Court Opinion

ID: 7900080
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:54:53.634995+00
Date Added: 2024-06-11T16:32:13.771121
License: Public Domain

McSherry, C. J.,
delivered the opinion of the Court.
There are four appeals in this record, and these cases with six others that await the determination of those now pending were in this Court on a former appeal; the decision being reported in 84 Md. 456. One of the questions involved is common to the ten cases—these four and the six still remaining in the Court below—but the other question is confined to three of the appeals now before us. We will first dispose of the question arising in all the cases and in another opinion we will deal with the remaining subject of controversy. On the former appeals the precise point at issue was the ownership of a fund in Court. The fund had been brought into Court under a bill of interpleader. On the one hand the fund was claimed by the appellee Colden Rhind, and on the other by the appellants who, with others, were members of a syndicate which had been formed to purchase and float a large block of the four and a-half per cent. State bonds of South Carolina. The fund litigated over arose in this way: The syndicate selected the Baltimore Trust and Guarantee Company to be its agent in negotiating with the officials of South Carolina respecting the purchase of the bonds. By one of the provisions contained in each of the several subscription agreements signed by every member of the syndicate it was stipulated that two-thirds of the two and one quarter per cent, interest to mature on said bonds between January the first, and July the first, eighteen hundred and ninety-three, should be paid by the Trust Company to R. A. Lancaster and Company “ for syndicate expensesLancaster, himself a member of the syndicate and also the agent of Rhind in promoting the undertaking, represented to the other members of the syndicate that he would be entitled to only about five hundred dollars of this sum so set apart for “ syndicate expenses',’ and he intimated if he did not assert that the rest of the money *313was payable to parties in South Carolina ; though he solemnly and repeatedly declared that he did not know and did not wish to know who would receive it. At the time he made these statements he was fully aware of their utter falsity, for he then had in his possession a secret written agreement, signed by Rhind and himself, in which they stipulated to divide the sum so appropriated to syndicate expenses, between themselves in the proportion of two-thirds to Rhind and one-third to Lancaster. When the fund out of which the syndicate expenses were payable was received by the Trust Company, Lancaster drew his drafts thereon to the amount of twenty-firm thousand two hundred and fifty dollars in favor of Colden Rhind, and the latter, in performance of the secret agreement just alluded to at once indorsed them in blank without recourse and delivered them back to Lancaster, who procured the money thereon for his own use. When this fraudulent conduct was discovered many of the members of the syndicate insisted that the Trust Company should pay no more of the fund upon Lancaster’s drafts until the amount thus surreptitiously secured by Lancaster should be made up to the syndicate out of the residue of the fund devoted to syndicate expenses, so as to place these members of the syndicate more nearly upon an equality with their copartner Lancaster. Lancaster, however, drew three more drafts aggregating forty-eight thousand five hundred dollars, on the same fund in favor of Rhind. In this state of the conflicting claims to the fund the bill of interpleader was filed by the Trust Company. The Trust Company, though a member of the syndicate, disclaimed in its bill of complaint any interest in the fund of forty-eight thousand five hundred dollars still remaining in its hands as the residue of the amount specifically appropriated to syndicate expenses, and by the interpleader decree the members of the syndicate who claimed the fund were made plaintiffs and Rhind was made defendant. By the same decree the bill was dismissed as to Lancaster because he disavowed any title to the fund, having been pre*314viously paid by the proceeds of the drafts for twenty-five thousand two hundred and fifty dollars ; and it was adjudged as to some other of the defendants, who had failed to answer the bill, that they were not entitled to any part of the fund. The contest then proceeded between the remaining members of the syndicate and Rhind, and ultimately resulted in a decree which awarded the whole fund to the latter. An appeal was then taken to this Court and on January the fifth, 1897, the decree appealed from was wholly reversed. In that controversy Rhind based his claim to the fund on two grounds. First, that he was entitled to the entire forty-eight thousand five hundred dollars under the three drafts drawn by Lancaster on the Trust Company in his, Rhind’s favor ; and secondly, because though under the syndicate subscriptions signed by the various members of the syndicate, the fund was made payable to Lancaster, it was well understood and known by the members of the syndicate that the money was really payable to Rhind under his original contracts with the Governor of South Carolina.
