Riley v. First National Bank

Roberts, J., delivered the opinion of the Court. Some of the preliminary stages of this -controversy will be found to have received consideration in the case of Riley v. Carter and Aiken, trustees, reported in 76 Md. 581 . In that case, the decree was neither affirmed nor reversed, but the case was remanded for further proceedings under Art. 5, sec. 36 of the Code, in accordance with the views of this Court therein expressed. After the case had been remanded the Circuit Court of Baltimore City overruled the demurrer to the bill of complaint, and the defendants therein answered the same.

At this juncture the counsel for plaintiffs filed orders with the Clerk of that Court directing him to enter the case dismissed as to' all of the attaching creditors, but the same counsel continued in the management of the case representing certain co-plaintiffs, who were general creditors of Nicholson & Sons, and conducted said case to final decree. The legal effect of the manner adopted by counsel in seeking the dismissal of the attaching creditors as parties to said proceeding is a question on this appeal to be hereinafter considered. In the further progress of the case in the Circuit Court of Baltimore City, replications were filed to the answers, and the case was heard upon the pleadings and testimony. The Court, by its decree, declared that the deeds of trust which had been executed by Johns H. R. Nicholson to Carter and Aiken, trustees, were not fraudulent in law or in fact as against the creditors for whose benefit the same were executed, but as against the claim of the permanent trustee in insolvency they were void and inoperative ; and said Carter and Aiken, trustees, were directed to deliver to said trustee in insolvency all the assets and property conveyed to them by said Nicholson, which they did: In accordance with the practice sanctioned by this Court in Buschman v. Hanna, 72 Md. 1 , the trustee in insolvency intervened as claimant in all of the attachment suits and procured judgments in his favor, whereby the litigation under the attachments was transferred to the Insolvent' Court for its decision.

The trustee in insolvency, in accordance with ²⁵ legal requirement, transferred the assets received by him from Carter and- Aiken, trustees, to the. Circuit Court for Baltimore County, for distribution, where Nicholson had been declared an involuntary insolvent. An audit having been filed in said insolvent case, which distributed the assets thereof pro rata and without preference to the creditors who had proved their claims in said case, the attaching creditors filed objections to the final ratification of the Auditor’s Account, on the ground that they were severally entitled to priority in the distribution of said assets and should not be dealt with upon the same equality as that of general creditors of said Nicholson & Sons; and further, because the said deeds of trust were fraudulent in fact and presented no legal bar to their right to have judgments of condemnation entered in said attachment suits which would establish their right to preference in payment out of said trust fund. The Circuit Court for Baltimore County overruled the objections to the Auditor’s Account and ratified the same, and this appeal is taken from the order of that Court.

Many interesting questions arise on this appeal, but it will not be necessary to give all of them consideration. Those which are requisite to a proper determination of the rights of the parties are few, but not free of some difficulty. It will be proper in the first instance to consider the legal status of those attaching creditors, who, through the intervention of the plaintiffs below, had been made parties defendant in Riley and others v. Carter and Aiken, trustees, by an order of the Court based upon a petition of the plaintiffs, in which it is averred that, in consequence of said attachments, they were necessary parties. Nothing in the progress of the case occurred to render them less necessary parties, so far, at least, as the reasonable purposes of the cause indicate; yet, after having remained parties litigant during the progress of this case on the appeal in 76 Md. 581 , and until the demurrer filed to the bill of complaint had been overruled, plaintiffs’ counsel, without the authority ²⁶ of the Court in which the case stood for hearing, filed with the Clerk of that Court two orders of the same date, one of which sought to dismiss the bill as to certain plaintiffs, and the other order sought to deprive the case of not less than sixty defendants by dismissing the bill as to them.

This statement suggests a question of importance in the practice of Courts of Equity in this State, and one of consequence to the