Court Opinion

ID: 7899551
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:54:35.322976+00
Date Added: 2024-06-11T16:32:12.662497
License: Public Domain

McSherry, J.,
delivered the opinion of the Court.
The record in this case is quite voluminous, the transac*426tions which it unfolds are numerous, and the fraud which it exposes, is both bold and unblushing. The bill which opened the pending controversy was filed by stockholders of “ The Transportation and Terminal Company of Baltimore City,” in behalf of themselves and others who might join them, against that company and other corporations and individuals, who were made co-defendants ; and its object is to secure the appointment of a receiver, who shall be clothed with authority to institute appropriate proceedings to rip up the unlawful and fraudulent acts complained of, and to recover back the property which the officers of the Transportation and Terminal Company disposed of without warrant or color of law.
With respect to the legal principles applicable to such a case, there can be no dispute. A stockholder, though owning but a single share, may invoke and set in motion the plenary and far-reaching powers of a Court of Equity to investigate, strike down and strip of its covering any act of the corporation to which he belongs, when that act is tainted with fraud, or is ultra vires or illegal. This jurisdiction is one of the most salutary and conservative possessed by a Court of Equity, and neither the adroitness of the imputed fraud, nor the skill that seeks to hide the illegality of the impeached transaction will thwart the exercise of the Court’s coercive and remedial authority. Mere internal dissensions among stockholders, or mere differences or disputes as to corporate management, so long as the officers or stockholders do no act that is fraudulent, illegal or ultra vires, will not warrant the intervention of a Court of Chancery; because in the absence of fraud, illegality or conduct that is ultia vires, the will of the majority is entitled to control the policy and the business of the body corporate. Shaw v. Davis et al., 78 Md. 308; Gamble v. Water Co., 123 N. Y. 91.
The Transportation and Terminal Company of Baltimore City was incorporated under the general laws, on December the thirteenth, eighteen hundred and eighty-eight. Its *427authorized capital stock was fifteen millions of dollars. On the very day the certificate of incorporation was signed, the five incorporators named in the certificate met, and each subscribed for one share of the capital stock, and thereupon proceeded to effect an organization. The corporation was designed to be a pooling company, gathering together the stock and property of several other corporations, both existing and projected, and conducting and operating their distinct enterprises under one central management. The chief promoter of the scheme was one John Henry Miller, and on the very day the company was chartered and formally organized, this same Mr. Miller submitted in writing a proposal to subscribe for fifteen thousand shares of preferred stock to be paid for in the following named property, viz., two thousand one hundred shares of the capital stock of the Maryland Central Railway Company; four thousand two hundred shares of the York and Peach Bottom Railway Company, and four thousand shares of the Deer Creek and Susquehanna Railroad Company. On the same day Miller subscribed for eighty thousand shares of the common stock to be paid for in certain property situated on North avenue and Oak street, in Baltimore City; and on August the first, 1889, he again subscribed for sixty-nine thousand shares more of the common stock to be paid for with other lots or parcels of land situated in Baltimore, and by a transfer of twenty-two thousand five hundred shares of the capital stock of the Maryland Central Railway Company, and nineteen thousand nine hundred and fifty shares of the capital stock of the Penn Anthracite Coal Company. These two subscription agreements entitled Miller to the whole issue of the preferred stock and to one hundred and forty-nine thousand out of the total one hundred and fifty thousand shares of the common, stock of the Transportation and Terminal Company. Twelve thousand eight hundred shares of the common stock were delivered to him or to his order. Without pausing at this point to refer to other details and transactions, we come to the period when *428Miller began operations to induce the plaintiffs to subscribe for the preferred and the common stock of the concern. A prospectus was prepared and a copy of it was forwarded by Miller on January the thirty-first, 1890, to Gustav Lindenthal, who had been connected with the enterprise as civil engineer, and who had had frequent interviews with both Miller and Gilmor, the president, respecting the disposition of the company’s stock. This prospectus was sent by Miller in a letter where he says, “ I also enclose a statement of the affairs of the Transportation and Terminal Company of Baltimore City. I need not repeat to you how desirable for the purpose mentioned in our late conversation it is to secure from fifty thousand to one hundred thousand dollars, and your kind offices in this direction will be very highly appreciated by several of our best friends.” The statement or prospectus thus enclosed was intended to be shown to Mr. Du Puy, a friend of Lindenthal, and a person who had been solicited to purchase from the company some of its preferred stock. This prospectus set forth, first, the names of the directors of the Transportation and Terminal Company as follows: John Gill, President Mercantile Trust and Deposit Company, Baltimore, Md.; James Sloan, Jr., President Farmers and Merchants’ National Bank, Baltimore, Md.; George S. Brown, of Alexander Brown & Sons, Baltimore; J. Swan Frick, attorney at law, Baltimore, Md.; William Gilmor President Maryland Central Railway Company, Baltimore, Md.;. Samuel Rea, Vice-President Maryland Central Railway Company, Baltimore, Md.; George M. Jewett, President Deer Creek and Susquehanna Railroad Company, Glennville, Md.; T. M. Logan, New York City, Samuel Thomas, New York City.” William Gilmor, president; John H. Bryant, vice-president; J. G. Case, secretary. Secondly, a statement that “ the company was chartered under the laws of Maryland, in December, 1888, and owns the following property : 27,000 shares, $ 100 par value, Maryland Central Railway Company, the authorized capital of which is 30,000 *429shares; 4,000 shares, $50 par value, Deer Creek-and Susquehanna Railroad Company, being two-thirds of the stock issued; 19,500 shares, $100 par value, of the stock of the Penn Anthracite Coal Co.; 1,500 shares, $100 par value, of the Maryland Construction Company of Baltimore City; extensive railroad terminal properties and buildings at North avenue, Baltimore.” It then gave a statement of the company’s annual income, which it represented to be one million two hundred and ninety thousand dollars. This was followed by representations which we transcribe in full, as follows:
“ The Penn Anthracite Coal Company owns 2,700 acres of the best character of anthracite coals, situated in a body at Mt. Carmel, in Northumberland and Columbia Counties, Pennsylvania. The contracts between this company and a mining company, guarantee the payments of royalties which will annually net a minimum of $150,000 and may be double that amount.