We decided when these questions were presented on the former appeals that, under the contracts entered into between the Trust Company acting as the agent of the syndicate, and the State authorities of South Carolina, “ one ot the things which the members of the syndicate contracted to get, and one of the things that was to be their common property * * * was this six months’ interest. * * ” In other words, one of the things which was to be the common property of the syndicate was this very six months’ interest out of which the syndicate expenses were specifically payable. “The Trust Company,” we went on to say, “ was authorized to disburse in discharge of syndicate expenses from this common or partnership fund for the benefit of the whole syndicate, two-thirds.” * * In giving our reasons for the conclusion that the fund out of which the syndicate expenses were to be paid belonged to and was the property of the syndicate and not of Rhind, we proceeded *315to state that: “There being no reservation of this July coupon and no exception of it from the sale, but, on the contrary, the clearest manifestation of an intention that it should accompany and go with the bonds to which it was attached; when the bonds were sold to the syndicate the July coupon or interest was also sold, and the syndicate (the purchaser) through the Trust Company acquired title to the July interest. Under the individual subscriptions antecedently made, the proceeds of the July coupon thus acquired by the syndicate were impressed with a trust, and the Trust and Guarantee Company was authorized to disburse the fund for account of syndicate expenses and in a particularly designated way. Whatever the antecedent arrangements between Colden Rhind and the authorities of South Carolina may have been, they were obviously superseded by the contracts of January the nineteenth, and March the seventh, and no title to this interest passed to Rhind. Whatever claim he has or can assert to any part of this interest, whether the claim be preferred as commissions or as syndicate expenses, must now be made through the syndicate, and must be derived from and founded on the second clause of the individual subscription contracts which were the basis of the final transaction and of the actual purchases of January the nineteenth and (March the seventh, 1893.” It is perfectly obvious, therefore, that one of the propositions distinctly and flatly determined in the former appeals was, that the whole fund then in controversy—and the whole fund then in controversy included the identical part now in dispute—was a common or partnership fund and was the property of the syndicate and not the property of Rhind. We further held that as Rhind and Lancaster had entered into a fraudulent scheme to secure to Lancaster, one of the members of the syndicate, an advantage over the other members, he, Rhind, was answerable for the fraud and misrepresentations of his agent as well as for the fraud and want of frank dealing of which he and Lancaster, as promoters of the syndicate had been guilty; and that the fund *316payable to Rhind under the drafts and amounting to forty-eight thousand five hundred dollars, was liable to make good the injury done to the other members, to the extent of the secret and fraudulent profit secured to Lancaster. As the secret and fraudulent profit which Rhind had agreed to pay Lancaster was twenty-six thousand two hundred and fifty dollars or one-third of the whole seventy-eight thousand seven hundred and fifty dollars which constituted two-thirds of the July coupon on the total amount of bonds purchased, we further held that Rhind must pay to the syndicate out of whatever interest he had in the fund in Court the sum he participated in turning over, as an unlawful profit, to his confederate Lancaster under the pretext of applying it to syndicate expenses. But as Rhind held by assignments from some members of the syndicate transfers of their undivided interests in this reclaimed fund, it was stated in the opinion that he would be entitled to those assigned interests. As between Rhind and the syndicate, Rhind was entitled to no part of the twenty-six thousand two hundred and fifty dollars wrested from him; but Rhind, as assignee of some members of the syndicate, became the owner of the proportions which the assigning members would have taken upon a distribution of the fund, but for those assignments. These conclusions, reached after full arguments and upon mature reflection, irresistibly led to an entire and total reversal of the decree appealed from, and the causes were remanded to the lower Court for the passage of a new decree conforming to the opinion of this Court. When the record reached the Circuit Court of Baltimore City it was contended by Rhind that the shares of those members of the syndicate who had failed to answer the bill of interpleader, and who the decree of the lower Court had, in consequenee, adjudged to have no interest in the fund, belonged to him ; whilst the members of the syndicate who had made the contests and secured a reversal of the final decree, insisted that these lapsed or abandoned shares, as they are called, belonged to the syndicate and were divisible between themselves and *317Rhind upon the basis upon which the twenty-six thousand two hundred and fifty dollar fund was divisible—Rhind being entitled only in virtue of the assignments heretofore alluded to. In one view of the case there are five of these lapsed or abandoned shares aggregating six thousand eight hundred and thirty-eight dollars and thirty-six cents; in another view there are but four such shares, amounting to six thousand three hundred and forty-one dollars and seventy-two cents. Whether there are four or five lapsed or abandoned shares is the question we shall deal with in the next case. To whom do the funds representing the lapsed or abandoned shares actually belong—whatever their number may be, is the inquiry now involved. The Court below signed a decree on April the third, wherein by sec. 4 of paragraph V, it awarded the whole of the lapsed or abandoned shares to Rhind, and wherein by sec. 3 of paragraph V it rejected the claim of Heald & Company to participate in said fund wrested from Rhind by the former decree of this Court passed January the fifth, 1897. From the decree of April the third the pending appeals were taken.
