Baltimore & O.R. Co. v. Glenn

• Decision Date: 25 February 1868
• Parties: THE BALTIMORE AND OHIO RAIL ROAD COMPANY, and others, v. WILLIAM W. GLENN, and others.
• Court: Maryland Court of Appeals

28 Md. 287

THE BALTIMORE AND OHIO RAIL ROAD COMPANY, and others, v. WILLIAM W. GLENN, and others.

Court of Appeals of Maryland

February 25, 1868

APPEAL from the Circuit Court of Baltimore City.

The bill in this case was filed in the Circuit Court of Baltimore city, on the 6th of October, 1866, by the appellee, against The National Express and Transportation Company, John Blair Hoge, John J. Kelley and C. Oliver O'Donnell, Trustees of said Express Company, the Baltimore and Ohio Rail Road Company, and the Bank of Commerce, on behalf of himself, and such other creditors of the said Express Company, as might become parties to the suit, and agree to contribute to the costs of prosecuting the same. The bill charged that the National Express and Transportation Company, a body politic and corporate of Virginia, by deed dated the 20th of September, 1866, conveyed to the said John Blair Hoge, John J. Kelley and C. Oliver O'Donnell, all the estate property, rights and credits of every kind, including calls or assessments on stock of the said company, in trust, among others, that the trustees should permit the grantor to remain in the possession and use of all the property therein granted or assigned, except debts, claims and moneys, payable, until the first day of November, 1866, and thereafter until the trustees should be requested by one or more of the creditors secured by said deed, and whose debt or debts should then be due, to take possession of such property; with authority to the trustees to take possession thereof, at any time after the date of the deed, if requested so to do by the board of directors of the said grantor; and further, that out of the trust funds, the trustees should pay all debts then due, or which should become due from the grantor to its officers or employees for their services as such, on or before the said first day of November, 1866, or such previous time as the trustees should be required to take possession of the property conveyed thereby; and further that the trustees should pay out of the trust fund, in ratable proportion the two debts due by the grantor; one to the Baltimore and Ohio Rail Road Company, and the other to the Bank of Commerce; and further, ratably, the balance of all debts for which the grantor should become liable to any rail road companies for transportation of express matter, from the date of said deed to the said first day of November, 1866, over and above the net receipts for such transportation; the said grantor reserving to itself all tolls and compensation accruing for the transportation of express matter, not yet delivered to consignees nor yet transported, although under existing contracts.

The bill further charged that the said express company was largely indebted to the said Glenn, for money loaned by him to said company, as also for obligations incurred by him for said company; and further, that an agreement was entered into between him and said company, on the 9th August, 1866 whereby upon certain conditions, he agreed to extend the time for the payment of its indebtedness to him for money loaned that said company did not comply with any of said conditions and that the execution of said deed of trust was a violation of said agreement, and should not be permitted to stand to the injury of the rights of the said Glenn. The bill further charged that the said Glenn had sued out a writ of attachment, against said company in the city of Baltimore and in the District of Columbia, and caused the same to be levied upon the property of said company, but that the property so levied upon was wholly inadequate to satisfy his claim against said company; and that the said deed of trust was fraudulent and void, and ought to be so declared. The bill asked for an injunction to restrain the express company and the trustees from disposing of, or conveying any of the property embraced in the said deed of trust, and from applying any part of said property to the purposes mentioned in said deed, or from suffering or permitting said property to be used by said company, in the manner provided in said deed. The bill also asked for the appointment of a receiver. An injunction was issued in conformity to the prayer of the bill, on the 6th of October, 1866.

The National Express Company and the trustees filed their answers on the 13th November, following, and moved to dissolve the injunction, the latter adopting the answer of the former, as part of their answer.

The Express Company, among other things, admitted that it was a body politic and corporate, chartered, organized and existing by virtue of the laws of the State of Virginia, and of no other State; that it was indebted to the said Glenn for money lent to it, and paid for it to the amount of twenty-one thousand and five hundred dollars, with interest, as alleged in the bill; but whether the same or any part thereof was then due, or at the time when the suit was instituted, or when the appellee sued out his attachment, against the respondent in Baltimore, it submitted to the judgment of the Court; it admitted the execution of the deed of trust of the 20th of September, 1866, but denied that it was done with any design to delay, hinder or defraud creditors or with any other fraudulent purpose whatever; on the contrary, that it was done with a bona fide purpose to make the most effectual and equitable provision for the payment of all its creditors that was then practicable; it insisted that the deed itself, if considered with reference to the nature and necessary operation of an Express Company chartered in Virginia, and carrying on an express business in Virginia, Maryland and other States, would appear on its face to have a purpose consistent with justice and the rules of law in all its provisions; that the preference given to employees of the company, so far from indicating a fraudulent purpose, was justified by equity; that, given to the Baltimore and Ohio Rail Road Company and the Bank of Commerce, was a more convenient substitute for a preference which they already held, and in fulfilment of a pledge given to them; the provision for paying employees and rail road companies for services to be rendered during a short period after the deed was made, was a necessary part of the provisions for the winding up of the affairs of the company in a manner beneficial to its creditors, and allowing the stockholders an opportunity to pay them speedily by hastening the discharge of their own obligations or otherwise; while the sums due and to become due from the stockholders were immediately appropriated by the deed to the use of the creditors; the possession of the property was reserved for a brief period to the company as part of the same general design; that the deed was not made in contemplation of insolvency, nor was the respondent then insolvent. The total amount of its liabilities was about two hundred and seventy-five thousand dollars or rather less. It owned property which had cost over two hundred thousand dollars, and which, unless forced to sale under unfavorable circumstances, was worth that sum. There was due to it from stockholders in calls or assessments already made, over two hundred thousand dollars, the most of which was due from solvent persons, and there remained eighty per cent. or over three millions of dollars, liable to be called for on the subscription of stock; it further alleged that the said deed of trust was valid, and would have been valid under the laws of Maryland, if it had been made in said State by a corporation of said State, not only as between the parties thereto, but as against the appellee and all other persons claiming adversely to the same; that the said deed was executed in Virginia, that it conveyed no real estate except one small parcel in that State; that it was duly recorded according to the laws of that State before the appellee sued out said attachment; that neither said deed nor any of its provisions, parts or clauses, was contrary to the laws which were in force in the State of Virginia, when it was made, and ever since, but according to those laws the said deed was and is valid and effectual to all intents, not only as between the parties thereto, but as against creditors and all other persons; it further insisted that in the Courts of Maryland all questions respecting the legality, validity, operation and effect of said deed as to personal property thereby conveyed or assigned, or purporting to be conveyed or assigned, should be decided according to the laws of Virginia, even though such property may have been found and attached in this State at the suit of a citizen of Maryland, and that the title of the assignees or trustees named in said deed is superior to any lien, right or claim of the appellee by virtue of his attachment or otherwise; that the making of said deed was not inconsistent with the rights of the appellee under the agreement of the 9th of August, 1866, nor with any rights which he had as a creditor at or before the making of that agreement.

The trustees, in their answer, alleged that they had been prevented from proceeding effectually to execute the trusts confided to them by the deed of trust, in consequence of the injunction issued in this cause, and legal proceedings elsewhere; but asserted their readiness to carry the same into execution whenever permitted. They insisted that the appointment of a receiver was wholly unnecessary for any purpose; that while a receiver appointed in this State would have no authority to act in other States, any order depriving them of power to execute the trust confided to them in other States, would be the probable cause of heavy losses to the trust, would destroy the only means of winding up the affairs of the Express Company under a single...