Court Opinion

ID: 7898308
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:53:51.430114+00
Date Added: 2024-06-11T16:32:09.367898
License: Public Domain

Miller, J.,
delivered the following separate, and, in part, dissenting opinion:
The several appeals in this case were taken from an order of the Court below passed on the 20th of August, 1890, which ratified account D and directed the fund in Court to he applied accordingly. A motion to dismiss the appeals has been made, founded on the alleged ground that they were not taken within two months from the date of the final order or decree in the case. But the appeals are within time, if the order of the 20th of August is to he treated as such final order or decree. In support of the motion it has been contended that the previous order of the 10th of July was the final and appealable order. Several accounts had been stated by. the auditor, viz., account A stated under instructions of complainants’ solicitors, and accounts B and C under instructions of defendants’ solicitors. The case was then *554argued upon exceptions to these several accounts filed on both sides, and the learned Judge on the 10th of July delivered an opinion in which he definitively decided upon all the claims presented, and approved account A “as correct in principle,” and in all other respects, with the exception that it did not allow the counsel fees of Messrs. Walsh, Poe and Carter, as set forth in account C; and on the same day passed an order- rejecting all the accounts, including account A, and again referred the case to the auditor to state an account in accordance with his opinion. This order, of course, simplj’- required the auditor to restate account A, allowing these counsel fees which that account had not allowed. Without doubt an appeal could have been taken from this order by parties thereby aggrieved, under section 25, Art. 5, of the Code, because it was an order “determining a question of right betxoeen the parties, and directing an account to be stated on the principle of such determination;” but they were not obliged to take such appeal at the risk of having this order stand irrevocable, because the succeeding section (sec. 26) of the same article provides that “on appeal from a final decree or order, all previous orders which may have been passed in the cause shall be open for review in the Court of Appeals, unless an appeal under the preceding section shall have been previously taken from such orders.” The parties to whom distribution was made under account A could not have received their money under the order of the 10th of July, nor until account D had been ratified by the order of the 20th of August. It seems to us clear that the latter order is the final decree or order contemplated by section 26, Art. 5, of the Code, and that an apjoeal from it opens for review .the order of the 10th of July, and everything decided by the opinion on which that order is founded. The motion to dismiss is therefore overruled.
The fund in Court for distribution is the proceeds of a judgment for $75,000 against the Baltimore and Ohio *555Railroad Company, recovered on the 20th of March, 1885, by William A. Brydon, in the Superior Court of Baltimore City, for breach of a coal contract between him and the company dated the 17th of May, 1875. Before and at the time this contract was made, and when it was alleged to have been broken, and ever since, Brydon was, and has been the president of the “North Branch Company,” a mining corporation, incorporated by the Act of 1867, ch. 309, and owned, and still owns a majority, by a few shares, of the stock of this company. It was out of the mines of this company that the coal to fulfil this contract was to be, and was, in fact, actually taken so long as the contract was in force. Two days before the verdict against the railroad company was rendered, Brydon gave an order to enter the suit to the use of Henry G-. Davis & Co., the proceeds of the judgment to be recovered therein to be applied, according to certain agreements between him and Davis & Co., and it was accordingly so entered. By these agreements all the proceeds of the judgment were divided between Brydon and Davis & Co. Upon exceptions taken at the trial, the railroad company appealed, but the judgment against them was ultimately affirmed by this Court. In July, 1886, before the judgment was paid, G-emmell and Sinclair, who were minority stockholders, but owners of nearly one-half of the stock of the North Branch Company, filed their bill in the present case against Brydon, Davis & Co., the North Branch Company, and the railroad company, in behalf of themselves,- and of “all creditors of the North Branch Company who may choose to come in and contribute to the exjDenses of the suit.” The bill charges that the contract between Brydon and the railroad company was in equity the contract of the North Branch Company, and that Brydon was acting fraudulently in claiming it, as his own individual contract; that Davis & Go. were aiding him in the attempt to. consummate this fraud *556and were not bona fide assignees of the judgment. The prayer of the hill is for an injunction to restrain the collection of the judgment, to have the entry to the use of Davis & Oo. stricken out, and the judgment declared to he the property of the North Branch Company. An injunction restraining the collection of the judgment was granted, and, upon motion to dissolve, testimony covering more than seven hundred printed, folio pages was taken. In all this Brydon testified and insisted that the contract was rightfully his own; that he owned all the stock of the North Branch Company; and that Gemmell and Sinclair, though holders of certificates of stock, were not bona fide owners of the same for value The Court below, however, refused to dissolve the injunction, and passed an order continuing the same till final hearing.- Prom that order the defendants appealed, and when the case was heard in this Court, we found, after a careful examination of this large mass of testimony, that it presented Brydon in a very unfavorable light, and showed that Davis & Co. were not bond fide assignees of the judgment without notice. Our opinion in that case is reported in 70 Md., 358.
