Court Opinion

ID: 7900288
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:55:00.52277+00
Date Added: 2024-06-11T16:32:13.576438
License: Public Domain

Roberts, J.,
delivered the opinion of the Court.
The appeal in this case is from a judgment of the Superior Court of Baltimore City. The facts are, that the Mary.land Agricultural Company of Baltimore City (the appellee here), was a corporate body, engaged in the sale of agricultural implements, &c., in said city. In the course of its business, it was unable to meet its obligations and was on the first of October, 1896, compelled to execute a deed of trust of all its property for the benefit of its creditors, without priority or preference. The deed is in the usual form, signed by the president and by the secretary of the company, with the corporate seal annexed. The property of the corporation consisted of a stock of agricultural implements and book accounts. The trustee, David P. Smelser, on the day of execution of the deed to him filed his bond, with the American Bonding and Trust Company of Baltimore City as the sole surety thereon, which bond was duly approved by the clerk of said Court, and thereafter upon the petition of the trustee, the Circuit Court No. 2 of Baltimore City assumed jurisdiction of the trust and proceeded to direct the proceedings of said trust. After the expiration of more than a month from, the execution of said deed the plaintiffs (the appellants here) who were creditors of the appellee company, issued an attachment and charged said company with having assigned and disposed of its property with intent to defraud its creditors and laid the attachment in the hands of the trustee in possession of the trust property. When the short note case against the appellee was tried, the indebtedness to the appellants was admitted, and judgment thereon was entered for the amount of such indebtedness. The attachment suit was then tried and contested and the Court held that there was no evidencé to sustain the attachment, and the appellants being called, took a non pros. After the execution of the deed in October, *4731896, the trustee sold such part of the stock at private sale from the store, as he could, and in, March, 1897, he sold the remainder of the stock at public auction, and employed Matthews and Kirkland, the garnishees, and appellees in this case, as his auctioneers. Before the proceeds of sales made by the garnishees had been turned over to Smelser, trustee, the appellants on the 18th of March, 1897, more than five months and a-half after the deed of trust had been executed, issued an attachment on said judgment and caused the same to be laid in the hands of said garnishees. So that from the first of October, 1896, to the 18th of March, 1897, the trustee had the title and undisputed possession of all the trust property and was engaged in the administration of his trust under the jurisdiction of the Circuit Court No. 2 of Baltimore City. The case was tried in the Superior Court of Baltimore City, and issue was joined on the plea of nulla bona. The Court instructed the jury that there was no evidence legally sufficient to sustain a verdict for the appellants, which was the effect of the prayer of the appellees granted by the Court, and refused to grant the three prayers of the appellants. The verdict and the judgment being in favor of the appellees, the plaintiffs have appealed.
The first exception in the record relates to the admissibility in evidence of the equity papers in the Circuit Court No. 2, where the trustee is administering his trust. It is difficult to conceive of any substantial objection to the admission of this proof, especially in view of the fact that the appellants deemed it necessary in support of their contention, to offer in evidence the deed, which was admitted without objection and read to the jury. The subsequent acts of the trustee, as shown by the proceedings in the equity suit pending in the Circuit Court No. 2, demonstrate very clearly the character of his conduct in dealing with the trust which he had assumed under said deed, and is strictly in accordance with fair dealing and a just regard for the rights of creditors. This Court, in Main & McKellip, garn. *474v. Lynch, 54 Md. 664, held that the subsequent acts of the trustee may be inquired into to sustain the allegation of fraud, then certainly the conduct of the trustee ’showing good faith in the discharge of his duties, becomes both material and pertinent. The appellants were not in any manner injured by the admission in evidence of the original equity papers instead of a certified copy, and they have failed to call our attention to any injury which has resulted in consequence of the admission of this evidence. Barton Coal Co. v. Cox, 39 Md. 1; Wyeth v. Walzl, 43 Md. 426; Hays v. Wells, 34 Md. 512. It is also contended that the original equity papers cannot be used as evidence unless accompanied with a transcript under seal of the docket entries in such case, as required by the Act of 1890, ch. 318. Whilst this is true, there is nothing in the record which tends to show that the provisions of the Act were not complied with in this respect. We think the Court committed no error in the admission of the equity papers, under the circumstances of this case.
The appellee’s prayer is substantially a demurrer to the evidence and its consideration will practically dispose of all the questions which arise in connection with the appellants’ three prayers. It is urged on the part of the appellants that the execution of the deed of trust under consideration here, was not authorized by the board of directors or by the stockholders of the Maryland Agricultural Company at a duly held meeting, after notice, either actual or constructive, of the time and place of such meeting, and that no formal resolution was passed directing the execution of said deed, which was therefore void and vested no title in the trustee. Whilst it is true that the testimony in the record fails to fully sustain all that the appellants contend is requisite to the proper execution of the deed, yet without considering in detail the objections which have been urged against it, we entertain no doubt as to the force and character of the proof which clearly establishes the fact that the directors and stockholders, resident as well as non-resi*475dent in this State, have expressly sanctioned the action of its officers in the execution of the assignment to Smelser, and from its date to the institution of this suit have fully ratified and acquiesced in its provisions. Certain of the creditors of the corporation have sought to obtain preferences in the payment of their claims by garnishing its property and assets, but nothing of a fraudulent character has been shown, in the conduct of the trustee, which would justify the slightest interference with the administration of his trust. 