“ The contracts between the mining company and the Terminal Company for the marketing of coal guarantee, also, a minimum profit of $250,000.
“ Through the' operations of the Baltimore Belt Railroad Company the Terminal Company’s properties at North avenue will produce a minimum rental of $100,000 from their use by the Baltimore and Ohio, the Maryland Central and other railroad companies using the Belt Railroad.
“ Through the operations of the Maryland Construction Company, 60% of the stock of which is owned by the Terminal Company, $1,500,000 of the first preferred stock of the Baltimore Belt Railroad Company becomes the. property of the Terminal Company; this stock is a 6 % dividend payer, the income to provide which is guaranteed by the contracts between the Baltimore Belt Railroad Company, the Baltimore and Ohio Railroad Company and the Maryland Central Railway Company.
“ The Belt Railroad Company’s preferred stock alone provides for the 6% “guaranteed” dividend on the preferred *430stock, issu.e of the Terminal Company, which issue, limited to 15,000 shares ($xoo par), with its 6% perpetual, accumulative annual dividends, is secui'ed under the Maryland laws as a first mortgage lien on all the company’s assets now and hereafter acquired, thereby making this stock an investment security.
“ The ‘ Maryland Construction Company,’ being the contractor for the building and completion of the ‘ Belt ’ Railroad, expects a cash profit therefrom, sixty per centum of which the Terminal Company receives, this being estimated as sufficient to pay dividends on the first preferred stock during the construction of the ‘ Belt Line ;’ but the royalties from the mining of the coal on the Penn Anthracite Coal Company’s property commence immediately, these alone being sufficient to provide for the first preferred stock interest.”
On February the sixth, 1890, William Gilmor wrote in his official capacity as president of the Transportation and Terminal Company to Lindenthal, a letter from which the following extracts are taken:
“ Dear Mr. Lindenthal: In the present additional allotment of our syndicate affairs, your proportion would be one thousand (1,000) shares of preferred stock, $100,000 par value, and one thousand (1,000) shares of common stock, on the same terms to the promoters as before, $75,000 for the block as above, with the pifivilege, at the expiration of one year from date, to return the preferred stock and receive therefor the $75,000, with interest. The 1,000 shares of common stock remaining in your hands as the profit on your ..share in the syndicate, the par value whereof is $100,000.
“ If you are, perhaps, not able now to take the entire block, you are at liberty to have some friend, acceptable to us, join you. Kindly advise me as to your decision at the earliest date.
“ As our Belt Line contracts with the B. & O. have been approved and the passage of the city ordinance is assured, *431we must proceed promptly to complete the purchase of the right of way and station properties.
“ You are aware the Belt bonds have been placed with the ‘ Browns. ’ Thus we are in good shape now for future operations, and should lose no time in carrying forward our part of the project.”
Relying with implicit confidence on the truth of the representations made in the prospectus, and trusting to the assurances given by Gilmor in the above letter of February the sixth, Mr. Du Puy agreed to purchase from the Transportation and Terminal Company eight hundred shares of preferred stock and 800 shares of common stock, for which he delivered to Lindenthal two checks, each for thirty thousand dollars, and each bearing date February the twentieth. Seven days later two receipts, each one acknowledging the receipt of thirty thousand dollars in payment for four hundred shares of preferred stock and four hundred shares of common stock, were signed by Gilmor, as president, and in each receipt it was stipulated that “ the holder of said stock shall have the privilege to return after one year from date the said 400 shares of said first preferred stock, and to receive therefor from the said company thirty thousand ($30,000) dollars and six per cent, interest, after deducting the amount of dividends paid by the company on said shares, and to retain the 400 shares of common stock of said company.” Not one cent of this sixty thousand dollars was paid to the Transportation and Terminal Company or ever went into its treasury. One check passed into the possession of Gilmor, and was deposited to his' individual credit. After he had deducted ten thousand dollars to pay himself a debt due to him by Miller, he gave his own checks to Miller for the residue. The other thirty thousand dollar check was turned over by Miller to Samuel Rea, who, after paying himself four thousand dollars for four months salary as vice-president of the Maryland Central Railway Company, and after paying something over ten thousand dollars to a contractor for work on the Maryland *432Central Railway, turned the balance over to Miller. This disposition of the money was unknown to Du Puy. It is simply impossible to read these letters and receipts to which we have referred, without giving credence to that part of the testimony of Lindenthal and Du Puy wherein they both unequivocally assert that they never imagined the stock purchased with the proceeds of the two thirty thousand dollar checks was the property of Miller. They both unquestionably believed the representations made to Lindenthal, that the stock belonged to the Transportation and Terminal Company, and was being sold for its uses and benefit, and especially for the purchase of terminal facilities in Baltimore. The pretext that Mr. Gilmor signed by inadvertence the receipts in his official capacity instead of individually, finds no support outside of his own declaration, and that declaration is neutralized by his letter of February the sixth, wherein he made in almost the identical language used in the receipts, the statement with respect to the repurchase by the company of the preferred stock at the end of one year. Besides, it is not perceived what Gilmor could possibly have had to do with signing any receipts for this sixty thousand dollars, if the parties to the transaction understood that Du Puy was purchasing stock that actually belonged to Miller. And to clinch the matter Miller, himself, as late as. August the twenty-eighth, 1890, wrote to Lindenthal that he, Miller, would take and pay for the preferred stock referred to in the letter of William Gilmor, president, dated February the sixth, “ if the Transportation and Terminal Company shall refuse or neglect to comply with their engagements in the premises.”