In that case the order continuing the injunction was affirmed, and the cause was remanded for further proceedings. When the case reached the Court below under this remand, Gemmell and Sinclair filed an amended and supplemental hill, in which they charged that Brydon was largely indebted to the North Branch Company; that the company was practically insolvent, and prayed for a decree that it he wound up, its property sold, its assets collected and distributed among the parties entitled thereto, and that a receiver be appointed for that purpose. It would have been a grave mistake if the Court below had undertaken to grant the relief thus prayed; for 1 take it to he clear that an equity Court in Baltimore City has no jurisdiction to wind up and dis*557solve a corporation doing business, and having its principal office located in Garrett County. Gode, Art. 28, secs. 264 to 269. But the Court has not attempted to exercise such jurisdiction. On the contrary, after answers to the amended and supplemental bill, and after much testimony had been taken, the Court, on the 28th of September, 1889, ordered anddecreedthatthejudgment in question was the property of the North Branch Company and not the individual property of Brydon; that the papers be referred to the' auditor to state an account distributing the judgment, with interest to the parties entitled thereto; and that notice he given to all creditors of the North Branch Company to file their claims, properly authenticated, on or before the first day of November following. This notice was duly given, and the case then went to the auditor. Creditors came in, filed their claims, and a large amount of testimony was taken. Accounts were stated to which exceptions were filed on both sides, and the result is the order’ratifying account D, from which these appeals are taken. Now, in all this, I cannot perceive that the Court below has in any wise transgressed its legitimate jurisdiction. It has simply taken possession of this judgment against the railroad company, has had the money due upon it brought into Court, and has distributed it to those whom it decided were entitled thereto. It has not dissolved the North Branch Company, nor wound ujj its affairs, or sold any of its property, or appointed a receiver for that purpose, nor has it, so far as I can see, forfeited or confiscated any of its stock. In making distribution the Court has taken into consideration the indebtedness of' Brydon to the North Branch Company, but in doing this, it has done only what the defendants concede it had the right to do, for in their answer to the amended and supplemental hill, they state that “the claims which the plaintiffs allege said company has against Brydon and the said *558Henry Gr. Davis & Go. are all matters properly cognizable in this case, and can be prosecuted by the plaintiffs as well as by a receiver appointed by the Court.” This has accordingly been done, and account D is the result reached by the Court below. In form the account is rather more complicated than auditor’s accounts usually are, but the necessities of the case required this, and I find no difficulty in understanding it.
