Glenn v. Marbury

• Decision Date: 16 May 1892
• Citation: 36 L.Ed. 790,12 S.Ct. 914,145 U.S. 499
• Parties: GLENN v. MARBURY
• Court: U.S. Supreme Court

145 U.S. 499

12 S.Ct. 914

36 L.Ed. 790

GLENN v. MARBURY.

May 16, 1892.

STATEMENT BY MR. JUSTICE HARLAN.

This action at law was brought March 22, 1889, by John Glenn, in his capacity as substituted trustee in a certain deed of trust made by the National Express & Transportation Company, a corporation of Virginia; also as trustee by virtue of an order passed by the chancery court of the city of Richmond, Va., in a suit in equity brought by William W. Glenn, suing on behalf of himself and others, creditors of that corporation. Its object was to obtain a judgment against the defendant, Marbury, for the sum alleged to be due from him under an order, in the above cause, making an assessment and call on subscribers to the stock of that company.

The facts necessary to be stated in order to show fully the grounds of the defense are as follows:

In August, 1866, Josiah Reynolds, a citizen of Maryland and a stockholder of the National Express & Transportation Company, suing on behalf of himself and all stockholders of that corporation who should come in and contribute to the expenses of the suit, brought an action in equity in the circuit court of the United States for the eastern district of Virginia, against that corporation,—to be hereafter, in this opinion, designated as the 'Express Company,'—and against its president, directors, and superintendent. The bill set forth that the company had been and was then being conducted in a reckless, extravagant, and improvident manner, and that the money subscribed by the plaintiff and other stockholders had been and was being wasted and misapplied in conducting its business, chiefly in ways and for purposes that were illegal and in fraud of the rights of stockholders. The relief sought was an injunction restraining and probibiting the company from conducting its business in the illegal and improvident manner specified in the bill. The bill also prayed that a receiver be appointed by the court to take possession of the property and effects, books of account, and papers of the company; that such property and effects might be sold and disposed of, and any money due the company collected by the receiver; and that an account be taken under the order of the court of its business, its debts and liabilities paid, and the balance distributed among the stockholders. The bill particularly referred to an agreement with one Ficklin, which, it was alleged, ought to be set aside as in fraud of the rights of stockholders. The defendants were duly served with process, and one of them, J. J. Kelly, the superintendent of the express company, filed an answer. The company appeared and adopted as its own the answer of Kelly.

On the 23d of August, 1866, an order of injunction was issued restraining the defendants 'from collecting or taking any proceedings to collect or enforce from the complainant the payment of moneys for or an account of his stock in said company, or assignments or calls thereon, either by sales of stock or otherwise, and from making any assessments upon the complainant in respect to or on account of his said stock, and also injoining and restraining the said company, its directors, agents, and servants, from pleading, using, or applying the property, funds, effects, and credits of the said company to or for any purposes or objects other than the regular and legitimate express and transportation business for which the said company was organized, and from carrying out or fulfilling the agreement with Benjamin Ficklin, mentioned in said bill, or any similar agreement with any other person, and from selling any of the shares of said stock held or owned by the complainant until the further order of this court.'

The express company, on the 20th day of September, 1866, having previously appeared and filed its answer in the Reynolds suit,—executed to John Blair Hoge, J. J. Kelly, and C. Oliver O'Donnell a deed assigning and conveying to them all the estate, property, rights, and credits of the company, of every kind and wherever they might be, including moneys payable to the company, 'whether on calls or assessments on the stock of the company,' or on notes, bills, accounts, or otherwise. The deed was made on certain trusts, among others, that the trustees should permit the express company to remain in the possession and use of all the property conveyed or assigned, except debts, claims, and moneys payable, until November 1, 1866, and thereafter until the trustees should be requested by one or more of the creditors secured by the deed, and whose debt or debts should then be due, to take possession of the assigned property; the trustees, however, to take possession at any time, if requested by the company's board of directors. The trustees were required by the deed to proceed without unnecessary delay 'to collect all the debts, claims, and moneys payable, which are hereby granted or assigned.'

