Baltimore & Ohio Railroad v. Flaherty

Per Curiam. A majority of-the Judges who heard the argument of this case are of opinion that the order appealed against should be reversed, and that the petition of the appellee should be dismissed. We are of that opinion for two reasons : First. Because the Circuit Court of Baltimore City did not heretofore assume jurisdiction and control over the whole fund mentioned in the proceedings, but only over that portion thereof which belonged to the non-assigning members of the extinct Relief Association ; the other part of the — 105 — fund, assigned to the Railroad Company, and held by it in trust for the relief department, having been alluded to in the consolidated cases merely for the purpose of ascertaining the amount or proportion of the entire fund distributable to the non-assigning members. And, secondly, because the assets of the Baltimore and Ohio Railroad Company having gone into the hands of receivers appointed by the United States Court, the petitioner, if he has any standing whatever to claim the relief prayed for, must seek that relief in the tribunal that now has jurisdiction over the a'ssets of the Railroad Company, >and, of course, therefore, over the funds held or due by the company,.as trustee, to its. relief department. An opinion giving at length our reasons in support of these conclusions will be filed hereafter. (June 24, 1897). Roberts, J., delivered the opinion of the Court. From the views which we entertain of the various questions arising on this appeal and the conclusions to which we have arrived and heretofore indicated in th& per curiam opinion filed, it will not be necessary for us to do more than state briefly the reasons which have controlled us in arriving at the result announced. This Court has heretofore on three different occasions been called upon to consider and pass upon the conflicting interests and views of the members of the Relief Association and the appellant company. The cases will be found reported in 72 Md. 493; 77 Md. 566, and 79 Md. 442. This appeal is taken from an order of the Court entered on an intervening petition of the appellee filed in the consolidated cases, directing the appellant company as trustee to pay into Court on or before the 29th of January, 1897, to be deposited to the credit of the case, the sum of $390,273.04, subject to the further order of the Court, &c. The primary question which this appeal presents is, did the lower Court under the facts and pleadings in this case have the jurisdiction requisite to make the order appealed from ? We have already said that it did not. Without going into a detailed statement of the various — 106 — questions which have occupied the attention of this Court in the cases heretofore referred to, we think the Court below erred in assuming that it possessed jurisdiction of the case made by the appellee's petition by virtue and in consequence of the action and course of conduct of the appellant company, in the cases passed upon by this Court. To understand the question brought before us on this appeal, it will be necessary for us to make reference to some of the facts contained in the reported cases relating to this controversy. In 1888 the charter of the association was repealed. Just prior to this Act going into effect nineteen thousand and two hundred of the twenty thousand three hundred and sixty-five members of the association, in consideration of certain covenants made on the part of the Railroad Company, assigned in due form to the Baltimore and Ohio Railroad Company, in trust for the new relief department organized by it, all their interest in the funds of the Employees’ Relief Association. The obligations undertaken by the Railroad Company are set forth in .its agreement with the Relief Association, dated March the twenty-ninth, 1889 ; and amongst other things it expressly stipulated that if any member should refuse to join the new relief department, the value of his membership and interest in the old association should be ascertained by a competent actuary, and paid in money. Eleven hundred and sixty-five of the members did not make any assignment of their interests, and did not join the new relief department, and so became entitled to the surrender value of their interests in the old association. 79 Md. 444-5. Referring to this bill the Court below has said, “ The whole trust created by the agreement of March 29, 1889, was brought before the Court, although it is quite manifest that the occasion for doing so was the fact that some of the members of the old association had refused to become members of the new relief department, and it was necessary to have the aid of the Court in ascertaining their interests.” In the whole trust is included the obligations of the Railroad Company to the — 107 — 19,200 members of the old association who had assigned their interests °to the appellant company and become members of the department, and the company’s obligations to the relief department as an unincorporated association, as well as the obligations of the company to the 1,165 members who did not assign and who were named as defendants in the bill. We think it quite clear, from the language of the 6th section of the bill referred to, what the obligations were in the discharge of which the company sought the Court’s aid, and that they were its obligations to the dissenting members, and those only. The jurisdiction of the Court extends only to the rights of the parties before it, and no use of language in the bill can extend the jurisdiction to the relations between the plaintiff and parties not brought into Court under the bill, even though such parties be named as defendants. Here, no defendants are named except the 1,165 non-assigning members, and no process of any kind was ever prayed or issued against the assigning members of the relief department. This Court has said in Oliver v. Palmer, 1 x G. & J., 448-9, that, “It is a fundamental rule of equitable jurisprudence, to the universality of which the case before us forms not one of the exceptions, that where a bill is filed to affect a fund in which diffei'ent persons