Whether a deliberate scheme to deceive and to entrap the credulous and unsuspecting had been devised by Miller .upon a large and imposing scale, and had, either actively or through culpable inattention or inexcusable indifference to consequences, been furthered or aided by others connected with the Transportation and Terminal Company, it is not material to inquire; but that such a scheme was ulti*433mately developed, is too obvious to admit of discussion. The prospectus prepared by Miller, the active and reckless promoter and founder of the enterprise, was false in almost every particular. Of the five prominent and widely known business men named as directors of the Transportation and Terminal Company not one occupied that position, and out of the whole list of seven none but Gilmor and Rea were in fact connected with the undertaking. The Transportation and Terminal Company did not own twenty-seven thousand shares of the Maryland Central Railway Company’s stock ; nor fifteen hundred shares of the Maryland Construction Company’s stock ; nor an interest in the Belt Railroad Company, though the prospectus flatly alleged that the Transportation and Terminal Company “ owns ” those shares. And the statement that one million five hundred thousand dollars of the first preferred stock of the Baltimore Belt Railroad Company became the property of the Terminal Company, and that the Belt Railroad Company’s preferred stock alone provides for the six per cent. “ guaranteed ” dividend on the preferred stock issue of the Terminal Company was without the semblance or shadow of truth. ■ The “ six per cent, perpetual, accumulative, annual dividend * * * * secured under the Maryland laws as a first mortgage lien on all the company’s assets now and hereafter acquired,” was a pure fabrication devoid of the faintest prospect or the remotest possibility of a realization.
The stock ledger of the Terminal Company shows that seven thousand five hundred shares of preferred stock were disposed of to sundry individuals, but the record does not •disclose the amount received therefor. • If the sales were made at the same figures charged Du Puy, nearly half a million of dollars were realized; and if realized doubtless went into the pockets of the enterprising and speculative promoters. Having secured all the money that was obtainable, Miller and the Terminal Company’s officers turned their attention to the project of dismantling the company of whatever assets it had and of then winding it up. This *434feature of the case is most astounding. In the vigorous language of one of the distinguished counsel for the appellants,." it dignifies these transactions to call them frauds.”
One of the avowed objects of the pooling company was by acquiring the majority of the stock of the Penn Anthracite Coal Company to control the latter’s shipments and business. The construction of the Deer Creek and Susquehanna Railroad to the coal fields of Pennsylvania was a part of the general plan, and the evidence indicates that those coal fields gave promise of being the most valuable assets of the concern. Now, Miller by his subscription contract of August the first, 1889, had agreed to place in the Terminal Company a controlling interest in the stock of this coal company, and to that extent to give a tangible value to the shares of preferred stock. But when the scheme of dismantling began, the very first step taken by the directors of the Terminal Company at the instance of Gilmor and upon the request of Miller, was to cancel this subscription on August the sixteenth, 1890, just six months after Du Puy had paid his .sixty thousand dollars of actual cash. Miller was thus relieved from his obligation to assign the Penn Anthracite Coal Company’s stock to the Terminal Company, and the only consideration for this action was Miller’s forbearing to take sixty-six thousand five hundred shares of the common stock which he had previously agreed to take. As by this arrangement one of the chief sources from which there was ever any prospect of value accruing to the pool company’s stock was deliberately cut off, the objects of the company became, as was claimed, materially changed. Accordingly, on November the eighth, 1890, the president, William Gilmor, made to the board of directors the following statement: “ I have had considerable .talk with the parties interested in the affairs of this company, and it seems desirable, as the purposes for which the company was originally formed have been in some respects materially changed, that we had better take some action and appoint a committee to discuss with stockholders and parties interested, some *435plan of winding up the affairs of the company.” A committee of three, including the president, was thereupon appointed “ to confer with parties in interest, and counsel, as to the advisability of adjusting, settling and winding up the affairs of this company.” On the fourth of December the committee reported that “ in order to settle and adjust the indebtedness of this company, as well as to properly relieve it from its obligations, we deem it advisable for this company to make, execute and deliver a deed of trust to some suitable trustee.” It was then resolved “ that the affairs of the Transportation and Terminal Company of Baltimore City be wound up, and the assets and property of said corporation