On the 31st of December, 1866, the court appointed a receiver of the money, property, and effects of the express company, 'with all the powers, rights, and obligations usual in such cases, subject to the control of this court, until the affairs of said company be fully and finally closed up.' He was ordered to execute and file, before entering upon his duties, a bond, with sureties to be approved by the court, of $20,000, conditioned for the faithful discharge of his duties as receiver of the funds, property, and effects of the express company. It was further provided in the order appointing the receiver as follows:

'That upon the execution, approval, and filing of said bond the said receiver shall be vested with all the estate, real and personal, as well as all the money, notes, accounts, assessments due on stock or other securities, or rights in action of the said National Express & Transportation Company, as trustee of such estate and property, for the use and benefit of the creditors of said company, and of its stockholders and others who may be interested in the same, with all the powers, rights, and authority of a trustee appointed by this court, or acting within its jurisdiction and control.

'Such receiver shall have all the powers and authority which ordinarily belong to such trustee, and the said defendants, as well as all other persons who may have the possession or control of any of the money, books, property, effects, or things in action of the said National Express & Transportation Company, and especially John Blair Hoge, John J. Kelly, and C. Oliver O'Donnell, the trustees named in a pretended assignment referred to in the complainant's petition, are hereby required to assign, transfer, and deliver to the said trustee, on being notified of this order, all such money, property, notes bonds, estate, real and personal, so in their hands or under their control, and they are also required to execute and deliver all deeds, conveyances, releases, transfers, or acquittances that may in any wise be necessary to place any or all of said property or effects so in the hands or under the control of the said receiver, and they and each of them, on being required, shall make all discovery and furnish all information which the said receiver may require in relation to any or all of the property, business, or transactions of the said company.

'The said receiver will proceed to collect all the property, money, and effects of the said National Express & Transportation Company, and convert the same into money, and he will also ascertain the amount of the debts and liabilities of the said National Express & Transportation Company, and, after payment therefrom of all expenses, including counsel fees and costs, with such compensation as the court may allow him, will, from thme to time, apply the funds so received and obtained by him in the satisfaction and discharge of the debts of the said company under the orders of this court.

'And if there shall be any sums due upon the shares of the capital stock of the said company the said receiver will proceed to collect and recover the same, unless the persons from whom the said sums may be due shall be wholly insolvent, and for this purpose may prosecute actions at law or in equity for the recovery of such sums in his own name, as receiver or otherwise, as he may deem best, and shall apply the maney so received under the order of this court to the satisfaction and payment of the remaining debts of said company, as well as the legal and necessary expenses of the due execution of this trust, including a reasonable compensation and commission to himself for services on this behalf, and also including such necessary and reasonable fees and costs as may be necessary in maintaining, prosecuting, or difending any suit or suits which it may be necessary to prosecute or defend in order to the full execution of this trust.'

The receiver gave the required bond, and it was approved by the court on the 12th of January, 1867.

Reynolds having died, Washington Kelley, a stockholder was permitted to become a party plaintiff, and, with the leave of the court, filed August 20, 1870, an amended and supplemental bill. The receiver reported to the court, December 11, 1880, that he had not been able to obtain possession of any of the company's effects, except two freight cars; and that so far as he could ascertain, in all the states where the company did business, its property and effects had been attached by its creditors. This report being made, 'on motion of the defendants John Blair Hoge and J. J. Kelley,' the order appointing the receiver was vacated, annulled, and set aside, the receiver discharged and exonerated, the injunction dissolved, and the suit dismissed.

On the 4th of December, 1871, W. W. Glenn, suing on behalf of himself and all other creditors of the express company, filed his bill in equity in the chancery court of the city of Richmond against that corporation, and its officers, and against the trustees named in its deed of September 20, 1866. The...