Mottu v. Primrose

23 Md. 482, 1865 Md. LEXIS 43

• Court: Court of Appeals of Maryland
• Decided: October 6, 1865
• Status: Published

Opinion

Bartol, J.,

delivered the opinion of this Court:

In this case, the judgment below was rendered against six defendants, and the appeal has been taken by five of them only; and the appellee has moved to dismiss the appeal, on account of the non-joinder of the other defendant. Since the decision of the case of Lovejoy vs. Irelan, 17 Md. Rep., 525, the law must be considered as settled, that where a judgment is rendered jointly against several persons, an appeal cannot be prosecuted by some of them, without the others, unless there be summons and severance.

This rule rests not only upon authority, but is founded in reason and justice; otherwise the consequence might be, that in a judgment against six persons, there might be six distinct and separate appeals, and, in the language of Tidd, (Practice, 2 vol., 1189, when speaking of writs of error,) “Wo- that means the plaintiff would be delayed from his ex-eeution for a long time, and from having any benefit of his judgment, though it might be affirmed once or oftener.” Tho effect of the application of this rule to the present case, would be, under the authority of Lovejoy vs. Irelan, to compel us to gratify the motion, and dismiss tho appeal. But the counsel for the appellants, to obviate the difficulty, have moved this Court to direct a summons now to be issued against the party who has not joined, requiring him to come into this Court and unite in the appeal; and, on his failure to do so, that his co-defendants may be severed, and allowed to prosecute the appeal alone.

This presents the question, from what Court the writ of summons and severance properly issues ? Neither the case of Lovejoy vs. Irelan, nor the case of Price vs. Thomas, 4 Md. Rep., 515, settles this question. In Price vs. Thomas, the objection was obviated by a correction of the record, and in Lovejoy vs. Irelan, no motion for the writ appears to have been made in the Appellate Court. The inference drawn by the appellee’s counsel from the language of the Court in those cases, “that the writ must be issued from tho Court where the judgment has been rendered, and that a severance is a necessary preliminary to the taking of the appeal,” we think is not warranted either by those decisions, or by the established practice in such cases.

After a careful examination of our books of Maryland practice, we have been unable to find any evidence of the practice in this State on this subject. Neither in Harris’ Entries, our old and justly respected book of forms, nor in the modern compilation of the same book, by Mr. Evans, or in his work on Practice, do wo find any reference to the writ of summons and severance. In the English practice, the writ is well known, and will be found treated of as well in standard elementary works as in the reported cases cited by the authors of books of practice. See 1 Archbold Pr., 233, 2 Tidd, 1189, 1225. 2 Sannd. Rep., 101, sec. 101 g, notes.

It appears, from these authorities, that the practice in writs of error required that “they should he brought in the name of all the parties against whom the judgment is given, that it may agree with the record,” * * * * “and if any one or more of them refuse to appear and assign errors, they must he summoned and severed, and then the writ of error may he proceeded in hy the rest only.” 2 Saund. Hep., 101 g, note. See, also, authorities there cited.

(Decided October 6th, 1865.) Thos. S. Alexander and Win. A. Fisher, for the appellants, contended:

1st. That the Company’s real and personal estate being situate in Baltimore county, the Superior Court of Baltimore city had no jurisdiction to grant the writ. 8 Bland, 656, Gape Sable Company’s case.

2nd. That no demand having been made upon the respondents to appoint a judge and tellers, and there having been no refusal by tbom, tbe application should have failed. Tapping on Mand., 76 Law Lib., 282, 52 n. 84 n. (i.) 285. Lt. vs. Breakneck Ganal, 4 N. & M., 871. B. vs. W. Love, 3 Barn. & Grass., 677. B. vs. Bristol & Essex B. B., 4 Adol. & Ell., N. B., 162. B. vs. Nottingham, 3 Adol. & Ell., 503. B. vs. Frost, 8 Adol. & Ell.fim. B. vs. Wilts. Ganal, 8 D., 623. B. vs. Montacute, 1 W. Blade’s Go. Bacon’s Abr., Mandamus, (L>.)

