Brady v. State

Weisel, J., delivered the opinion of this Court. The motion for a preliminary injunction in this case was postponed by an agreement of the solicitors, to be called up ■at a future day. Answers having been filed, it was after-wards agreed that the cause should be submitted upon final hearing, and that upon such hearing a decree pro forma should he entered denying the right of the appellant to enforce his judgment, and that a perpetual injunction should be granted, from which said Brady was to appeal. The injunction was accordingly entered on the 13th of February, 1866, from which -this appeal has been taken... ³⁰⁰ It was therefore granted and perpetuated on bill, answers and exhibits.

The bill took a broader scope than the controversy with the appellant, touching his right to attach the chattels and moneys mentioned in the proceedings to satisfy his judgment. It embraces and enumerates the several relations of the State of Maryland' to the Chesapeake and Ohio Canal Company, as stockholder and creditor, and re-asserts the claims of the State to the property, works and revenues of that company under the several Acts of Assembly which, from time to time, during the progress of its work, authorized aid to be afforded-to it by subscriptions to its capital stock and by loans, and under the several promises, agreements and conveyances which those Acts of Assembly contemplated»and provided for, and which were made, entered into and executed by the company. In view of these relations, and the heavy indebtedness to the State secured by these engagements and conveyances, the State, through its Board of Public Works, charged with its interests in this respect, claimed the protection of the Court and asked that the president and directors of the Canal Company should be strictly enjoined and prohibited from'parting with any portion of its revenues, tolls or income, as net revenue or otherwise, until a sufficient amount shall have been deducted and reserved to meet all necessary current and probable contingent expenses, and from paying any debts from net revenues to any creditors not entitled to claim payment in priority of the State, whereby its revenues would be absorbed and applied to other purposes than those which would enable the company to perform all its duty and engagements to the State without hindrance or embarrassment. The company, by the admission of its answer and submission to the decree of the Court, is a willing- party to the injunction and has not appealed from the order.

The only matter now to be' determined upon this appeal ³⁰¹ la, the right of the appellant, Brady, to a judgment- of condemnation of the chattels and credits which have been levied on under his writ of attachment. If he has this right, the injunction as to him would be dissolved and his writ permitted to take its course at law. The only garnishees who admit credits in their hands, or moneys belonging to the Chesapeake and Ohio Canal Company, are the Cumberland City Bank to the amount of $469, and John EL Shaw, the collector of the company at Cumberland, to the amount of $9,244.61. The American Coal Company, another garnishee, also admitted moneys due by it, at the time the attachment was laid in its hands, for tolls to the amount of $2,137.59, which however it was induced to pay over to the company upon an indemnity, These, it sufficiently appears from the answers, were of the tolls and revenues of the company.

The bill alleges and charges, that these sums are not more than should be reserved by prudent" men charged with the conduct and management of the canal, to meet the necessary current and the probable contingent expenses of the company, according to past experience and the uncertain reverses and injuries to which such a work is constantly exposed from freshets and other casualties, and that the company is entirely without available means for such purposes, manifestly indispensable other than those of its ordinary tolls and revenues. Tho State further alleges and charges, that these moneys so attached are exempt from the reach of this creditor by reason of the various relations it sustains to the company as stockholder, with preferred claims to dividends, and as a creditor with liens upon all the property and works of the canal and all its net tolls and revenues, and relies for the assertion of this right upon the various Acts of Assembly passed upon these subjects, and the agreements and covenants with the company, and ³⁰² the conveyances executed by it to the State, as provided for in said Acts. We do not consider it necessary, in the aspects presented by this case, to examine minutely how far the State, as a stockholder in this work, with guaranties for preferred dividends out of its profits, would be sustained in enforcing its rights against the appellant. Much stress was laid in the argument upon the superior rights of the State as a sovereign, not only in granting the chartered rights to the company, but in exercising visitorial power over the company, and by this means controlling its revenues and keeping them within the line or course of expenditure provided for in its charter, and other laws authorizing subscriptions by the State to its stock.

The provisions of the Constitution, in the establishment of a Board of Public Works for supervising all public works in which the State is interested as stockholder or creditor, were also urged as imparting to the State peculiar attributes in its character as complainant in this suit. The Chesapeake and Ohio Canal Company, though chartered for great public purposes, and exercising by grant a portion of the State’s right of eminent domain to take private property for the use of its work, upon just compensation to the owner, is nevertheless a private corporation. The fact that the State itself is a shareholder, or a large shareholder, in the capital stock of the company, does not impart to the company any of its sovereignty as such, nor can the State, by virtue of its sovereignty, claim any other or higher rights, as a suitor., than that of an ordinary stockholder, except so far as it may have rights and interests over other stockholders secured to it by law and engagements with the company, or its other stockholders in pursuance of law. The cases cited by the appellant illustrating this, are sufficient for the purpose.