be sold and disposed of and the proceeds distributed according to law to those entitled thereto, and a deed executed for these purposes, with the necessary legal formalities, unto Winfield J. Taylor, as trustee.” On the same-day, December the fourth, the Terminal Company executed a formal deed of trust. On the very next day Taylor, who,, in a report filed in Circuit Court No. 2, on December the fifth, stated under oath that he had been appointed w to wind up the affairs of this corporation,” entered into an agreement in writing with Miller wherein it was stipulated, subject to ratification by the Court, that Taylor as trustee of the Terminal Company would deliver and quit-claim to Miller the two thousand one hundred shares of the Maryland Central Railway Company’s stock and the four thousand shares of the Deer Creek and Susquehanna Railroad Company’s shares, and release him from any and all further payments of money, stocks, bonds, securities or property whatsover on account of his, Miller’s subscription to the Terminal Company’s stock, provided Miller would, in consideration of such delivery, quitclaim and release, assign to Taylor, the trustee, eleven thousand shares of the preferred stock of the Terminal and would relinquish his claim to any further shares of common stock beyond the twenty thousand shares heretofore agreed to be issued to him. In his report to the Court on the sixth of December, the trustee stated that this arrangement had the *436approval of a majority in value of the creditors of the Terminal Company and a majority of its stockholders. In a moment we shall see who the creditors were. The stockholders, other than the preferred ones, were Miller and the directors — the latter holding but a few shares. Upon the representations made in this ex parte report, Circuit Court No. 2 ratified the agreement between Miller and Taylor, and as a consequence Miller was released from his obligation to deliver to the Terminal Company the shares of stock of the Maryland Central Railway and of the Deer Creek and Susquehanna Railroad, which he had bound himself to deliver, and the Transportation Company ,got in exchange nothing but its own preferred stock, which had been diminished in value to the precise extent that the surrendered shares in these other companies had any appreciable worth. This was a step in the declared scheme to wind up the -affairs of the company in the interest of the parties who had selected the trustee; but it was not a step that would ever have been taken had the design of the directors and their trustee been to realize whatever the assets would fairly bring and then in good faith distribute them to the creditors, if any they were. This proceeding was unlawful, but indefensible as it is, it is by no means as reprehensible as the acts to which we are now about to allude. Whilst it is perfectly well settled that a corporation in failing circumstances may make an assignment for the benefit of its creditors, State v. Bank of Md., 6 G. & J. 205; Merrick v. Bank, 8 Gill, 59; yet this is quite different from an attempt to wind up and dissolve a corporation and to destroy its existence under the pretext of merely paying its creditors. It is the object of an act that determines its character. Iff then, the objecfiof the directors of the Terminal Company was, as stated by them in the resolution which they passed ■on December the fourth, to wind up the affairs of the company, their proceeding was illegal; because the mode pointed out by the statutes to effect that end was not pursued and no other one could be substituted. The Code, Art. 23, *437sec. 264 et seq. prescribes in detail the method to be followed in the formal winding up of a corporation. It is only-necessary to say that in this instance the method therein provided was not observed, either in form or substance. If, then, the design was in fact to wind up the concern, the attempt was abortive and illegal. If, on the other hand, the design was, under the cloak of a deed of trust, to accomplish the same end, then also was the proceeding illegal; because, no matter what the form of the proceeding if the ultimate and ulterior purpose were forbidden to be accomplished in that particular way, the means employed to bring about the unlawful result would, in consequence of the unlawfulness of the result, themselves be unlawful. But if, passing by the declared intent of the deed as evidenced by the resolution we have quoted, we concede that the deed was in fact and was designed to be a deed of trust such as a corporation in failing circumstances may lawfully make, its validity, like the validity of every other deed of the same character must depend on the good faith of both the grantor and the trustee. If the deed does not in terms hinder or delay creditors, then it is valid whatever may have been intent of the grantor, unless the trustee becomes implicated in the fraud. It is only where the trustee does become implicated in the grantor’s fraud that a deed regular on its face can be made to hinder and delay creditors; and in such a case the deed is void. Ferrall v. Farnen, 67 Md. 76. We come then to inquire whether the trustee was involved in and connected with the fraud which . incontestibjy influenced, under the dominion of Miller, the officers of the Terminal Company in making the deed of •trust.
