Eastern Md. Dist. Meeting of Church of Brethren v. Union Bridge Banking & Trust Co.

Decision Date10 January 1945
Docket Number73.
Citation40 A.2d 518,184 Md. 241
PartiesEASTERN MARYLAND DISTRICT MEETING OF CHURCH OF BRETHREN v. UNION BRIDGE BANKING & TRUST CO. et al.
CourtMaryland Court of Appeals

Appeal from Circuit Court, Carroll County; James Clark, Judge.

Suit by the Union Bridge Banking & Trust Company and others, on behalf of themselves and other creditors of Blue Ridge College who might join in suit against Blue Ridge College and others to stay foreclosure proceedings instituted against defendant college by the Eastern Maryland District Meeting of the Church of the Brethren and to declare the invalidity of mortgage and mortgage debt and of deed from college to church. From a decree for complainants, defendant Eastern Maryland District Meeting of the Church of the Brethren appeals.

Decree reversed and bill of complaint dismissed.

Theodore F. Brown, of Westminster, and Omer T Kaylor, of Hagerstown (A. Earl Shipley, of Westminster, on the brief), for appellant.

Francis Neal Parke, of Westminster, for appellees.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GARSON, and HENDERSON, JJ.

GRASON Judge.

The Union Bridge Banking and Trust Company, a body corporate together with the individual plaintiffs, instituted this case against the Blue Ridge College (herein referred to as College), The Eastern Maryland District Meeting of the Church of the Brethren (herein referred to as the Church), both corporations, and Theodore F. Brown, attorney named in a mortgage for the purpose of foreclosure. The suit is brought on behalf of the plaintiffs, who sue as creditors of the Blue Ridge College, as well as on behalf of all other creditors of the College, who come in and contribute to the expenses of the suit.

The circumstances out of which this litigation arose are, in brief, as follows: Sometime before 1900, the Church a religious denomination, determined to organize a school, limited to students whose parents were members of the church. The teachers were also to be members of this denomination. In conformity with this purpose, in 1900 the Church caused to be organized the Maryland Collegiate Institute, a corporation. In provided for the organization and operation of such a school. The curriculum corresponded to courses prescribed by high schools. At that time there were not many high schools maintained under the public school system, but in a few years following this venture by the Church such schools came to be relatively numerous, and the need for the Institute was largely fulfilled. In 1910 the Church caused the charter of the Institute to be changed. It was given the title of The Blue Ridge College and authorized to operate a college. The teachers and students were limited to those having membership in the church. The Institute had a capital stock of $25000, divided into one thousand shares of the par value of $25 each. There was no change made in this feature by the Act of 1910. The old Institute was located at Union Bridge but the College was located at New Windsor, Carroll County, Maryland. In 1906 The Eastern Maryland District Meeting of the German Baptist Brethren was incorporated. Laws 1906, c. 79. Its name was changed to its present name by the Act of 1920, Chapter 628. The testimony shows that the corporation was to be a holding and fiscal agent for the church. This corporation, in 1937, as is shown by the evidence in this case, held 940 shares of the stock of the College. For a long number of years before the happening of the events involved in this case, the College built up an Endowment Fund. Under the terms of the gifts to this Fund, if the College ceased to be operated under the control of the Church the money contained therein would become the property of the General Educational Board of the Church. There was subscribed to this Fund $86,000, but only between $25,000 and $30,000 of this subscription was paid. As these subscriptions were paid they were utilized by the College to erect buildings on the campus. As the College used this money it gave its note to the Fund, and in 1937 the College owed the Endowment Fund between $29,000 and $30,000. Former students and graduates of the College made donations which went into an account known as the Alumni Association Account. About $3000 taken from this Account was invested in college buildings.

On the 27th day of June, 1933, the will of Annie R. Stoner was admitted to probate by the Orphans' Court of Carroll County. Under this will she left the Blue Ridge College two farms containing two hundred and seventy-five acres of land, and a lot of land improved by a tenant house, which adjoins the farms. She stated therein it was her desire that the fund arising therefrom 'be devoted to whatever may be most advantageous to said Blue Ridge College in the judgment of its board of trustees.' All the rest and residue of her estate, 'including legacy or devise hereinbefore set forth failing for any reason,' is given to the College, with request that the proceeds therefrom be kept separate from other property of the College and be designated the 'Roop and Stoner Endowment.'

In 1927 the Church concluded it was operating too many colleges within a given radius and they determined to sell the Blue Ridge College. To quote from the testimony: 'While the school was not a burden on the Church, especially, it was operating without any outstanding deficiency any time. We decided we would like to dispose of the plant and save our resources for the other schools.' It was offered to the County. In 1928 there was some negotiation for the sale of the College, conducted with Paul N. Hornbeck and The National Bureau of Private Schools, but these negotiations failed. Hornbeck, it seems, endeavored to procure a purchaser for this College and in 1937 he produced some New Jersey interests, headed by Judge Ullrich. This resulted in the New Jersey interests buying all of the shares of stock issued by the Blue Ridge College, thus getting control of the institution.

The original holdings of the College consisted of about twenty-five acres of land and the college buildings. In addition to this it acquired, including other real estate the property devised to it under the will of Mrs. Stoner. The Eastern Maryland District Meeting of the Church of the Brethren, a corporation, owned 940 shares of the stock of the Blue Ridge College. The College was indebted to the Endowment Fund in the sum of between $29,000 and $30,000 and indebted to the Alumni Association Account in the amount of $3000. It was otherwise indebted in the sum of about $15,000. The New Jersey interests were concerned with the twenty-five acres belonging to the College, together with its buildings, and wanted to control the stock of the Blue Ridge College and hence control that property for the purpose of conducting a non-sectarian college. It was necessary for the College to acquire its stock which was owned by the Church. The College conveyed all of its holdings to the Church corporation, with the exception of the twenty-five acres and buildings comprising the College property, which was all of the property involved in the sale. The Church endorsed its stock to the College and agreed to assume the debts of the College. The College then executed to the Church the mortgage in question. The consideration for the mortgage is between $29,000 and $30,000 owed by the College to the Endowment Fund; commission on sale, $5000; and an indebtedness of the College of...

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