The lapsed or abandoned shares, that is, the shares which would have belonged to the Trust Company and certain members who failed to answer the bill of interpleader, were not separate and distinct funds belonging distributively to these particular members of the syndicate; but they were parts of a common fund, the whole of which was the property of the syndicate, held for ultimate distribution amongst such of the members as should in due season make claim thereto. These so-called lapsed shares did not belong to Rhind, nor were they owned by Lancaster. They, together with the other shares, made up a common or partnership fund which was divisible into as many properly apportioned parts as there might be rightful claimants. If the lapsed shares were fractions of an entire fund, the whole of which, undivided into parts belonged to the syndicate in common; then the failure of some of the members to claim the por*318tions that would have gone to them had they made claim thereto, obviously did not divert those portions from or divest them out of the syndicate and most certainly did not transfer them to Rhind ; but left them just where this Court’s decree declared them to be—that is, in the syndicate. The whole twenty-six thousand two hundred and fifty dollars being by reason of the fraudulent conduct of Lancaster and Rhind, syndicate assets, and not the separate apportioned assets of any particular member, and being in no sense the property of Rhind except in so far as he became the assignee of some of the members, Rhind could not possibly acquire a title to them by the mere failure of some of the members to demand what wmuld have been theirs had they seasonably claimed it. The controversy when it originated did not present the case of an interpleader between two parties where the funds belong to one or the other of them, and where one only asserts in the proceedings a claim and the other forbears to do so, but permits a decree to go against himself by default. The fallacy of the appellee’s argument consists in assuming that this is such a case. The contest was between an individual and a quasi copartnerhip. The individual was declared not to be entitled to the fund, but the syndicate or copartnership was decreed to be the owner thereof. The mere fact that some of the members of that partnership did not claim any part of its assets did not dis-entitle the partnership to the fund or deprive the other members of the right to appropriate what would, upon a distribution of the syndicate’s assets, have gone to the defaulting members had they demanded it. The failure of some members of the syndicate to claim an interest in the fund did not and manifestly could not deprive the syndicate of that fund or of any part of that fund. The lapsed or abandoned shares were no more segregated from the total fund than were the shares of the contesting members. There had been no apportionment when the bill of interpleader was filed, nor did the decree finally passed on that bill make any *319division. The decree of this Court filed January fifth, 1897, did not divide the fund into shares, but declared the entire fund, that is, the twenty-six thousand two hundred and fifty dollars, to be the property of the syndicate ; and whilst the opinion stated that the members of the syndicate would be entitled to the fund in a named ratio, that rule of apportionment by no means excluded a participation by the contesting members in the lapsed or abandoned shares. The prior contestation was over the whole fund—Rhind on the one hand claiming all of it, and the members of the syndicate claiming it, on the other hand, as the property of the syndicate : and that issue was finally concluded by a decree which determined that Rhind owned none of the fund in virtue of either of the two grounds upon which he founded his title to the whole. That same decree further conclusively settled the fact that the syndicate owned the entire twenty-six thousand two hundred and fifty dollars, though Rhind under certain assignments and, therefore, through the syndicate, was conceded a portion of it. In a word, when reduced to its last analysis, the claim now made by Rhind is to fart of a fund, the zohole of which we heretofore decided belonged to some one else, and, therefore, that no part of it belonged to him in his own right. The ground upon which he asserts title to the fraction that he now claims is the identical ground that he relied on to support his disallowed claim to the whole fund. If that ground was untenable as to the whole fund it must be equally so as to every part of it. We are unable to see how there can be any logical escape from the conclusion that Rhind is not entitled, in his own right, to a fart of a fund, after we have deliberately determined that he had 110 interest whatever in the fund at all. If the whole includes all its parts and the whole has been adjudged to belong to the syndicate, then there has been a flat decision that Rhind is not entitled to any of the fund except by virtue of the assignments he holds. This being so it follows, of course, that section 4 of para*320graph V of the decree appealed from is erroneous and must be reversed.
(Decided June 23rd, 1897).
So much of the decree as has been appealed from, to-wit, see. ¿p of paragraph V is reversed with costs above and below, and the cause is hereby remanded for a netv decree in this particular, conforming to this opinion.