But it has been argued that as soon as the Court decided that the judgment belonged to the North Branch Company, it should have turned the money over to that corporation to be disposed of by its board of directors. This, without doubt, would have been the proper course in an ordinary case where the corporation is regularly conducted, where directors are annually elected bjr the stockholders, who faithfully and honestly discharge their duties in attending to its business affairs. But here is a case where the president owns or controls a majority of the stock, and can therefore elect whom he chooses to be his co-directors, where there has been neither a stockholders nor directors’ meeting for more than fourteen years; where Brydon, the president, has been charged with an attempt to cheat and defraud the company and the minority stockholders in relation to the contract for breach of which this judgment was recovered; and where throughout this long litigation the judgment both of the Court below and of this Court has been against him on that question. In our opinion in the former appeal, strong comments were made upon his conduct, and that of his co-directors, and we decided that Gremmell and Sinclair, the minority stockholders, who undoubtedly have an interest in the proceeds of this judgment, had the right to file this bill without any demand or refusal on the part of the corporate authorities to do so, because the president and directors of the corporation were themselves guilty of the wrong complained of; and it would *559be against the plainest principles of justice to permit the perpetrators of the wrong to conduct a litigation against themselves. As stated, the hill was filed by these minority stockholders in behalf of themselves, and all creditors of the North Branch Company, not only against Brydon, Davis & Co., and the railroad company, the judgment debtor, but against the North Branch Company itself, so that all parties interested were made parties to the suit. But besides this, in our opinion affirming the order granting the preliminary injunction, and remanding the cause for further proceedings upon the motion to dissolve, we declined to pass upon the question of counsel fees, because it was “ a matter to be considered upon final hearing, when all the creditors shall have had an opportunity of coming in and being heard,” 70 Md., 879. This was a plain direction to the Court below in its further proceedings, to give notice to creditors, and to go on and distribute the fund. This has been done, notice to creditors has been given, and they have come in and filed their .claims, and the fund has been brought into Court and distributed. Now, for this Court, after its decision on the former appeal and its plain direction to the Court below, when the fund is rightfully in that Court, and when all parties interested in its distribution have come in and are before the Court, to arrest the proceedings at this stage of the case, and say that the money must be delivered over to the North Branch Company, which means to Brydon and his co-directors, to be distributed by them, or by direction of the Circuit Court for Garrett County in a new suit in which all this tedious litigation would have to be renewed, would amount to an intolerable outrage upon the administration of justice. I think the Court below was entirely right in refusing to do this, and in holding on to, and making distribution of the fund.
It has also been argued that the Court below was in error in allowing Gemmeil and Sinclair to plead limita*560tions to the claims filed by Davis & Co., Brydon, and other parties, because they are minority stockholders in whom no such right is vested, and the discretion to interpose this plea is reposed exclusively in the corporation itself. On this point, my own view is that the ruling of the Court below is correct. The right of the minority stockholders to file this bill in their own names, and to share in the distribution of this judgment, has been already adjudicated in their favor, and I do not think that corporation law has anything to do with this case. The general rule undoubtedly is that, whenever there is a fund in Court for distribution, every one entitled to share therein, has the right to plead limitations against the claims of other parties seeking a share of the same fund, and I see no reason why Gemmell and Sinclair should in this case be deprived of that right. A majority of the Court, however, are of a different opinion,- and think the right to plead limitations belongs solely to the corporation itself, and cannot be exercised by the minority stockholders. In passing, therefore, upon the validity of the claims rejected in account D, they must be considered without reference to the plea of limitations.
Yiewed in this light, I have given a careful consideration to each and all of the rejected claims. We are all of opinion there was error in rejecting what is' called the Gouverneur claim. What is that claim ? Brydon and Gemmell bought on joint account from the Gouverneurs, father and son, the property which, on being afterwards transferred to the North Branch Company, constituted its whole capital, and was the basis on which all its stock Avas issued. The deed therefor was taken in Brydon’s name, and he gave a mortgage on the property to secure a balance of purchase money, amounting to $3600. A controversy arose between the Gouverneurs as to who was entitled to this money, which was settled by this Court *561in its decision in Brydon vs. Campbell and Gouverneur, 40 Md., 331. The result of that litigation was a decree directing Brydon to pay the money to the two Gouverneurs in certain proportions. This decree was not paid, and execution upon it was threatened and ordered. Davis & Go. then came forward, advanced the money, paid the Gouverneurs, and had the decree entered -to their use. This is the claim, and we find nothing in the record to impeach its justness or fairness. It has not been paid, and we regard the decree founded on and enforcing this mortgage, as binding upon all the property conveyed to Brydon by the Gouverneurs, and decide that it must be paid out of the proceeds of this judgment. Its payment will enure as much to the benefit of Gemmell and Sinclair, as stockholders, as it will to that of Brydon, because the property of the company will he thereby relieved of an incumbrance.
