Gephart v. Starrett

Bowie, J., delivered the opinion of the Court. This case arises under Art. 1 of the Public Local Laws of the State, title “Allegany County,” sub-title “Manufacturers and Miners.” Secs. 99 to 103. These sections enact, “that if any individual, association or body corporate engaged in mining or manufacturing in Allegany County, shall be indebted to the persons in their employ or to furnishers of any raw material, in the aggregate sum of $25, and shall neglect or refuse to pay the same for the space of thirty days, the Circuit Court for said county, or the Judge thereof in vacation, shall, upon the petition of the employés, or furnishers of raw material etc., appoint a receiver to take charge of the affairs of such individual, etc., with a view to their liquidation and settlement under the authority of the Court.” 2nd Code Pub. Loc. Laws, 28, 29. — 398 — “The defendant in said petition shall have aright to answer the same and deny the facts therein stated, and the issue shall be tried by the Court at the term to which such petition shall be presented, or at the next term of the Court, if the petition be filed in vacation; but no demurrer or plea in abatement shall be allowed, nor shall the same on any account be postponed.” Sec. 100, ibid. “ The receiver is required to give bond in a penalty, and with security approved by the Court or Judge and he shall be bound and held liable for every default, negligence or malfeasance in office.” Sec. 101. The receiver is required to take charge of all the personal estate of the debtor, to collect the evidences of debt due him, sell and dispose of, on such terms as the Court shall direct, the goods and • chattels, and to payoff and discharge the debts “pro rata,” and it is declared there shall be no priority or preference in the payment of such claims, and no attachment, execution, mortgage, &c., shall operate as a lien on said property to the prejudice of the employes, but the same shall be first fully paid, etc. The appellants, citizens of Allegany County, claiming to be creditors of one Larned & Hays, who carried on the business of manufacturing iron castings in the' City of Cumberland, as employés of said firm, filed their petition on the 4th of April, 1877, in the Circuit Court for Allegany County, as a Court of equity, alleging the indebtedness of said firm to them, in large sums, amounting to more then twenty-five dollars, which had been due more than thirty days; that the defendants were possessed of a large amount of personal property : that Larned had ■absconded and left the country, and Hays refused to take charge of and protect the property, so that it was in danger of being lost, etc., wherefore they prayed that a receiver be appointed, and summons issued for the defendants, pursuant to Art. 1, Code of Pub. Loc. Laws, secs. 99 to 103, etc. — 399 — On this petition the Circuit Court for Allegany County, on the sixth of April ensuing, passed an order appointing a receiver, directing them to sell, etc., and requiring him before proceeding to act, to give bond with a surety to be approved by the Court or the clerk thereof, conditioned for the faithful performance of the trust reposed in him. Subpoenas were ordered to be issued for the defendants, which being done, they were returned “ summoned ” as to Hays, “nonest” as to Earned. Hays filed his answer disclaiming all interest in the premises. The receiver filed his bond, with surety approved by the clerk. The receiver having taken possession and sold the property referred to in the petition, reported his proceedings to the Court on the 25th of May, which being referred to the auditor, an account was stated distributing the proceeds of sale “pro rata,” to which George Gephart, the appellant excepted. The exceptions to the auditor’s report are as follows, viz., 1st. That the property sold by the receiver was not the property of Earned, but the property of Gephart, the exceptant. 2nd. The fund in Court was not subject to distribution under its order, because the bond of the receiver was not approved by the Court or a Judge thereof, but by the clerk, and no notice appears to have been served on the defendant, Earned, of the filing of the petition. 3rd. Because the claims allowed by the auditor were not properly proven. These exceptions do not directly involve the question of jurisdiction, and it does not appear from the record any such question was raised below; the learned Judge who decided the case took up the exceptions and disposed of them seriatim, without alluding to the question of jurisdiction . The points made by the appellant’s brief are, that the proceedings are “ coram non,” because the provisions of — 400 — Art. 1, sec. 99, etc. of the Pub. Loc. Laws, confer a special jurisdiction on the Court, and the requirements of the law have not been strictly complied with, viz., 1st. That the proceeding should have been instituted in the “ Circuit Court,” as a Court of law and not as a “ Court of equity.” 