Gemmell v. Davis
| Decision Date | 16 March 1892 |
| Citation | 23 A. 1032,75 Md. 546 |
| Parties | GEMMELL ET AL. v. DAVIS ET AL. |
| Court | Maryland Court of Appeals |
Appeal from circuit court of Baltimore city.
Petition in the case of Davis v. Gemmell (for prior reports, see 17 A 259; 21 A. 712) by Thomas Gemmell and Malcolm Sinclair minority stockholders of the North Branch Company, that an alleged indebtedness of William A. Brydon to the company might be set off against the dividend distributable to his stock. From a judgment denying the petition, petitioners appeal. Affirmed.
William A. Brydon recovered a judgment amounting to $75,000 against the Baltimore & Ohio Railroad Company for a breach of contract with respect to the purchase of coal from him by the railroad company. This judgment was entered to the use of Henry G. Davis & Co., and on appeal to the supreme court was affirmed. 9 A. 126. Immediately thereafter Thomas Gemmell and Malcolm Sinclair filed a bill in the circuit court of Baltimore city against Henry G. Davis & Co, William A Brydon, the North Branch Company, and the Baltimore & Ohio Railroad Company. The bill alleged that the judgment, though recovered in the name of Brydon, in fact belonged to the North Branch Company, of which Brydon, Gemmell, and Sinclair were stockholders, Brydon owning a majority of the stock, and Gemmell and Sinclair the remainder, and that the assignment of the judgment to Davis & Co. was fraudulent. It prayed that a receiver of the North Branch Company might be appointed to take charge of all the property and assets of that corporation; that the assignment of the judgment to Davis & Co. might be canceled; and that the Baltimore & Ohio Railroad Company might be restrained from paying over the amount of the judgment to Brydon or Davis & Co. An injunction issued as prayed. The defendants answered the bill, Brydon claiming that the judgment did not belong to the North Branch Company and Davis & Co. claiming that it was their property under the assignment from Brydon. A motion was made to dissolve the injunction, and a large mass of testimony was taken, and on September 28, 1889, a final decree was passed, declaring that the $75,000 judgment was the property of the North Branch Company, making the injunction perpetual, and referring the cause to the auditor "to state an account or accounts, distributing the amount of the judgment, with interest thereon, upon the pleadings and proof now in the cause, and such other testimony as may be produced by any of the parties, or by any parties who may file claims as creditors, to and among the several parties who may be entitled thereto." It was further ordered that notice be given to creditors of the North Branch Company to file their claims.
Argued before MILLER, ROBINSON, BRYAN, IRVING, FOWLER, and MCSHERRY, JJ.
W. Irvine Cross and W. L. Marbury, for appellants.
W. Pinkney Whyte, John Prentiss Poe, and William Walsh, for appellees.
When this case was last before us (73 Md. 530, 21 A. 712) the order ratifying the auditor's report was affirmed in part and reversed in part, and the cause was remanded that a new audit might be stated in conformity to the decision then rendered. By that decision sundry claims against the North Branch Company were held to be just debts due by that company, and were directed to be paid in full out of the fund in court. The balance of the fund was declared to belong to the stockholders of the North Branch Company, and it was ordered and decreed that this balance should, in the new audit, be distributed pro rata among those stockholders. After the record had been remanded, and had reached the lower court, a new audit was stated, wherein all the debts due by the North Branch Company were allowed out of the fund, and the balance distributable to the shareholders was ascertained to be $20,370.04. William A. Brydon at one time owned 488 shares of the stock; 15 shares were held by other persons, chiefly to qualify them as directors; and Gemmell and Sinclair hold the remaining 497. Atty. Gen. Poe and Mr. William Walsh, who conducted the litigation for Brydon from the beginning of the protracted controversy now nearly at an end, filed an order entering to their own use one-third of the amount to which Brydon's stock was entitled, and Henry G. Davis & Co. filed a petition, claiming, as assignees of Brydon's stock, the dividend payable thereon. The certificates of stock were produced, and upon the back of each certificate there was written a full assignment, dated November 13, 1888, and duly executed by Brydon. No transfers were ever made on the books of the company. Gemmell and Sinclair, the minority stockholders, filed a petition in the case, alleging that Brydon was insolvent, and claiming that he was a debtor to the North Branch Company in an amount exceeding $20,000. They prayed that this alleged indebtedness might be set off against the dividend distributable to Brydon's stock. The auditor allowed the claim of Messrs. Poe and Walsh, and distributed the balance of the Brydon's stock dividend to abide the further order of the court. The circuit court of Baltimore city ratified the audit, and awarded the balance of the fund so audited to abide its further order to Henry G. Davis & Co. and Mrs. Susan V. Brydon, the wife of William A. Brydon. From this order Gemmell and Sinclair took the pending appeal.
There was some additional evidence taken relative to the ownership of Brydon's stock. It appears from this evidence that Brydon's stock was first pledged by him to Henry G. Davis & Co. on August 27, 1874. No assignment was then indorsed on the certificates, but the certificates were placed by Brydon in an envelope, and were delivered to one of the members of the firm of Henry G. Davis & Co.; and upon or accompanying the envelope was this memorandum, viz.: Subsequently the assignment of November 13, 1888, was written on the certificates, which, since their delivery on August 27, 1874, have been continuously in the possession of Henry G. Davis & Co. Brydon testified that the assignment was made for the purpose of pledging the stock as collateral security for the payment of the Governeur lien, and for a loan of $400, though Henry G. Davis & Co. claim that the pledge was intended to secure numerous other items of indebtedness on the part of Brydon to them. It further appears that on the 28th day of October, 1876, Brydon executed the following transfer of the same stock to his wife, viz.: This, he testified, was intended as a collateral security for his indebtedness to her. The Governeur lien has been paid off and discharged. It was allowed as a valid claim against the North Branch Company on the former appeal in this case; and the $400, according to Brydon's testimony, have likewise been settled. That Brydon was justly indebted to his wife when he executed this transfer to her does not admit of a doubt. That he was also indebted to Henry G. Davis & Co. for large advances made by them to him is equally certain. As the case now stands, there are three claimants to the fund constituting the dividend on the Brydon stock, namely, the North Branch Company, represented by its minority stockholders, Henry G. Davis & Co., and Mrs. Susan V. Brydon, though there is no contest between the latter two, for, while they both claim the fund, they do not claim it as against each other, but as against the North Branch Company. If Davis & Co. are entitled to the dividend, or if Mrs. Brydon is entitled to it, the claim of the North Branch Company must fall. If they be not entitled to it, the North Branch Company will be, provided Brydon is actually indebted to it as alleged.
So far as the appellants are concerned, it makes no difference whether the dividend on the Brydon stock rightfully belongs to Davis & Co. or to Mrs. Brydon. Unless the North Branch Company--the body corporate, not Gemmell and Sinclair, as individual stockholders--has a lien on the dividend, which lien is prior in its equities to the claims of ...
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