Such an inquiry is, to some extent, of a metaphysical character, because it involves an investigation into an undisclosed and deliberately concealed mental design. A fraudulent intent unexecuted is a mere mental concept. It is intangible. When executed it is generally not susceptible of proof otherwise than as extrinsic, visible acts which owe *438their origin to it, indicate its antecedent or coincident existence. You cannot look into and see the hidden processes of the intellect; but as no rational creature does a deliberate act without some motive or design, you may, through the act when done and through all its attendant surroundings, deduce or discover the intent with which it was performed. In no other way can the motives of human conduct be fathomed or exposed, unless at the moment an act is done its purpose is truthfully declared by the actor himself. No power can act without an object as to the terms of its action, and as a cause that must specify that action; for all acts are specified, determined by their object. Even the will cannot elicit an act of free choice which concerns no object at all. Hence the act of an intelligent agent that concerns no formal object at all is inconceivable — it is nothing. Necessarily, then, an act which has been done by an intelligent agent had an object when it was done and that object must be traced back, to be discovered, through the act itself and through the surroundings which co-ordinate with it. Now, we have seen from their own recorded declarations what the design of the officers and directors of the Terminal Company was. Did Taylor participate therein ? He was conferred with about the execution of the deed of trust and was evidently familiar with the condition of the company’s affairs. On the very day that the resolution was passed authorizing the winding up of the company the deed of trust to Taylor was executed. It was filed for record the following morning and thereupon the petition herein-before alluded to praying for permission to return to Miller the stock, already described, was filed by Taylor and was acted on at his instance by the Court. This haste showed, considerable familiarity on the part of Taylor with the subject and indicates a preconcerted arrangement between him and Miller, who obviously controlled the directors, to strip the company of much of its apparent assets. After the completion of this transaction no steps appear to have been taken by the trustee until the seventh day of - February, *4391891. On that day Taylor filed a report of sales, wherein he reported that he had sold at private sale the lots of ground conveyed by Miller to the Terminal Company in payment for stock as stated in a former part of this opinion; and that Thomas H. Blick was the purchaser for the total sum of one hundred and twenty-one thousand, twelve dollars and thirty-three cents. The report declared that the purchaser, Blick, will pay “ in money the sum of thirty-five thousand, twelve dollars and thirty-three cents, in three payments ***** he will assume from date and pay the liens now existing upon the property,” and the liens are then set forth and described. Now, the truth is that Blick, who was only a clerk in the office of William Gilmor, President of the Baltimore and Lehigh Railroad Company, though he signed the report of sales, never did purchase the property and never was financially able to do so. He testified that Taylor and Gilmor called on him and that Gilmor stated that “ they desired me to take charge of some property which they wished to deed to me, and desired me to hold it until such time as they should ask for a re-transfer, and I think Winfield Taylor remarked to me that it was a large purchase. I at once said to him, ‘ I am not purchasing propertyhe said, ‘ all right, Blick, the purchase money will be provided and you can just take the deed of this property, which will not involve you in any way, and it will be an accommodation to the company, they will make all the payments ; as an employee, of course, I felt disposed to accommodate them, and I remarked to them at the time, ‘ Gentlemen, this property is an elephant, and I do not buy any elephants. They said that was all right, and I took the property with the understanding that I was to deed it to them whenever they wished. I told them the only trouble was that in the event of my death they might get tied up in some way.” Further on he was asked, “was it ever intended between you and Hauseman and Taylor and Gilmor that you should pay the amount of money which you undertook to pay by this con*440tract?” And he answered, “ On the contrary, they assured me that I should not pay it, and should not be required to pay it.” On the ninth day of April, 1891, Taylor conveyed this property to Blick, and in the deed stated that " Blick hath fully paid the purchase money agreed by him to be paid.” This statement was absolutely without foundation. It was never intended that Blick should pay, and in point of fact he never did pay a single cent of purchase money. On April the twenty-fifth, Blick, at the request of the real purchasers, conveyed a portion of the property pretended to have been sold to him, to Moses H. Hauseman, the general solicitor of the Terminal Company, for the expressed consideration of five dollars and other good and valuable considerations ; and on the seventh of September following, Blick conveyed to the same grantee others of said lots for a like expressed consideration; and on the same date he conveyed to the Baltimore and Lehigh Railroad Company, of which Gilmor was president, the residue of the property so purporting to have been bought from Taylor. The consideration mentioned in the deed to the Lehigh Railroad Company was thirteen thousand seven hundred and twenty-three dollars. Not one cent of this sum ever went into the hands of Blick. On the sixth of April the trustee procured an auditor’s report to be ratified.. In that report he was charged with the whole pretended purchase money, viz., $121,012.33, when in fact he had received none of it. He was allowed $9,680.98 commissions, as though he had collected the entire proceeds of sale ; and the net balance was distributed in partial payment of the claims filed by Moses H. Hauseman, the Maryland Central Railroad Company (the predecessor of the Baltimore and Lehigh) and Winfield J. Taylor. These three were all the creditors of the Terminal Company. These claims are said to constitute the considerations for the subsequent conveyance made by Blick; and this audit is said to demonstrate that the Terminal Company was insolvent. Without making particular allusion to the conveyances which followed, it is sufficient to say that *441this property, which is called in the prospectus the terminal property, got into the hands of the very parties who, under antecedent contracts, were designed ultimately to acquire it. The trustee, whilst having full commissions allowed to himself so as to indicate an apparent insolvency of the Terminal Company, did not claim and was not paid his commissions and his audited fee, but only about one thousand dollars, or less than one-tenth of the whole. Upon the basis that he received only about one thousand dollars, the Terminal Company could have paid in full the three claims filed against it and would not have shown an apparent insolvency. Thus by the acts of the trustee the assets of the company were gotten rid of; its property was sold under a purely fictitious sale, and eventually got into the hands of parties who were designed to have it; and the trustee deliberately relinquished his commissions because, as he says, he thought the parties interested would make this up to him in some other way.
It is simply impossible, on looking dispassionately into these occurrences and tracing them back to their origin, to avoid the conclusion that the results reached were the identical results, intended to be reached when the resolution to appoint a trustee was adopted; and it is equally impossible to hold that these results could have been brought about as originally designed to be accomplished, without the active and willing co-operation and assent of the trustee. Circuit Court No. 2 was misled into ratifying a sale, which, instead of being a sale in fact, was a mere sham ; and this the trustee knew and was instrumental in having done. If he imposed upon the Court he could not have been acting innocently ; and as the ultimate outcome of all that he did was to bring to pass, under the outward forms and semblance of law, precisely the things which the directors by their prior determination intended should be done and done through the instrumentality of a trustee, his intent — the color and character of his intent — in doing what he did cannot be mistaken. He was obviously a perfectly willing *442instrument to put into the shape and appearance intended the plan or scheme agreed upon. On no other possible hypothesis can his actions throughout be explained. On that hypothesis his conduct is consistent.