have an interest, all the persons interested therein must be made parties, nt finis sit litium, that a multiplicity of actions may be avoided.” Grier, Mills & Co. v. Stoller, 77 Fed. Rep. 1; Scott v. McNeal, 154 U. S. 34, 46; Reynolds v. Stockton, 140 U. S. 254. The appellant contends that the rights and obligations which existed between the appellant company and the 1,165 defendants, whose rights were passed upon in 77 Md. 566, were not created or determined by the agreement of March 29th, 1889, and had nothing to do with the regulations of the relief department. These rights and obligations arose as between the appellant company and said defendants by reason of the fact that the former had come into possession of the assets of the old association, in which the defend — 108 — ants as members of the association had each an equitable interest. It mattered not whether the company’s possession was lawful or unlawful, the simple fact of possession charged it with obligations to said defendants in reference to the property. But after a careful examination of the record of this appeal and of the appeals heretofore alluded to, we think it very clear that the relief department of the appellant company is an entirely distinct association from the Baltimore and Ohio Employees’ Relief Association and is composed of entirely separate and distinct members and it no where appeal's from the records of the three former appeals, which have been decided by this Court, that the lower Court has at anytime assumed jurisdiction and control over th e whole fund mentioned in the proceedings in this cause, but only over that portion of said fund which belonged to the non-assigning members of the extinct Employees’ Relief Association. The other part of the fund assigned to the appellant company and held in trust for the new relief department having been alluded to in the consolidated cases merely for the purpose of ascertaining the amount or proportion of the entire fund distributable to the non-assigning members. On the 29th of February, 1896, the appellant company passed into the hands of receivers appointed by the Circuit Court of the United States for the District of Maryland. The fourth paragraph of the order of said Court appointing said receivers reads as follows : “ That the said receivers be further fully authorized and instructed to continue the operation as heretofore, of the several features of the relief department of said defendant, in accordance with the regulations adopted by the president and directors of the said defendant for the government of same; to continue to collect, and receive, and to disburse the funds of said department in its several features, as provided by said regulations, and generally to fulfill and discharge all the duties and obligations of said defendant in connection with said reli ef department.” Mr. Smith in his recent work on ReR — 109 — eceiverships, sec. 7, p. 23, says,' “The primary and proximate effects that follow the appointment of a receiver are: The property, funds, or whatever maybe the subject-matter of the litigation that come to the hands of the receiver are in custodia legis, and being so, will not be permitted to be interfered with, either by the parties to the suit, strangers to the suit, or other Courts of co-ordinate jurisdiction.” Again the same author says, “ Neither will the Court permit its receiver to be sued or harrassed by litigation without its express permission, to be granted only in exceptional cases for judicious and special reasons. The Court first obtaining jurisdiction and appointing a receiver retains that jurisdiction, as a rule, for all purposes, settling and adjusting in the same suit, all conflicting interests of whatsoever nature between the parties that grow out of or relate to the subject-matter in controversy.” In Beverley v. Brooke, 4 Gratt. 187, the Court says, “ By the order of appointment the Court takes the whole subject into its own hands ; and ultimately disposes of all questions, whether legal or equitable, growing out of the proceeding.” To the same effect are Covell v. Heyman, 111 U. S. 176; Heidritter v. Elizabeth Oil Cloth Co., 112 U. S. 294; Leadville Coal Co. v. McCreery, 141 U. S. 475; Hyland v. The James Roy, 59 Fed. Rep. 784; Ga. R. Co. v. Atlanta & F. R. Co., 49 Fed. Rep. 608. The State and Federal Government, while they are distinct parts of a complete system, are each supreme within the limits of the authority confided to them ; each government is possessed of a judiciary power commensurate with its own objects and purposes, and partaking of its supreme authority; and the exercise of the judicial power in each is confided to the tribunals of the respective governments, and they can never come in conflict while they exercise only the authority which rightfully belongs to each. These tribunals are invested with the general as well as incidental powers necessary to the complete administratipn of justice. It is needless to pursue this inquiry further. If there was error in the passage, by the — 110 — Circuit Court of the United States, of the order appointing the receivers of the appellant company, there were wellrécognized methods by which that error could have been corrected; either by direct application to the Court which passed the order, or by an appeal to the appropriate tribunal to correct the error if any such there was. It is certainly not within the province or jurisdiction of this Court to supervise the conduct of the receivers, or to interfere in any way with the discharge by the Circuit Court of its important functions. That Court has taken jurisdiction in the premises, and the fourth paragraph of its order has clearly outlined its relation to and control over the relief department of the appellant; we fail to recognize any other consequence that could be reasonably expected to follow an affirmance of the order of the lower Court, than loss and disaster to the many whose interests are involved in this controversy. It follows from what we have said that the order of the lower Court must be reversed with costs: (Decided January 5th, 1898). Order reversed with costs.