Scott v. Gittings

Stockbridge, J., delivered the opinion of the Court. The record in this case contains three appeals from an order of the Circuit Court for Baltimore City by which certain exceptions which had been filed to an auditor’s account were • overruled, and that account finally ratified and confirmed. One of these appeals was taken on behalf of the State of Maryland, another on behalf of the Mayor and City Council of Baltimore, and the third by William Force Scott, general assignee in bankruptcy, acting especially for James Watson Webb and for Tilley Allen, and Charles B. Peabody and Henry O. Little, substituted trustees under a deed of ⁵⁹⁸ trust from George Peabody. Tbe last exceptions, in their amended form, are conditional and are only to be considered in the event of the contention in the first two appeals being sustained.

Motions have been made to dismiss the appeals "of tbe State of Maryland, and of tbe Mayor and City Council of Baltimore and in our opinion these motions should be granted. Tbe question involved in these two appeals are tbe same, but in view of tbe large amount of litigation to which tbe fund in this controversy has given rise, it seems proper to review, as concisely as may be, tbe facts out of which tbe litigation has arisen, and then consider tbe questions of law presented by tbe claim made on behalf of tbe City and State. In 1838 there was issued by tbe George’s Creek Coal and Iron Company a certificate for 100 shares of its stock in tbe name of “Morris Robinson, Agent,” and in 1841 there was issued a certificate for 41 shares of tbe same stock in tbe name of “Telley Allen, in Trust.” There was no entry whatever upon tbe books of tbe George’s Creek Company to indicate for whom Morris Robinson was agent, or for whom Telly Allen was trustee, or the nature of the trust. Neither at tbe time of tbe issue of these certificates, nor for a long period thereafter, was tbe stock a paying one.

No dividend of any description was declared or paid to tbe stockholders until tbe year 1864, and from that time on dividends were regularly declared and paid to tbe stockholders, once or twice in stock, but generally in cash. No one, however, appeared to claim any of tbe dividends declared upon tbe stock so standing in tbe names of “Robinson, Agent,” or “Allen, in Trust.” Tbe certificates of tbe stock dividends and tbe cash of tbe cash dividends remained in tbe bands of tbe George’s Creek Company up to tbe time of tbe dissolution of that company, and in tbe course of tbe forty-odd years which elapsed from tbe time when tbe declaration of dividends was begun, tbe aggreate of those dividends amounted to tbe very considerable sum for tbe two holdings of, approximately, $90,000. ⁵⁹⁹ In 1910 Malcolm V. Tyson filed a bill in tbe Circuit Court No. 2 of Baltimore City, as administrator of Robinson, deceased, the purpose of which was to bave delivered and paid over to bim tbe stock, and accumulated dividends upon tbe stock standing in tbe name of “Morris Robinson, Agent.” Tbe decision in that case is reported in 115 Md. 561 , where this' Court held that as Tyson was suing in tbe representative capacity of an administrator, be could recover only such property as bad belonged to Robinson individually, and that tbe addition of the word “agent,” as it appeared on tbe stub of tbe certificate, indicated that tbe stock and dividends for wbicb bis bill was filed, was not tbe property of Robinson personally, and, therefore, that bis personal representative was not entitled to> bave delivered to- bim any stock or other property wbicb Robinson may bave held in a fiduciary capacity, such as an agent. Tbe next step in tbe litigation was tbe case of tbe Baltimore Trust Co. v. The George’s Creek Coal and Iron Co., 119 Md. 21 . That suit was brought by tbe Baltimore Trust Company as receiver, for tbe Tilley Allen stock, and in that case tbe pleadings alleged tbe belief of tbe plaintiff that no trust ever existed in respect to said stock, but that tbe same belonged to bim individually.

Tbe receiver bad been appointed without notice to the George’s Creek Company, and in that case it was held, first, that tbe pleadings did not disclose any sufficient reason for tbe appointment of a receiver without notice to tbe George’s Creek Company; and, second, that tbe plaintiff bad not shown any such legal or equitable interest in tbe subject-matter of tbe petition as to warrant it in asking for tbe appointment of a receiver. Tbe third suit was a bill filed by certain stockholders of tbe George’s Creek Company asking that tbe Circuit Court of Baltimore City assume jurisdiction over tbe dissolution of that company, steps looking to that end having been previously taken by tbe corporation without judicial proceedings, and asking, further, that receivers might be appointed to take charge of and distribute tbe assets of tbe corporation. ⁶⁰⁰ and wind up its affairs. In that bill it was alleged that it was probable that the stock standing in the name of “Robinson, Agent,” was held by him as an agent of the corporation, and it asked that the value of that stock and the dividends accumulated thereon should be divided among the remaining stockholders in proportion to their respective holdings; and with regard to the Allen stock it was alleged, that if the proceedings instituted by the Baltimore Trust Co. were successful, the George’s Creek Co. would be divested of the possession of said accumulated fund, although the lawful ownership of the same might remain unestablished, to the injury of the plaintiffs and other stockholders in the George's Creek Co. In this case a decree was entered on the 26th of January, 1914, dissolving the George’s Creek Company, and appointing John S. Gittings, the present appellee, receiver. A further attempt to secure the stock and accumulated dividends in the “Robinson, Agent,” branch of this case was made in a bill filed in Circuit Court No. 2 of Baltimore City, by Charles B. Peabody, et al., Trustees, against the George’s Creek Coal and Iron Co., reported in 120 Md. 659 .