(Decided January 9th 1896.)
We have, then, illegal conduct, fraudulent acts and u/tra vires proceedings; and a Court of Equity is asked by the persons who have been victimized to appoint a receiver who may rip open all these actions. Can it refuse to grant relief? If it is powerless to do so, not only would the law be open to grave reproach for inefficiency, but serious wrongs would go unredressed and fraud of a stupendous character would escape and go unrebuked. It is not for us to say what particular assets or property a receiver can, when appointed, recover. It is enough for the purposes of this case for us to be able to see from the record that wrong and fraud have been perpetrated, and that this is an eminently fit case for the appointment of a receiver to unmask and rip open whatever is not beyond the reach of successful assault.
We shall, therefore, reverse the decree below which dismissed the bill, and remand the cause for further proceedings.

Decree reversed with costs and cause remanded for further proceedings.

Subsequently a motion for a re-argument was made and overruled.
Bryan, J.,
delivered the following opinion, agreeing to the overruling of the motion for re-argument, but dissenting from the opinion of the Court on the question of fraud.
I wish to express my views on the charges of fraud which are made in the bill of complaint. To do this in a satisfactory manner, it will be necessary to take a general view of the circumstances which have occasioned this controversy.
*443The Transportation and Terminal Company was chartered in December eighteen hundred and eighty-eight. It embraced in its scope a great many objects which are set forth in detail in the charter. The number of shares was fixed at one hundred and fifty thousand, and the par value of each share was one hundred dollars. The operations of this corporation were projected on a very large scale; contemplating the control and management of the Baltimore Belt Railroad Company, the Maryland Central Railway Company, the Deer Creek and Susquehanna Railroad Company, the York and Peach Bottom Railway Company, and also the acquisition of a large number of shares of the Penn Anthracite Coal Company and other corporations. This enterprise was supposed to offer good prospects of great profits to those who would embark in it; but like many similar undertakings it came to a disastrous issue.
It is not surprising that persons, who have risked their money in a speculation and have lost, should find fault with those who had the management of it. They very frequently vent their displeasure by wholesale charges of fraud and misconduct. But when such questions are presented for investigation in a Court of Justice, they must be sustained by proof. I will consider the testimony on this subject. Much of it is irrelevant; much of it hearsay; much of it is brought out by leading questions frequently repeated against the protest of counsel; and a very large portion of it cpmes from a witness incompetent to testify. The two principal witnesses for the plaintiffs are Herbert Du Puy and Lindenthal. In all points affecting the charges against the defendants the testimony of Du Puy is entirely hearsay ; he knows nothing whatever about it, except what he says was told him by Lindenthal. On page .forty-five of the record he says in answer to a cross-interrogatory: “I have had nothing to do with any one else outside of Mr. Lindenthal and the counsel in the case.” On page sixty-eight, in speaking of William Gilmor in answer to a cross-interrogatory, he says: “ He is the only officer I know ; I *444have never had any correspondence with any of them.” On pages sixty-nine and seventy, when asked upon what information and belief he based some of the most offensive charges of fraud, he says: “I decline to state.” On these occasions he was instructed by his counsel not to answer. On page seventy a cross-interrogatory was propounded to him in this form: "You spoke in your testimony of an option being given you by a Mr. John Henry Millerand he answered: “ I didn’t; I never had anything to do with Miller; never saw him and never saw a letter from him; didn’t know him at all.” When Lindenthal is called as a witness the defendant’s counsel examined him on his voir dire. This is what took place : “ Defendant’s counsel desires to ask the witness the following questions: Q. Do you believe in the existence of a Supreme Being?
A. I have the right to affirm. (Counsel for plaintiffs objects to the question.) (Counsel for defendants says that he is examining the witness on his voir dire, to see whether or not he is competent.)
Q. Do you believe in the existence of a Supreme Being ?
(Counsel for plaintiffs renews his objection.) The witness does not answer.