Angell & Ames on Corp., secs. 30, 31, 32. Bank of United States vs. Plan ³⁰³ ters Bank of Georgia, 9 Wheat., 907 . Curran vs. State of Arkansas, 15 How., 304 . Wallace vs. Turnpike Company, 8 Watts, 316 .

But while this company is a private corporation, as distinguished from a public municipal body, it is not of that ordinary kind which is created merely for the pecuniary benefit of its stockholders, but like that of the Baltimore and Ohio Rail Road Company, it was designed to promote great public interests, which were its chief objects, and to the accomplishment of which moro than ordinary powers were granted, and liberal rules of interpretation for its benefit ought to be adopted in expounding its privileges and rights for effectuating the designs of the Legislature, and securing the rights of the State in a work of such magnitude and involving such vast public interests. Mayor & C. C. of Balto. vs. Balt. & Ohio R. R. Co., 21 Md. Rep., 91 . But the State, in this ease, claims exemption from the proceedings instituted by the appellant, and asks for the restraining power of equity, on the ground of its character as a creditor of the company, with liens on its property, and net revenues and tolls, to secure its loans. It relies, in this branch of the case, on the Acts of 1834, ch. 241, and 1844, ch. 281, and the obligation or stipulation of the company and the mortgage executed by it, which these Acts authorized and required, as conditions upon which the Legislature of the State granted the aids for prosecuting and completing the canal to Cumberland, as provided in those Acts.

By the Act of 1834, eh. 241, a sum not exceeding two millions of dollars was authorized to be raised and loaned to the Chesapeake and Ohio Canal Company, to enable it to complete its work to Cumberland. As a condition precedent, the company, after assenting in general meeting to the terms of the Act relating to itself, was to prepare and deposit with the Treasurer of Maryland, a covenant and ³⁰⁴ obligation, verified by its corporate seal, and the signatures of its president and directors, pledging the whole of the net revenues of the company, and the whole of the water rights, lands and other property at any time acquired by it, or the rents or other, avails thereof, for the purpose of securing to the State the payment of the interest and principal of said loan ; the interest to be paid quarterly as therein specified, and the principal at the time therein stipulated. To secure the final payment of the debt, it was further provided that the company should stipulate in said covenant or obligation for the payment to said treasurer of the whole of its net revenues, and the proceeds of the sales or leases of the whole of the property thitherto or thereafter to be acquired by it, as the same should from time to time be sold or« leased, until he should receive a sum in his judgment sufficient to constitute a sinking fund adequate to pay off the principal of said debt, when and as the same should become payable, over and above the payment of the interest. The bill alleges that the company assented to this law, executed the covenant or obligation as therein provided and required, and received the said loan’of two millions of dollars.

It further states that nothing has ever been paid to the complainant by said company, or in any way, on account of the principal or interest due on said loan ; and that no payments have ever been made to,the treasurer for the purpose of constituting the sinking fund required ; and that the interest which has accrued on the loan and is due to the State, computed to the 31st of May, 1865, amounted to the sum of three millions and fifteen thousand dollars. The covenant or obligation executed by the Company and delivered' to the Treasurer of Maryland, in pursuance of this Act, has not been exhibited with the bill, and is not before the" Court; but the fact of its execution ajid delivery, in the mode required by the law, was not denied in the ³⁰⁵ argument. The appellant in his answer admits that the State advanced to the company the two millions of dollars under this ■ Act, in regard to which sum the State is a creditor, with all the rights of a creditor. The answer is silent as to the interest due and in arrear, hut states that the principal was applied to the construction of the canal, and was exhausted when it reached Harper’s Ferry.

The annual reports of the company made in June, 1865, and June 1866, the one a part of the record and the other filed with it, and made evidence hy the agreement of counsel, certify to the amount of such interest due and in arrear as stated in the bill. To say nothing of other claims of the State as a creditor presented in the bill, here is an item of clear indebtedness exceeding five millions of dollars, for which the net tolls and revenues have been pledged to the State, hy solemn obligation of the company,c and in pursuance of one of the public statutes of the State. How far the information of the appellant is correct or can he relied upon as to the solvency and prosperous condition of the Canal Company, and its ability ere long to pay off its debts and establish its credit upon a firm and lasting basis, as averred in his answer, can he judged of in the face of this item of indebtedness alone, to say nothing of a ten millions of indebtedness besides, with an annual surplus of revenue from all sources, in 1865, of but thirty-seven thousand dollars, as disclosed by said reports. Stopping at this point, we thus perceive that the State is a creditor of the company for a sum exceeding five millions of dollars, principal and interest, which debt originated hy loan in 1835, under an Act of Assembly which authorized the pledge of the company, in the mode therein prescribed, of the whole of the net revenues of the company, as, also, of all its other property, and the rents and avails thereof, as security for its repayment, and which pledge was ac ³⁰⁶ cordingly given and still subsists.

What protective force this has will be hereafter noticed. We pass now to the consideration of the Act of 1844, eh, 281, the last in the series of legislative aids whieh the State-with unbounded liberality bas afforded to this important work