Brown v. Maryland Freestone Min. & Mfg. Co.

• Decision Date: 16 March 1881
• Citation: Brown v. Maryland Freestone Min. & Mfg. Co., 55 Md. 547 (Md. 1881)
• Parties: JOSEPH T. BROWN, Trustee, and others v. THE MARYLAND MINING AND MANUFACTURING COMPANY, and others.
• Court: Maryland Court of Appeals

55 Md. 547

JOSEPH T. BROWN, Trustee, and others v. THE MARYLAND MINING AND MANUFACTURING COMPANY, and others.

Court of Appeals of Maryland

March 16, 1881

APPEAL from the Circuit Court for Montgomery County, in Equity.

The case is stated in the opinion of the Court.

The cause was argued before BARTOL, C.J., GRASON, MILLER ROBINSON and IRVING, J.

James B. Henderson and William Pinkney Whyte, for the appellants.

Thomas Henderson and William H. Tuck, for the appellees, Charles W Hayden, Joseph A. Blunden, Hillary L. Offutt, Henry D. Cooke Jr., Wm. H. Barnard, receiver of the First National Bank of Washington, D. C., and Henry D. Cooke, Jr., assignee of said Bank.

GRASON J., delivered the opinion of the Court.

This appeal is taken from two decrees of the Circuit Court for Montgomery County, sitting in equity, and the questions presented are as to the priorities of the respective claimants in the distribution of the proceeds of the sales of the property decreed to be sold.

It appears from the record that on the first day of July in the year 1868, the Maryland Freestone Mining and Manufacturing Company of Montgomery County, Maryland, a corporation under the general incorporation laws of this State, made and executed coupon bonds, each for the sum of five hundred dollars, to the amount of one hundred thousand dollars, payable at the First National Bank of Washington City in the District of Columbia, on the first day of January, in the year 1881, with interest at six per cent., payable at the same bank in gold coin semi-annually on the first days of January and July in each year, and at the same time executed a mortgage of all the property of the Company to secure the payment of the bonds and coupons so issued, at the times and in the order they might respectively become due and payable.On the first day of January in the year 1870, the said corporation made and executed a second series of coupon bonds of the same denomination as those of the first series and to the amount of one hundred thousand dollars, payable on the first day of January, 1885, at the same bank, with the same interest payable on the same dates and in all other respects like those of the first series, and to secure the payment of them a second mortgage of the same property as that covered by the first deed, was executed by the corporation.

On the 30th day of October in the year 1872, the corporation executed a mortgage of the same property to Henry C. Swain and William M. Tenney, as trustees, to secure the payment of two promissory notes of even date with the mortgage, one in favor of John L. Kidwell for the sum of $24,250, and the other in favor of Henry D. Cooke for the sum of $5750; each payable at said First National Bank of Washington City, on the first day of November, in the year 1877, and bearing interest at the rate of six per cent., and payable semi-annually.

On the 28th of March, in the year 1873, Upton Darby obtained, in the Circuit Court for Montgomery County, a judgment against the corporation for the sum of $1179.07, with interest and costs, and issued execution thereon, which was levied on the lands and personal estate of the corporation; and afterwards on the 26th day of August, 1873, assigned the same to Charles W. Hayden, who was then the president and general manager of the corporation.

On the 14th day of October, 1874, Joseph A. Blunden sued out and levied an attachment on the property of the corporation for the sum of $3687.72, with interest and costs.

Some time in the autumn of 1874 it was discovered that all three of these mortgages were defective in consequence of their not having been acknowledged in accordance with the requirements of the Code and not having the affidavit as required by the 29th section of Article 25, and not having the corporate seal affixed.On the 12th day of October, 1874, the corporation adopted a resolution authorizing and directing confirmatory deeds to be executed, confirming all that was contained in each of the original deeds, as of and from their dates, and that they should be recorded according to their original priorities.

Deeds were accordingly executed and acknowledged on the 16th, 19th and 20th October, respectively, and recorded, the first on the 20th and the other two on the 22nd of October.These last three deeds were executed and acknowledged in conformity with the provisions of the Code.

Default having been made in the payment of the coupons of the first series of bonds, Joseph T. Brown, the trustee, named in the two first named deeds, at the instance and request of the holders of some of the said bonds and overdue coupons, filed the bill in this case on the 4th day of November, 1874, praying a sale of the property for the payment of the overdue interest.All persons interested were made parties, or came in by petition, and by agreement of the parties the auditor was appointed a special commissioner to take testimony and state accounts, showing the number and amounts of the bonds secured by the respective mortgages, and classifying them according to their respective legal priorities; and also showing the number and amounts of the various coupons for interest attached to any and all of said bonds which were due and unpaid, preliminary to the passage of a decree.Testimony was taken by the auditor, under the aforesaid order of Court, as also under a commission afterwards issued to Washington City, and a large number of bonds and coupons were filed.First mortgage bonds to the amount of $90,000 and overdue coupons belonging thereto, amounting to $23,188.25, including interest thereon from the time of their maturity to the date of the audit, were filed.In the latter sum was included $2120.70 of coupons, which were filed by Edwin L. Stanton, receiver of the First National Bank of Washington and which had been detached from the first mortgage bonds held by other parties.Charles W. Hayden, the secretary and treasurer of the company also filed over $2000 worth of detached coupons of the first mortgage bonds.The commissioners of the Freedman's Saving and Trust Company filed second mortgage bonds to the amount of $95,000, and overdue coupons belonging thereto, with interest to the date of the audit, amounting to more than $30,000.Stanton, receiver of the First National Bank, also filed coupons of the second mortgage bonds aggregating $536.55, and Hillary L. Offutt filed second mortgage bonds to the amount of $5000, with all the coupons belonging to them.The auditor having failed to decide the questions of priorities of these claimants, the case was submitted to the Court upon the pleadings and evidence, and on the 5th day of April, 1878, a decree was passed providing for a sale of the property for the payment of the claims in the following order, to wit:

1st.The costs of the proceedings in the cause, including trustees' commissions.

2nd.Darby's judgment, interest and costs.

3rd. Blunden's judgment, interest and costs.

4th.Offutt's $5000 second mortgage bonds, with the coupons belonging to them and overdue at time of sale of the property.

5th.Overdue detached coupons of all bonds held and filed by parties other than the holders of the bonds.

6th.First series of bonds with the coupons overdue at time of the sale.

7th.Second series of bonds, (other than Offutt's $5000,) including coupons overdue at time of sale.

8th.Kidwell's and Cooke's notes with interest.

9th.All other claims filed and proved.

Afterwards on the 21st day of November, 1878, the Circuit Court, upon petition filed to modify its decree, changed the fifth, sixth and...