A claim has been set up by Davis & Go. for money advanced by them to Brydon for payment of witnesses and other expenses, in the prosecution of his suit against the railroad company. Passing by other objections to it, it is sufficient to say I do not find this claim adequately proved. The witness, Blackistone, who was a clerk for Davis & Go., from 1874 to March, 1887, appears to have simply copied and made out the account on which this claim is based from the hooks of Davis & Co. He did not even make all the entries himself. Some were made by another clerk, who is not produced as a witness. He appears in most cases to have put down the entries as directed by Mr. Henry G. Davis, and seems to have had no personal knowledge for what purpose the money, consisting in some cases and largely of checks and cash items paid to Brydon, was advanced or applied. He says Senator Davis would know about that. On many points, and especially as to how the accounts viere kept in the books, his testimony is confused and conflicting. The *562books themselves were not put in evidence so as to afford a proper basis for the cross-examination of the witness, nor did Mr. Henry Gf. Davis himself appear as a witness in the case. I cannot take this mere copy of the account from these books made by this witness, under these circumstances, as sufficient proof of the claim. And here I may remark, that in so far as this, or any other claim in the case purports to be supported, in whole or in part, by the testimony of Brydon, I am compelled to say he has been so thoroughly discredited as a.witness in the former record, that I can place no reliance upon his testimony, nor upon any statements of accounts made out by him.
The same objection as to want of sufficient proof applies also to the claim of Davis & Co. for taxes paid for Brydon. The North Branch Company was, of course, responsible only for taxes on its own property, and not for those upon Brydon's own house and adjacent land. But in this claim no such distinction is made. No tax receipts by the collectors are given, and no statement from the county commissioners' office as to how much and what property was assessed on their books against the North Branch Company is .furnished; and besides Blackistone in his testimony says-he presumes the taxes thus paid by Davis & Co. included the taxes on Brydon’s house and property. The claim is utterly void of adequate proof, and is but one of the many efforts made to hold the North Branch Company and the minority stockholders responsible for the individual debts of Brydon, because he was .President of that company, and owned and controlled a majority of its stock. In fact, the appellants set up'the preposterous claim that this small mining corporation, costing less than $5,000, which had been in active operation for but little more than two years, during which time it had mined and sold more than 40,000 tons of coal at a good profit, had in this *563short period incurred debts to such an amount that this judgment of $75,000 was only sufficient to pay a dividend on their claims. This is the result of their account B, and they aslc a Court of equity to ratify it.
In regard to the coal mined hy Brydon and sold to the railroad company and others, I think no injustice has been done hy charging him with the amount shown hy the proof, for which the coal was actually sold, and crediting him with the cost of mining the same as testified to hy himself in his suit against the railroad company. No other satisfactory proof on this subject has been adduced, and I see no other mode of arriving at a satisfactory'conclusion ujaon the subject.