2nd. That the proceedings were “ ex parte” and without notice. 3rd. The bond of the receiver was not approved by the Court or a Judge thereof. The principle upon which the first objection is founded is so generally recognized as to be almost elementary, and if well taken this objection would be decisive. The judicial power of the State is distributed by the Constitution among the Courts therein described as “ The Court of Appeals,” “ Circuit Court,” “Orphans’ Court,” etc. (Vide Constitution of Md., Art. IV, secs. 1 and 3.) When the Legislature imposes a judicial duty upon the “ Circuit Courts,” without other qualification, that duty is to be exercised according to its nature or character, by the “ Circuit Court” as a Court of law, or as a Court of equity. The nature of the duties imposed by Art. 1, sec. 99, of the Pub. Loc. Laws, on the Circuit Court of Allegany County, in relation to miners and manufacturers, was that of a Court of equity rather than a Court of law. The mode in which the proceeding was to be instituted, by petition rather than summons ; the summary powers to be ■ exercised ; the appointment of a Receiver, all indicate beyond doubt, that the Circuit Court, as a Court of equity, was the proper tribunal in which to initiate and conduct the proceedings. The practice, we believe, has been in accordance with this view. The case of Avery, et al. vs. Everett, Adm’r of Tough, was instituted in the Circuit Court for Allegany County, as a Court of equity, by a bill praying for an Injunction — 401 — and Receiver, and relief under the 1st Article of the Code of Pub. Loc. Laws, secs. 99 to 103. (Vide Everett vs. Avery, 19 Md., 136.) Although the cause was argued very iully by able counsel on each side, no objection was taken to the jurisdiction of the Court below, and the Court sustained the prayer of the complainants, which decree was affirmed in this Court after mature consideration, for the reasons assigned by the Judge below, in the opinion pronounced by him. In the case of Miller, et al. vs. The Cumberland Cotton Factory, instituted under the Act of 1847, ch. 228, a local law for Allegany County, containing almost identical provisions with those of the Code of Pub. Loc. Laws, the petition was filed in the Circuit Court for Allegany County, (as a Court of law,) it was urged on appeal to this Court, “ that these cases were properly cognizable on the equity side of the Court, but this Court held the petitioners were not entitled to their lien upon other grounds, and it was unnecessary to enquire whether the proceedings were on the equity or law side of the Court, or might be enforced under its general or special jurisdiction.” (Miller & Co. vs. Cumberland Cotton Factory, 26 Md., 478, 495.) The jurisdiction of the Court being, we think, unquestionable, the next inquiry is, whether the proceedings were regular. It must be conceded that the law required the Receiver’s bond to be approved by the Court or a Judge thereof, but that provision is not a condition precedent, to be complied with before the Court could act in the premises, but is clearly directory, and the subsequent action of the Judge, in correcting his error in the order of appointment, by approving the bond “ nunc pro tunc,” was clearly within his legal authority and cured every objection to which the bond was liable on-that account. The objection of want of notice to the defendant, Lamed, is not tenable. — 402 — (Decided January 11th, 1878.) The filing of the petition and issuing of the summons was constructive notice, statutory, if not actual notice. All our process against absent or absconding debtors and non-resident defendants is founded upon the same principle. The proceeding is “in rem” as well as in personam, constituting a quasi local Bankrupt Act. The law contemplates the Receiver shall take charge of the affairs of the defendants, with a view to their liquidation and settlement, under the authority of the Court. The' order of distribution is fixed by the Code in most imperative terms, “to each a pro rato proportion of his claim,” excluding all attachments, executions, mortgages, bonds, deeds, bills of sale, deeds of trust, or other lien, except mechanics' lien. The exceptant comes within the excluded class and cannot be admitted to the prejudice of the employes, without disregard to the plainest provisions of the Code of Pub. Loc. Laws. Pull proof of the claims having been made under, an order of the Court issuing a commission for that purpose, and the objections on that account withdrawn, the order of the Court ratifying the audit and overruling the exceptions of the appellant, is affirmed with costs to the appellees. Order affirmed.