Day v. Postal Telegraph Co.

Alvey, C. J., delivered the opinion of the Court. On the 30th of May, 1885, Austin G. Day, the appellant on this appeal, filed in the Circuit Court of Baltimore ³⁵⁸ City, a general creditors’ bill against The Postal Telegraph and Cable Company, and The Postal Telegraph Company of Baltimore City. Both companies have been duly incorporated, the former under the laws'of the State of New York, and the latter under the general incorporation law of this State. As the titles indicate, these companies were incorporated as telegraph companies, with p>owers to construct and maintain lines of telegraph, and to do a general telegraph business.

The New York Company was formed several years ago for constructing and operating telegraph lines within the United States, with its principal office in the City of New York, and the Maryland Company was subsequently formed in 1883, professedly for the purpose of constructing and operating telegraph lines within this State. The appellant alleges himself to be creditor of the New York Company to a considerable amount; and he also-alleges that said company is hopelessly insolvent and that its affairs have been placed in the hands of receivers by a Court of competent jurisdiction in New York. And in the original bill filed, the appellant alleged that the telegraph property in Maryland, which was in the possession of and being operated by the New York Company, such as right of way, poles, wires, &c., was in the Maryland Company, and that such property had been leased by the latter company to the New York Company; and that the New York Company was the owner of all the instruments and material used in operating the telegraph lines, and paid all the operatives and employés, and received and applied all the revenues and profits derived from the operation of said lines. Upon these and other allegations contained in the original bill, the appellant prayed for the appointment of a receiver of the property and effects of both companies found in this State, and for an injunction to restrain the companies, and their agents, and the receivers of the New York Court, from interfering with ³⁵⁹ the property or receiving and disposing of the revenues and profits derived from the Maryland telegraph lines ; and that the property be sold for the payment of debts.

But a few days after this bill was filed, another bill was filed in the same Court, by A. B. Chandler, in his character simply as receiver of the The Postal Telegraph and Cable Company (deriving his appointment and authority from the Supreme Court of New York,) against that company as defendant. In this bill it is charged, upon the oath of the plaintiff, that the defendant company, in accordance with the purpose of its organization, constructed lines of telegraph within the States of New York, Illinois, Ohio, Missouri, and. the District of Columbia, and caused corporations to be organized within the States of New Jersey, Pennsylvania, Indiana and Maryland, under the laws of those States, for the purpose of constructing and operating lines of telegraph therein; That the corporations organized under the laws of the last named States, constructed and acquired lines of telegraph in those States respectively, which lines were connected with and made part of the general telegraph system of the defendant company: That such corporations so organized in the States named, are controlled by'the defendant company, and that the stock therein is held almost entirely by the defendant company, or in its interest: That the lines of telegraph constructed by the defendant company, and those acquired or constructed by the corporations organized as stated, are operated together and comprise the telegraph system of the defendant company. The bill then charges that this company is largely indebted, and is utterly insolvent, and that the value of its property largely depends upon its being kept together and intact, so as to be operated as an entire system under one management. It then prays that the receivership created by the appointment of the Supreme' Court of New York be extended over the property within the jurisdiction of this ³⁶⁰ State; and that an injunction he issued to restrain all persons from interfering with .the property and effects of the defendant company.

A short time after this hill was filed, that is to say, on the ITth of June, 1885, and before answer was filed, the Court below, by order, consolidated the cases made by the two bills to which we have referred, and directed that such cases be proceeded in as one case. It thereupon rescinded previous orders passed upon the bills separately, and appointed the Hon. Geo. W. Dobbin, Samuel Snowden and Samuel D. Sprigg, receivers, with power and authority to take charge and possession of all the property and effects of both companies, and to collect all debts, revenue, &c.

In passing, it is proper to observe, that there was error in consolidating the bill filed by the receiver with that filed by the appellant, and thus making one case of hills that sought to accomplish objects that would conflict the one with the other. Moreover, the receiver appointed by the Court of New York had no extra-territorial power to institute proceedings in the Courts of this State, in regard to property not subject to the jurisdiction of the Court from which he received his appointment. His functions and powers, for purposes of litigation, are held to be limited to the Courts of the State within which he was appointed, and the principles of comity between the States do not apply to a case like the present. Bartlett vs. Wilbur, 53 Md., 485 ; Booth vs. Clark, 17 How., 322, 338 ; High on Rec., sec. 239.