Q. Do you believe or not in a future state of rewards and punishments ? The witness does not answer. (Defendant’s counsel objects to the swearing of the witness and the taking of his testimony and renews his general objection to this whole proceeding as being irregular and void.”) The witness was then permitted to affirm. The charges brought against the personal integrity of Gilmor and Miller rest on the testimony of these witnesses. The thirty-sixth article of the Declaration of Rights makes it necessary for the qualification of a witness that he shall believe in the existence of God, and that under His dispensation he will be morally accountable for his acts, and be rewarded or punished therefor in this world or the world to come. Here is a witness, who when put to the question fails in the most important requisite of competency, and is sustained by coun*445sel in seeking to introduce his testimony in the case. I am aware that many of the modern authorities object to the examination of a witness on his voir dire as to his religious belief. Yet in 2 Taylor on Evidence, page 1201, it is said that the “ witness may be interrogated in respect to his religious belief, either before he is sworn at all, or after he has been sworn on the voir dire, or even, as it wouid seem, after having been sworn in the cause.” And this Court in Arnd v. Amling, 53 Maryland, p. 199, in commenting oh this passage from Taylor, says that “ the inquiry into the competency of the witness, being preliminary and not final, conducted by the Court to ascertain the condition of the witness’s mind in a matter of creed, the mode of proceeding was discretionaiy with the Judge, if not contrary to law.” The question of practice is hardly worth considering in its bearing on this case, especially as no exception to the evidence has been filed in the cause in the manner required by the rules of practice. An insensibility to the obligations of an oath is imputed to the witness, and when formally interrogated as to his supposed moral deficiency he, by the advice of counsel conducting the examination, stands mute. And the great mass of the impeaching testimony is derived from this witness and another, who has learned from him by hearsay what he has to say. But I think that it would not be just to the defendants if this case should be decided merely on the failure of proof. There is other evidence which should be considered. On the day of the organization of the Terminal Company, John Henry Miller submitted an offer to subscribe for eighty thousand shares of its common stock, and to pay for it by the conveyance of certain leasehold property in the city of Baltimore, at the corner of Oak street and North avenue, and by the delivery of a moneyed consideration. The proposition was, that on the payment of one thousand dollars the Terminal Company should issue to him ten thousand shares of full paid common stock ; sixty-five thousand shares of said stock when Miller should deliver the deeds of conveyance *446for the leasehold property free' of all liens, except the ground rent, and five thousand shares when paid for ip cash at the rate of a hundred dollars a share. On the same day he made a proposition to subscribe for fifteen thousand shares of the first preferred stock of the Terminal Company which he offered to pay for by assigning shares of the Maryland Central Railway Company; of the Deer Creek and Susquehanna Railroad Company; and of the York and Peach Bottom Railway Company. Miller’s proposition was not acted on by the Terminal Company until the first day of the following August. On that day he offered to subscribe for sixty-nine thousand other shares, and offered to modify his former proposition in some respects. He offered to assign to the Terminal Company twenty-two thousand shares of the Maryland Central Railway Company, nineteen thousand five hundred shares of the Penn Anthracite Coal Company, and also to convey to it certain real estate lying at the intersection of North avenue and Oak street (in addition to the tract embraced in the former proposition;) also five hundred of the general mortgage gold bonds .of the Maryland Central Railway Company, in lieu -of all amounts previously agreed to be paid by him in cash; also to deliver in exchange for the York and Peach Bottom stock three thousand additional shares of the stock of the Maryland Central Railway; and also to deliver first mortgage bonds of the Deer Creek and Susquehanna Railroad to the par value of one hundred and fifty thousand dollars, in consideration that the Terminal Company would assume the balances due and to become due by him for the purchase of the real estate just mentioned. On this first day of August, eighteen hundred eighty-nine, the Terminal Company at a general meeting of the stockholders accepted' Miller’s proposition for stock. After these proceedings the president of the company resigned, and William Gilmor was elected in his place. The Honorable John K, Cowen was, at the same meeting, elected general counsel, and he is one of the counsel for defendants in this case. At a later date the gentlemen *447whose names appeared in the paper designated a prospectus agreed to become directors. Although' it has been maintained that they were never directors yet the evidence shows that they consented to serve. Some of this evidence was brought out by the complainant’s counsel in response to direct questions on examination in chief (Record page 237); and the rest is offered by the defendant (Record pages 266 and 270.) And all of it is entirely uncontradicted ; although an attempt to disprove it was made by the plaintiff in a rigid examination of Case, one of his own witnesses. It is testified that in point of fact they did not serve as directors, because of troubles which had occurred affecting the company.
At first every one connected with this enterprise seems to have had great confidence in its success. During the years eighteen hundred and eighty-nine and eighteen hundred and ninety, the Maryland Central Railway was in operation with the connecting railroad in Pennsylvania, between Baltimore and York; and the extension of new lines to the property of the Anthracite Coal Company was also actively urged forward. Gustave Lindenthal was the consulting engineer of the Maryland Central Railway and its extensions.
He made an elaborate report on the revenue, which might be reasonably expected from this source, and set forth the advantages and value of the line in the most flattering terms. He also wrote to John Henry Miller a carefully and elaborately prepared letter giving his views on the subject. In January eighteen hundred and ninety a contract was made between the Baltimore and Ohio Railroad Company, The Belt Railroad Company and The Maryland Central Railway Company, by which The Maryland Central system acquired the right to use the Belt Railroad and B. & O. terminals, in the city of Baltimore, for all traffic, including passengers, &c., for delivery in Baltimore and at tidewater points. Whilst matters bore this aspect, Lindenthal, being fully acquainted with the condition of the Ter*448minal Company and its prospects, and holding intimate relations with Miller, made proposals to Du Puy on the subject of investing money in the enterprise.
