Hambleton v. Rhind

McSherry, C. J., delivered the opinion of the Court. There are four appeals in this record, and these cases with six others that await the determination of those now pending were in this Court on a former appeal; the decision being reported in 84 Md. 456 . One of the questions involved is common to the ten cases—these four and the six still remaining in the Court below—but the other question is confined to three of the appeals now before us. We will first dispose of the question arising in all the cases and in another opinion we will deal with the remaining subject of controversy.

On the former appeals the precise point at issue was the ownership of a fund in Court. The fund had been brought into Court under a bill of interpleader. On the one hand the fund was claimed by the appellee Colden Rhind, and on the other by the appellants who, with others, were members of a syndicate which had been formed to purchase and float a large block of the four and a-half per cent. State bonds of South Carolina.

The fund litigated over arose in this way: The syndicate selected the Baltimore Trust and Guarantee Company to be its agent in negotiating with the officials of South Carolina respecting the purchase of the bonds. By one of the provisions contained in each of the several subscription agreements signed by every member of the syndicate it was stipulated that two-thirds of the two and one quarter per cent, interest to mature on said bonds between January the first, and July the first, eighteen hundred and ninety-three, should be paid by the Trust Company to R. A. Lancaster and Company “ for syndicate expensesLancaster, himself a member of the syndicate and also the agent of Rhind in promoting the undertaking, represented to the other members of the syndicate that he would be entitled to only about five hundred dollars of this sum so set apart for “ syndicate expenses',’ and he intimated if he did not assert that the rest of the money ³¹³ was payable to parties in South Carolina ; though he solemnly and repeatedly declared that he did not know and did not wish to know who would receive it. At the time he made these statements he was fully aware of their utter falsity, for he then had in his possession a secret written agreement, signed by Rhind and himself, in which they stipulated to divide the sum so appropriated to syndicate expenses, between themselves in the proportion of two-thirds to Rhind and one-third to Lancaster. When the fund out of which the syndicate expenses were payable was received by the Trust Company, Lancaster drew his drafts thereon to the amount of twenty-firm thousand two hundred and fifty dollars in favor of Colden Rhind, and the latter, in performance of the secret agreement just alluded to at once indorsed them in blank without recourse and delivered them back to Lancaster, who procured the money thereon for his own use.

When this fraudulent conduct was discovered many of the members of the syndicate insisted that the Trust Company should pay no more of the fund upon Lancaster’s drafts until the amount thus surreptitiously secured by Lancaster should be made up to the syndicate out of the residue of the fund devoted to syndicate expenses, so as to place these members of the syndicate more nearly upon an equality with their copartner Lancaster. Lancaster, however, drew three more drafts aggregating forty-eight thousand five hundred dollars, on the same fund in favor of Rhind. In this state of the conflicting claims to the fund the bill of interpleader was filed by the Trust Company. The Trust Company, though a member of the syndicate, disclaimed in its bill of complaint any interest in the fund of forty-eight thousand five hundred dollars still remaining in its hands as the residue of the amount specifically appropriated to syndicate expenses, and by the interpleader decree the members of the syndicate who claimed the fund were made plaintiffs and Rhind was made defendant.

By the same decree the bill was dismissed as to Lancaster because he disavowed any title to the fund, having been pre ³¹⁴ viously paid by the proceeds of the drafts for twenty-five thousand two hundred and fifty dollars ; and it was adjudged as to some other of the defendants, who had failed to answer the bill, that they were not entitled to any part of the fund. The contest then proceeded between the remaining members of the syndicate and Rhind, and ultimately resulted in a decree which awarded the whole fund to the latter. An appeal was then taken to this Court and on January the fifth, 1897, the decree appealed from was wholly reversed. In that controversy Rhind based his claim to the fund on two grounds.

First, that he was entitled to the entire forty-eight thousand five hundred dollars under the three drafts drawn by Lancaster on the Trust Company in his, Rhind’s favor ; and secondly, because though under the syndicate subscriptions signed by the various members of the syndicate, the fund was made payable to Lancaster, it was well understood and known by the members of the syndicate that the money was really payable to Rhind under his original contracts with the Governor of South Carolina. We decided when these questions were presented on the former appeals that, under the contracts entered into between the Trust Company acting as the agent of the syndicate, and the State authorities of South Carolina, “ one ot the things which the members of the syndicate contracted to get, and one of the things that was to be their common property * * * was this six months’ interest. * * ” In other words, one of the things which was to be the common property of the syndicate was this very six months’ interest out of which the syndicate expenses were specifically payable. “The Trust Company,” we went on to say, “ was authorized to disburse in discharge of syndicate expenses from this common or partnership fund for the benefit of the whole syndicate, two-thirds.” * * In giving our reasons for the conclusion that the fund out of which the syndicate expenses were to be paid belonged to and was the property of the syndicate and not of Rhind, we proceeded ³¹⁵ to state that: “There being no reservation of this July coupon and no exception of it from the sale, but, on the contrary, the clearest manifestation of an intention that it should accompany and go with the bonds to which it was attached; when the bonds were sold to the syndicate the July coupon or interest was also sold, and the syndicate (the purchaser) through the Trust Company acquired title to the July interest. Under the individual subscriptions antecedently made, the proceeds of the July coupon thus acquired by the syndicate were impressed with a trust, and the Trust and Guarantee Company was authorized to disburse the fund for account of syndicate expenses and in a particularly designated way. Whatever the antecedent arrangements between Colden Rhind and the authorities of South Carolina may have been, they were obviously superseded by the contracts of January the nineteenth, and March the seventh, and no title to this interest passed to Rhind.

Whatever claim he has or can assert to any part of this interest, whether the claim be preferred as commissions or as syndicate expenses, must now be made through the syndicate, and must be derived from and founded on the second clause of the individual subscription contracts which were the basis of the final transaction and of the actual purchases of January the nineteenth and (March the seventh, 1893.” It is perfectly obvious, therefore, that one of the propositions distinctly and flatly determined in the former appeals was, that the whole fund then in controversy—and the whole fund then in controversy included the identical part now in dispute—was a common or partnership fund and was the property of the syndicate and not the property of Rhind. We further held that as Rhind and Lancaster had entered into a fraudulent scheme to secure to Lancaster, one of the members of the syndicate, an advantage over the other members, he, Rhind, was answerable for the fraud and misrepresentations of his agent as well as for the fraud and want of frank dealing of which he and Lancaster, as promoters of the syndicate had been guilty; and that the fund ³¹⁶ payable to Rhind under the drafts and amounting to forty-eight thousand five hundred dollars, was liable to make good the injury done to the other members, to the extent of the secret and fraudulent profit secured to Lancaster. As the secret