Whatever exceptions may exist in certain cases to the general rule, it is clear that a case like the present does not fall within any of them; for here, to entertain the hill of the receiver and grant the relief prayed by it, would likely, if not certainly, interfere with the exercise of the jurisdiction of the Court previously invoked, in regard to the same subject-matter. The hill by the receiver, therefore, should have been dismissed; or if not dismissed, should have been simply retained by the ³⁶¹ Court to await the final determination of the rights of the parties under the prior suit instituted by the appellant, for the benefit of all the creditors of the foreign insolvent corporation. After the order of consolidation and the appointment of receivers, as just stated, upon the coming in of the answer of The Postal Telegraph Company of Baltimore City, the Court, by its order of the 23rd of Sept., 1885, dissolved the injunction and discharged the receivers as to that company, but continued the receivers as to the New York Company; and they continued to hold possession of all the property that had come into their hands, as property belonging to the New York Company, or which was liable for its debts. The appellant then obtained leave to amend his bill; and in the amended bill filed by him, after stating the substance of his original bill and the proceedings thereon, he proceeds to charge, that since the filing of his original bill he has discovered, and so charges, that the title to the property mentioned in the proceedings was not vested in The Postal Telegraph Company of Baltimore City", and therefore it was not leased by it to The Postal Telegraph and Cable Company, as charged by mistake in his original bill; but that said property, consisting of all the right of way, telegraph poles, and wires, and all the instruments, &c., in this State, which were or had been in possession of The Postal Telegraph and Cable Company, belongs to and is the sole property of that company, and therefore subject to the possession and control of the receivers previously appointed.

That The Postal Telegraph and Cable Company furnished the money to pay for all of said property, and the same was in fact paid for by it: That no part of the money was furnished by The Postal Telegraph Company of Baltimore City; and that even if any title to any part of said property ever did vest in that company, it has no beneficial interest therein, but holds the same for The Postal Telegraph and Cable Company. He then charges ³⁶² that the value of the property is about $75,000. He also charges that The Postal Telegraph and. Cable Company has always had all of said property in its possession, until the appointment of the receivers, and has had the complete management and control, thereof.

He charges, moreover, that The Postal Telegraph Company, of Baltimore, has no property of its own; hut that since the insolvency of the New York Company, The Postal Telegraph Company of Baltimore City has attempted to reorganize with a view of setting up a claim of ownership to the property now in the hands of the receivers. He then prays an injunction against the Maryland company to restrain it from interfering with or making claim to the property. The Postal Telegraph Company of Baltimore City, by its answer filed on the 13th of October, 1885, to the amended bill, denies by simple negation the several allegations which we have recited from the amended bill, and then states its claim to the property thus: “That the legal title to and beneficial interest in the aforesaid property, consisting of all the telegraph wires and poles, and the right of way for the same in Maryland, and claimed by the plaintiff to be the property of The Postal Telegraph and Cable Company, is in this respondent, as an independent corporation of Maryland. That as its own funds were insufficient for the building and constructing of its lines, or the completion of the construction thereof, it paid for the same by issuing its obligations therefor.

That said lines and property have only been in the possession of The Postal Telegraph and Cable Company for use under an agreement, whereby that company undertook to operate the same as part of its telegraphic system, without loss to the respondent or injury to its property, and to lease the necessary offices, employ and pay the necessary operators and workmen, and furnish the necessary instruments, blanks and office furniture, &c., necessary for the purpose. That said agreement was terminable at the pleasure of either ³⁶³ party, and that the same has been recently terminated.” It also denies “that there has been any attempt to reorganize the company, and avers, that from the date of its incorporation it has been exercising its legal powers under its charter;” and that the claim made is but the assertion of its legal and equitable right to the possession of its own property, now held by the receivers in these proceedings.” It therefore prayed that the receivers be ordered to deliver up the property held by them. We have thus stated fully, and at much greater length than is ordinarily done in an opinion, the opposing allegations of the parties, in order that the precise nature and extent of their respective claims and • pretensions may be made apparent in the very involved condition of the proceedings. It does not appear from the record whether the New York Company ever answered either the original or amended bill, and we infer from the proceedings that it never appeared in the cause as defendant.

There is nothing therefore to show the position or claim of that company with respect to the property in question, except the allegations of the bill filed by the New York receiver. There was a large mass of proof produced, at the various stages of the qjroceedings, and by the final decree of the Court helow both the original and amended bills were dismissed, as against The Postal Telegraph Company of Baltimore City, and the property was ordered to be delivered up to that company or its agent. It is from that decree that these appeals have been taken. Much of the proof is far from being satisfactory; but there are some facts disclosed in the record about which there can be no serious controversy.

That The Postal Telegraph Company of Baltimore City was formed at the instance and by the procurement of The Postal Telegraph and Cable Company, admits of no doubt. And it is equally free of doubt that the Maryland company was formed for the purpose, and with that distinct understanding on the part ³⁶⁴ of those engaged in its organization, of acting as a mere auxiliary organization to the New York company. Indeed, Armstrong, who, from the organization of the Maryland company to the time of the decree appealed from, was its president, states in his testimony that in the organization he acted for the New York company. He says, “I was in the employ of the construction department of The Postal Telegraph and Cable Company, and it was during that employment that I organized this (the Maryland) company.

I was paid for my services by The Postal Telegraph and Cable Company.” Mr. Cummins, who was one of the organizers and directors of the Maryland company, was, at the time, Vice-President and general manager of the New York company. And it is proved beyond doubt that all the money for the construction of the telegraph lines in Maryland, including