This case was. brought upon the theory that the stock m question was the property of James Watson Webb, that said Webb was indebted to the Bank of the United States in the sum of $3,090 upon his note dated May 23, 1839, and that the stock which stood in the name of “Robinson, Agent,” had been delivered as collateral security for this note at the time of its negotiation with the Bank of the United States, and that it passed to the trustees of that bank under the deed of June 7th, 1841, was uncollected by them and passed by their deed of May 21st, 1855, to Samuel Jaudon and others, the stock being a part of the unadministered assets of the bank. That subsequently on December 31, 1866, all of the then unadministered assets of the Bank of the United States were disposed of by Jaudon and others, trustees, to George Peabody, and that on September 28th, 1869, George Peabody transferred to George Peabody Russell and other's, as trustees, all of the remaining assets of the United States Bank ⁶⁰¹ then, held by him. In the auditor’s account filed in 1855 was contained a list of assets then in the hands of J audon and others, as trustees. In that bet of assets appears the entry, “J. Watson Webb, $3,090,” but without mention of the collateral, and to the petition for the order under which J audon and others made their sale to Peabody, was appended a schedule which was said to contain a “full statement of all of the said assets yet remaining in the hands of your petitioners,” but in this schedule neither the note of James Watson Webb, or of any collateral deposited with it, appeared.

In the case of Peabody against the George’s Creek Co., 120 Md. 659 , this Court held that the evidence adduced, failed to show sufficiently that the 100 shares of George’s Creek stock had passed to George Peabody in December, 1866, and, therefore, the plaintiffs in that action failed to recover the stock and dividends which had been declared on it. The case of Scott against the George’s Creek Co. was instituted in the United States District Court for Marylandsee 202 Fed. 251 , and the purpose of that suit was to recover the Tilley Allen stock, upon the theory that Allen had been adjudicated a bankrupt by the United States District Court of the Southern District of New York in 1812, and that Scott as official or general assignee iñ bankruptcy was entitled to any of the property of the bankrupt not theretofore reduced to possession by a bankrupt assignee; it further raised the question of the bona fides of the trust, claiming substantially that there was no trust in fact, but that such designation was for the purpose of concealing the property from Allen’s creditors, and that it in reality belonged to Allen individually. Mr. Scott, likewise in his capacity of official and general assignee in bankruptcy, claimed an interest in the “Morris Robinson, Agent,” stock, upon the theory that such stock had been the property of James Watson Webb, that Webb was also a bankrupt, and that Scott as official assignee in bankruptcy was entitled to the Webb stock, or at least so much of that stock and its accumulations as might remain after ⁶⁰² .the satisfaction by payment to the Peabody trustees of the note of Webb for $3,090, and interest thereon. In the United States District Court the proceeding was not dismissed, but was held in abeyance to await the determination of the pending case instituted by Montell and others, the Federal Court holding that there existed a concurrent jurisdiction in the State and Federal Courts, that the proceeding was in the nature of a proceeding in rem, with the fund as the res, that the jurisdiction of the State Court having first attached, the proceedings in the Federal Court would be stayed to afford an opportunity for action by the Courts of this State.

The case of Montell and others against the George’s Greek Go. was then proceeded with, and culminated, under an order of the Circuit Court of Baltimore City, in an auditor’s account by which the funds belonging to the stockholdings of “Robinson, Agent,” and “Allen, in Trust” (and which was then in the hands of Gittings, the receiver appointed by that Court) was finally distributed and disposed of. This account was filed on July 17th, 1914, and on July 25th, 1914, the State of Maryland intervened by petition and exceptions to the account. In the petition it avers that the State was entitled to the entire amount of both funds under section 135 of Article 93 of the Code, avering that the true owners of the stock long since died, and that no widow, surviving husband or relations within the fifth degree counting down from the common ancestor has come forward to claim any part of the said funds. On October 17th, 1914, the City of Baltimore intervened by exceptions and petition, alleging that it was entitled to both funds, under the same section of the Code as that upon which the State based its claim, and fi£rther under the provisions of the City Charter, sections 808-812.

The exceptions of the State and City being overruled, the present appeals were taken. The claims asserted to these funds by the State and by the City of Baltimore can appropriately be considered together, since they are both based upon the same provisions of the Code, the effect of which is, that if those claims are valid, the ⁶⁰³ title to the property now in dispute vests in the State, and the property belongs to the State, to he “paid to the Board of School Commissioners of the county wherein letters of administration shall he granted upon the estate of the deceased for the use of the public schools of said countyand in the case of the City of Baltimore, the title being vested in the State, is to be paid to the Board of School Commissioners of said city. The initial difficulty with the claim now presented on behalf of the State and City of Baltimore lies in the fact that neither Morris Robinson or Tilley Allen were residents of this State at the time of their death, but both were domiciled in New York, and in the existing lack of proof as to who was the principal of Robinson, or who was or were the cestui que trustent of Allen, it is impossible to say to the school commissioners of what county or the City of Baltimore the money should be paid, and the statute makes no other disposition of such a fund. A further difficulty is presented by the fact that Tilley Allen, if he had any right to or interest in the stock personally, left a will, while the statute relates to cases of intestacy only.

With regard to Robinson, administration was granted on his estate in 1909 by the Orphans’ Court of Baltimore City, and the section of the Code directs the payment of moneys, where the intestate left “no widow or relations of the intestate within the fifth degree” to the Board of School Commissioners of the county wherein letters of