I have examined with the utmost care each of the other rejected claims, and can allow none of them. All of them are either deficient in adequate and satisfactory proof, or are not shown to he just claims against the North Branch Company, though they may he such against Brydon individually. Some of the parties who trusted him and loaned him money seem to have regarded him and the North Branch Company as one, and took his individual notes as well as those signed hy him as President indiscriminately. It cannot he expected that I should protract this opinion hy going into the details of each claim. I must content myself with saying that I find no error in rejecting these claims, and that it is my opinion that the claims allowed in account D, to which no exceptions have been filed, with the Gouverneur claim which we have said must he allowed, include every well proved, just and honest claim that has been filed against the North Branch Company. ‘
This brings me to the claims allowed in account D, to which exceptions have been taken. These are the counsel fees allowed, and as to them I confess to have encountered much difficulty. I deem it proper to say that I do not look with approval upon the growing practice in the *564profession for counsel to undertake cases upon contingent fees, and then to come into Court, and hy petition, either hy themselves or through their clients, ask the Judges to allow the same. As a general rule, it is far better that compensation for professional services should be agreed upon and settled between counsel and client, without the intervention of the Court. Courts ought never to be troubled with such controversies, except in cases where direct suits are brought by counsel against clients to recover for professional services rendered, where the value of such services can be submitted, upon evidence, to the arbitrament of a jury. The relation of the Bench to the Bar is such that it becomes' an extremely delicate matter for a Judge, at the request of counsel or client, to decide upon the value of the services of the former in any given case; and whenever it is done it almost invariably provokes unfavorable comment, and not unfrequently casts merited suspicion and reproach upon the administration of justice. Some of the most able and honorable lawyers in the country rarely undertake a case on a contingent fee, and never where the client is able to pay them for their services. Gases, however, may sometimes occur in which, without the allowance of such fees, justice might be defeated, and redress denied to the poor and the oppressed, and it was upon this ground that the Courts first allowed the payment of such fees. Afterwards the validity of such fees was generally recognized, and it has been so recognized hy our predecessors in this Court. To such an extent has this doctrine been carried that at the present time it is not unusual for Courts to allow and enforce the payment of counsel fees in many other cases, especially where they are to be paid out of a fund in Court which counsel by their services have contributed to produce. I must therefore deal with the case before me according to the law as I find it established, and not *565upon my own individual opinion, however strong, as to what it ought to he.
Messrs. Walsh, Poe and Carter were counsel for Bryffon in his suit against the railroad company. They made contracts with him for contingent fees of a certain percentage out of the amount to be recovered. If there was proof that their services were rendered to Brydon with the hnoiuledge that he was prosecuting the suit for his own individual benefit, and with the intent and purpose of cheating and defrauding the North Branch Company and his co-stockholders, Gemmell and Sinclair, out of any share in the judgment to be recovered, their claim for compensation could not for a moment be listened to by a Court of equity. But there is no proof in the record to show they had such knowledge, and the high character and eminence in their profession of these gentlemen forbid even a suspicion on that subject. They acted honestly and faithfully in the prosecution of the suit, and, without doubt, their services were mainly instrumental in seeming the judgment for this large sum of which Gemmell and Sinclair are now seeking to take advantage. I think it would be inequitable for them to do this without allowing these counsel their fees. The claims for these allowances are not made by petitions filed by their client, according to the usual practice, but by petitions filed by themselves in their own names; and it is only by treating them as bona fide assignees of their proportional parts of the judgment, as specified in the contracts for their contingent fees, that relief can be granted them. I think they are entitled to be so treated, and that the ruling of the Court allowing their claims should be affirmed.
Messrs. Marbury and Cross have been and are counsel in this case for Gemmell and Sinclair, and have aided them in their effort to rescue the judgment from the control of Brydon and Davis & Go. They also had con*566tingent fees dependent upon their success, but not for any-specified percentage. They have succeeded, and the only objection made to their claim is that the amount allowed is unreasonable and excessive. Here 1 am confronted with the delicate and unpleasant duty of passing judgment upon the value of the professional services of these gentlemen. The litigation has lasted more than five years, and has been hotly contested at every step. A very large and unusual amount of testimony has been taken, and their labors have been constant and exhausting. I have the emphatic endorsement of the claim by the learned Judge of the Court beloxv, who says in his opinion that the labor performed by these counsel in his Court “has been simply immense, largely done, too, under the eyes of the Court,;” and he overruled the objection that the amount claimed is excessive. I have also the endorsement of the claim as reasonable and just by two of the most eminent lawyers in Baltimore City and in the State. ' In this Court I have personal knowledge of the elaborate and exhaustive briefs filed by them in both appeals, and of the ability and zeal displayed by them in argument. Under these circumstances my own opinion is that the judgment of the Court below allowing this claim ought to be affirmed, and that the claim itself, though large, is neither unreasonable nor excessive. A majority of the Court, however, are of opinion these counsel should be allowed the sum of $7,000 each out of the fund in Court, and that for any additional compensation they must look to their clients. Such is therefore the judgment of this Court upon this question.
(Filed 24th March, 1891.)