvania and has no financial or other responsibility, had no interest in the property or the sale, never paid any consideration, but was used as a cloak and sham in order to disguise the real transaction.

The Walker-Wadsworth Company, a corporation of Maryland, was financial agent of the Ajax Company, and was employed by it to buy the property, arrange the terms of payment and to sell the bonds of the Ajax Company; Osgoodby was treasurer and active manager of the Walker-Wadsworth Company, and conducted the negotiations; he collaborated with Berkley, trustee, in order to deprive the plaintiffs of the real consideration for the property, and the deed to Mary L. Macmullen and James Connell was made pursuant to an understanding with the Walker-Wadsworth Company and Osgoodby in order to divert from the plaintiffs their time share in the consideration paid for the property; the true consideration was as stated, which was paid, but the plaintiffs have not received it. The bonds of the Ajax Company not being engraved at the time of the purchase, temporary certificates called Interim Bond Certificates were issued which were to be surrendered and bonds delivered when the latter were engraved. There was paid to Berkley, trustee, the $1800 cash, the promissory note of $3100, secured by an Interim Bond Certificate for $5,000, and another such certificate for $15,000. A certificate for $22,000 of bonds was delivered to Mary L. Macmullen, and one for $19,000 was ostensibly delivered to Connell, but it was surrendered and the bonds represented by it were delivered to' the Walker-Wadsworth Company.

A certificate for $24,000 of bonds was made out in the name of the latter company and delivered to Osgoodby, as its representative. All the certificates' have been surrendered and the bonds delivered except to Berkley, trustee; Berkley withheld from the plaintiffs all knowledge of the true consideration, but the actual consideration is approved by the plaintiffs and ⁶⁸⁷ lias been approved and ratified by tbe Ajax Company. That company has always paid the semi-annual interest on its bonds, except those still on deposit with tho Mortgage Guarantee Company, the interest on which it has always expressed a willingness to pay when they are delivered to the true owners; the bonds represented by the two certificates of $5,000 and $15,000 are in the hands of the Mortgage Guarantee Company, but it demands the delivery of the two certificates before surrendering the bonds, to- which plaintiffs are entitled. In August, 1913, Berkley suddenly and mysteriously disappeared and it is not known whether he is living or dead; after his disappearance, Aaron E. Heiple, prothonotary and clerk of the Common Pleas Court of Somerset County, Pa., under tlie advice of the judge of that Court, took into his custody certain papers that had been in the possession of Berkley, amongst which were the Interim Bond Certificates issued to Berkley and the promissory note referred to>.

Heiple has filed them with the clerk of the lower1 Court, and he answered the original bill; by the terms, of the trust the certificates should be endorsed by the trustee and the bonds collected from the Mortgage Guarantee Company and dis*tributed to the plaintiffs^ but owing to the disappearance of Berkley there is no trustee to make the endorsement and the distribution, the $22,000 of bonds delivered to Mary L. Macmullen have been by her returned or loaned to the Ajax Company and are now on deposit with the State Bank of Maryland, it claiming to hold them as security for some indebtedness of the Ajax Company, but the plaintiffs have no knowledge whether the1 bank is a bona fide holder for value, without notice of the rights of tho plaintiffs, and at any rate there is a substantial equity in them; the remaining $43,000 of bonds were received by the Walker-Wadsworth Co., or Osgoodby acting for it, and neither is a bona fide holder for value, nor has either paid any consideration therefor, but they were received as part of a preconceived plan to defraud the plaintiffs, and they should be delivered to the trustee to be ⁶⁸⁸ appointed in the place of Berkley for distribution, in accordance with the terms of the trust. The amended bill prays: (1) That a new trustee be appointed in place of Berkley, with power to execute the trust reposed in him; (2) that said trustee be authorized to receive, the Interim Bond Certificates and the promissory note outstanding in the name of Berkley, trustee, and deposited with the clerk of the lower Court, to make such endorsements, and execute such instruments and writings as may be necessary, upon surrender of the certificates, to secure the bonds represented by them, and that the Mortgage Guarantee Company be ordered to deliver the said bonds to the trustee; (3) that the trustee be directed to> collect and recover the bonds wrongfully delivered to Mary L. Macmullen and now deposited with the State Bank of Maryland, and that she and the bank be ordered to deliver them to .said trustee free and clear of any claims by them; (I) that the Walker-Wadsworth Co. and Osgoodby for said company be ordered and directed to deliver the $13,000 of bonds received and held by said company or said Osgoodby to said trustee, free and clear of any claims of either of them; (5) that said trustee be ordered to hold all of said boüds and said note until the Court determines who are entitled to them, and upon said determination that the trustee deliver them to such person or persons as the Court may direct; (6) that in the meantime an injunction issue enjoining the State Bank of Maryland from disposing of, transferring or making delivery to anyone, except the trustee, of the bonds described in the amended bill, and that a similar injitnction be issued against the Walker-Wadsr worth Company and Alfred B. Osgoodby, as to the bonds in their possession or control, and (7)' for general relief. .We will consider the objections to the bill in the order stated in the brief of the appellees: 1. Alleged irregularity of the proceedings.—On January 22, 1917, the demurrers to an amended bill were sustained, with leave to file another amended bill. The next day the Court granted the plaintiffs leave to amend that bill by inter ⁶⁸⁹ lineation.

On January 25th an agreement of solicitors was entered into; that the demurrers' theretofore filed be considered as refiled to the bill as amended, per order of January 23, 1917, and the same day a motion for hearing was filed. The. appellees contend that there was no order of publication against Berkley on the bill as amended by interlineation, and that as he was a necessary party the demurrers were properly sustained. As the demurrers were by the agreement refiled on January 25th, it would be a most novel application of equitable procedure if the defendants who had been sum: moned and were represented in Court by solicitors coaid thus object to an amended bill because a non-resident was not then in Court under an order of publication. The decree appealed from was filed on February 13th, long before an order1 of publication could have: expired.

If the amendment was such as to require a new order of publication, which we need not, if we could, determine, as the record does not show what it was., those who were still in Court, and especially those who by their solicitors entered into the agreement referred to, had no. standing to object to the bill for such reason—their demurrers being filed two days after the interlineation. 2. Multifariousness.—As Alfred B. Osgoodby and the Walker-Wadsworth Company are charged with fraudulent conduct in connection with the. transaction, which resulted in what the plaintiffs complain of, they were properly joined with Berkley-. It might work great injustice to them if they were not made parties., as not only the bonds-, but their