3 Beach on Private Corporations, sec. 866; Kleckner v. Turk, 45 Neb. 176, 63 N. W. Rept. 469; Johnson v. Gumbel, 19 So. Rep. 100. It has been very earnestly contended that not only has this corporation been guilty of irregularities in its formation, but equally in the management of its affairs, and that when the deed came to be executed but two of the five directors were present, one of whom was the president, the other the secretary of the corporation. They, however, were not the only interested parties present, but even though they were, the act which they performed if subsequently acquiesced .in by the other directors, or a majority of them, rendered the assignment, in all respects, as valid as if it had been made in pursuance of a resolution passed by the whole board of directors. It has been held in a very recent case, McElroy v. Minnesota Percheron Horse Co., 71 N. W. Rep. 652 (1897), that “ a contract for the sale of all the assets of the company, including real estate made by the president alone, was binding on the corporation, since all the powers of a corporation vested solely in the board of directors may be conferred by implication arising from the way the corporation has directed its affairs.” To the same effect are the following authorities: Jones v. Williams, 139 Mo. 1, 39 S. W. Rep. 486; Smith v. Smith, 62 Ill. 493; Wabash R. R. Co. v. Ham et al., 114 U. S. 594; Sherman v. Fitch, 98 Mass. 59. Judge Fowler delivering the opinion of this Court in Stokes v. Detrick, 75 Md. 263-4, says : “ While it is well settled that the directors of a corporation cannot ordinarily alone sell or convey the whole of its property, yet *476it is equally true that, if such an unauthorized transfer is made, it may be ratified by the assent of the stockholders. Morawetz on Corporations, secs. 523, 577. And such assent may be inferred from their failure to protest against and promptly condemn the unauthorized acts of the officers of the corporation. Fort Worth Publishing Co. v. Hitson & Reed, 80 Texas, 216 (14 S. W. Rep. 846); Sheldon H. B. Co. v. Eickmeyer, 90 N. Y. 614. In Kelsey v. The National Bank of Crawford Co., 69 Pa. St. 429, it is said : ‘ The law is well settled that a principal who neglects promptly to disavow the acts of his agent by which the latter has transcended his authority, makes the act his own, and the maxim which makes ratification equivalent to a precedent authority, is as predicable of ratification by a corporation as it is of a ratification by any other principal, and is equally to be presumed from the absence of dissent.’ Morawetz on Corporations, sec. 618; Ragland v. McFalls, 27 N. E. Rep. 75.” And again in Edelhoff et al. v. Horner & Miller Straw Goods Co. et al., 86 Md. 595, where a creditor replevied his goods -from the trustees under an assignment for the benefit of creditors, which the president of the corporation had mortgaged, without express authority, this Court held, that “ While it may be true as a general rule that ministerial officers of a corporation, without authority expressly conferred, or to be implied from previous conduct, cannot pledge the property of the corporation, yet when a mortgage of its chattels has been made by such officers for the purpose of securing funds to pay its debts and continue its business, and it receives the full benefit of the transaction, without objection being made, it will be presumed to have authorized or ratified the acts of its officers. ” The appellants themselves long after they had issued an attachment on original process and obtained judgment in the short note case as heretofore stated, seem to have lapsed into apparent acquiescence, and not until after the expiration of five months from the date of said deed and the trustee had so far proceeded with the settlement of his trust to the extent of having dis*477posed of all the trust property, did the appellants resort to any further effort to gain precedence in the payment of their claim. In an effort to nullify a deed of this character, it is incumbent upon the party instituting proceedings to take action within a reasonable time after the deed has been executed. Riley v. Carter and Aiken, Trustees, 76 Md. 612. It is not contended in this case that the deed to Smelser was made in bad faith to accomplish a fraudulent purpose, nor that he was a party to any collusion, sought to be practiced on the creditors to force a settlement with them. It is only sought to assail this assignment on purely technical grounds based upon the manner of preparing for and actually executing the deed. When a corporation or an individual makes an assignment of all its property in good faith, it does not hinder or delay its creditors, and when the deed contains no improper preferences, it violates no provision of the insolvent law. Riley v. Carter and Aiken, supra; Ferrall v. Farnen, 67 Md. 76; Luckemeyer v. Seltz, 61 Md. 313.
There yet remains to be disposed of a single other question raised in this Court without having been considered or passed upon in the Court below. We will, however, dispose of the same. It is contended that the trustee failed to give such a bond as is required by section 205, Art. 16 of the Code, to vest him with the title to the property which had been conveyed to him. The section referred to requires a bond with sureties to be approved by the clerk, &c. The trustee in giving bond in this case has used the American Bonding and Trust Company of Baltimore City as sole surety. By the Act of 1896, ch. 41, amending the charter of said company, it is provided by the seventh section that said company “ is empowered to insure the fidelity of persons holding places of trust or responsibility to or under any State, county, city, corporation, company, person or persons whatsoever, to become security for the faithful performance of any trust, office, duty, contract or agreement, and to supersede any judgment or to go upon any appeal *478or other bond ; and it is further authorized to become sole surety in all cases where, by law, two or more sureties are required; and it shall and may be lawful for any Court, Register, Clerk or other officer to approve said company as sole surety in all such cases.” The language of this section authorizes said company to become sole surety in all cases, where by law two or more are required, and further provides “ that it shall and may be lawful for-any Court, Register, Clerk or other officer to approve said company as sole surety in all such cases.” This statute, we think, authorizes the performance of such a duty by the Courts of this State, as requires of them that they take judicial notice of its provisions, and a statute containing such a clause is so far public as not to require it to.be offered in evidence to enable the Courts to take cognizance of it. It is well settled that Courts must take judicial notice of their own officers. Norvell v. McHenry, 1 Mich. 227. It follows, we think, that a statute authorizing the performance of certain duties devolving upon its officers, and equally upon itself, should receive judicial notice, especially where such duty relates to the regularity of its proceedings.
(Decided April 1st, 1898).
Finding no error in the rulings appealed from, the judgment will be affirmed with costs.

Judgment affirmed with costs.