He impressed Du Puy with a very favorable opinion of the scheme; and he states that he showed him a map of the line which he had located, and gave him all the information which he himself possessed. The result of his dealings was that Du Puy authorized him to obtain for him eight hundred shares of the preferred, and eight hundred shares of the common stock at the price of sixty thousand dollars. He states in his testimony that it was a personal matter which he had arranged with Du Puy (Record p. 257 ;) and he so informed Miller by letter dated Feby. nth, eighteen hundred and ninety (Record p. 158), and he requested that the certficates should be made out in his own name. The stock undoubtedly belonged to Miller, the negotiation for the purchase of it was made with him, and the checks in payment for it were sent to Jhim by Lindenthal. He says in his answer that he sold it to Lindenthal; and he reiterates this statement when testifying as a witness for the plaintiffs. Gilmor testifies that as Miller had no bank account in Baltimore, he placed one of the checks in bank for Miller’s accommodation, and after reserving ten thousand dollars of the amount in payment of a debt due to him by Miller, he paid over the balance to him. It may be asked why should the president have signed the receipts for the stock in his official name. It should be remembered that each of the receipts contained an agreement that the holder of four hundred shares of common stock and four hundred shares of preferred stock, should, after the expiration one year, have the privilege of •returning the preferred stock, and receiving thirty thousand dollars from the Terminal Company while he kept the common stock. This was a valuable right attached to the stock; and it might also be of advantage to the company in case the stock should be enhanced in value. It was also just to the holder, because this privilege was *449■one of the conditions of sale, and Lindenthal desired to have th® company’s written assent to the agreement to take the stock on the terms mentioned. Gilmor testifies that the advantage to the company was the motive which induced him to sign it. (Record, page 264.) On cross-examination, he testified that when the receipt was laid before him, he was busy with some railroad matters, and it was stated to be the request of Lindenthal, and he signed it inadvertently; meaning, as I suppose, that he signed it without giving much attention to the matter. In this connection we must bear in mind that in his letter of February 6th, 1890, to Lindenthal, in speaking of the “ allotment of our syndicate affairs,” Gilmor stated to him that at the expiration of one year he would have the privilege of returning a thousand shares of preferred stock and receiving seventy-five thousand dollars, "while he’ kept possession of a thousand shares of a common stock as the profit of his shares in the syndicate. (Record, page 205.) And Miller, under date of August, 1890, writes to Lindenthal that if the Terminal Company should refuse •or neglect to comply with this engagement that he (Miller' would take and pay for the preferred stock on the same terms. All through this record we see it clearly evident ■that Lindenthal was a member of a syndicate actively engaged in promoting this enterprise, and of course expecting to reap large profits from its success. He was as well acquainted with its resources and prospects as any one connected with it. He was in close intercourse with Miller, and his consultations were exclusively with him. He wrote with his own hand what he called a “ sample letter” and •enclosed it to Miller, telling him to word it as he thought best. This was prepared for the purpose of having it addressed to himself by Miller. In a letter dated January 31st, 1890, Miller enclosed to him a statement of the affairs of the Terminal Company. In this letter, speaking of the statement, he said: “In a few words it represents our pool or-syndicate into the treasury of which are now put, .and will hereafter be put the stocks and bonds of all the *450companies in the project.” This letter was not shown to Du Puy;. but, on the contrary, the statement was pinned to Gilmor’s letter of Feby. 6th, 1890, and put in Du Puy’s hands, without the necessary qualifying explanation. This statement is the original of Exhibit No. 2 filed with the bill, which has been alleged in the argument to have been fraudulently contrived to cheat and deceive. The evidence shows that this document was prepared by Miller and Lindenthal conjointly, and that some of the property was .in the possession of the Terminal Company; some had been contracted for, and that there was a purpose and expectation to acquire the rest. Gilmor had nothing to do with the. preparation of it, and had never seen it, and had no knowledge of any such paper until about the time'of the bringing of the suit. (Record, pages 266, 267, 231, 232.) Miller testifies that he does not know of any copies of this statement being sent out. (Record, p. 232.) This speculation terminated very disastrously. It is impossible to suppose that every reasonable man would not know that although it might present prospects for great gain, yet there was also liability to considerable loss. It seems to have been defeated by disputes and dissensions regarding the Anthracite Coal Company. It is irrelevant to investigate the merits of the quarrel which proved to be so ruinous. Failure and disaster do not, however, imply fraud and misconduct. There may have been oversanguine anticipations, injudicious management and unwise proceedings. But in considering the results of such causes, let us ponder the calm and wise words of the Supreme Court of the United States : “ The law does not hold one responsible for the extravagant notions he may entertain of the value of property dependent upon its future successful exploitation, or the result of future enterprises; nor for expressing them to one acquainted with its general character and condition. How could an overestimate in such a case be shown? Other estimates would be equally conjectural. The law does not fasten responsibility upon one for expressions of opinion as to matters in their, nature contingent *451and uncertain. Such opinions will probably be as variant as the individuals' who give them utterance. A statement of an opinion assigning a certain value to property like a mine or a quarry not yet opened is not to be pronounced fraudulent because the property upon subsequent development may prove to be worthless; nor is it to be pronounced honest because the property may turn out of much higher value.” Gordon v. Butler, 105 United States, 557. Mr. Gilmor is in my opinion undoubtedly entitled to be acquitted of the charges which have been made against him. And I do not think that the evidence affords just reason to condemn Mr. Miller.
The sale of the property of the Terminal Company was' under the control of Taylor, the trustee. It cannot be imputed to him as a fault that he sold to Blick, a man unable to pay the purchase money; if he was representing-persons who were able to pay. In such case the agent would act for the principal; and no one would have any reason to complain, provided the principal should fulfill the-undertaking in his behalf.
The auditor’s report shows that the money was furnished, and distributed to the creditors of the corporation. In point of fact the settlement was in this wise; the claim for the purchase money was settled by being set off against debts due to the purchasers by the corporation. The subsequent-transactions relating to the exchange of stock for securities by Miller should be investigated in a future proceeding. This Court cannot in this case pass any decree which will settle and adjust the rights involved in these transfers, and give redress if any should be found to be due. It will injure no one to let these questions abide the result of such steps as the receiver, to be hereafter appointed, may be advised to take.
Lindenthal and Du Puy have made common cause in this-controversy; although Lindenthal has not become a party to the suit. They represent stock for which they paid seventy-five thousand dollars. So far as the record shows, *452there is no complaint from any other stockholder, and there is no other stock involved in this controversy.
Filed March 27th, 1896.