Prom an examination of the authorities, it is plain that, according to the practice at the common law in writs of error, the writ of summons and severance was issued out of the Appellate Court. In our system, where appeals have been allowed by statute, and have been adopted almost entirely in place of writs of error, they are to he proceeded in according to the same rules as governed writs of error; and in the absence of any established practice in our State to the contrary, or any adjudication by the Court of Appeals on the subject, we feel ourselves warranted in deciding the present motions in conformity with the English practice and authorities, and therefore overrule the motion to dismiss, .and will order a writ of summons and severance, in the usual form, to be issued against J ames Carey Cole, the non-joining defendant.

Motion to dismiss overruled, and writ of summons and severance ordered.

The appeal in this case was argued before Bowies C. J., and Bartol, Gtoldsborough, Oochrait and Weisel, J.

3rd. The application should have been to compel the repeal of the present, and the re-enactment of the former bylaws, and then to appoint the judge and tellers under the latter. Tapping on Mand., 282.

4th. The 8th by-law requires that ten days’ public notice shall precede an election; and as such notice could not have been given between the date of the filing of the petition and the third Tuesday of May, the petition should have been dismissed. Ellicott vs. Levy Gourt, 1 H. & J., 359. Tapping on Mand., 15. Bex vs. Wills. Ganal, 3 Adol. ds Ell., 477. Smith vs. Erb, 4 Gill, 459. Bex vs. May, 5 Burr., 2681. Ln mailer of Long Island B. B., 19 Wend., 38. Wilcox on Gorp., 14 Law Lib., 42.

5th. That the alteration of the by-laws was made in the exercise of the legitimate authority of the Board of Managers. Act of 1852, ch. 221, sec. 2. Angelí & Ames on Gorp., 357. Paxson vs. Sweet, 1 Green (N. J.) Bep., 196. Neiding vs. Francis, 3 Term Bep., 198. Foot vs. Mayor of Truro, 1 Strange Bep., 625. 2 Kent’s Gom., 295. Hughes vs. Parker, 20 N. Hi. Bep., 58.

6th. That the discretion of the Board over the subject was properly exercised in the passage of the amendment to the by-laws, inasmuch as it was done for the purpose of preventing the consummation of frauds contrived by former Boards, in privity with the petitioner. In support of this point, the respondents will rely upon the various facts detailed in the answer, the truth of all which is admitted by the demurrer. Gorporation cases, 4 Golee’s Bep., 78. Gom. vs. Gain, 5 S. &B., 510. Hoffman, dec., vs. Cumberland, Ganal (& Lron Go., 16 Md. Bep., 507.

7tli. The Court possesses a legal discretion to grant or refuse the writ, and such discretion is never exercised to assist fraud. Evans’ Prac., 408. 4 Bac. Abr., 496. Tapping on Mand., 16, 28.

8th. The Court erred in refusing to fix the penalty of an appeal bond. Code, Art. 5, secs. 3, 10, &c.

J. Mason Campbell and Bernard Carter, for the appellee:

1st. The Loudon Parle Cemetery Company was incorporated on the 22nd of February 1853, under the general incorporating law of 1852, ch. 221. The charter is filed as an exhibit with the petition; and by the first article of that charter, it is declared that the corporation shall he located, and its principal business transacted, in the city of Baltimore. The charter is acknowledged before the Judge of the Superior Court of Baltimore city, and recorded in the office of the Clerk of that Court. This is sufficient to show that this Court has jurisdiction of this case.

The objection taken in the answer of the defendants, that the Cemetery itself is situated in the county, will not affect the question. The first section of the Act of 1852, ch. 221, forbids the holding of any ground in the city for burial, while it allows the incorporation to be made and located in the city.

•The second section of the Act of 1852, ch. 221, declares that the Company may annually elect its Managers from its members, by a majority of the votes of the proprietors, at such time and place as its by-laws may specify. The charter of the Loudon Park Cemetery Company fixes the number of Managers at six; and it was under a by-law in existence on the third Tuesday of May 1864, fixing the time of election, that the present Board were elected on that day, to hold their office for one year from that date, and until their successors should be elected.

The enabling Act of 1852, ch. 221, only gives power to the corporations coming into existence under it, to make annual elections; but it is immaterial to consider this question. This Company undoubtedly had power to hold an annual election under its by-laws, and by its by-laws in existence on the third Tuesday of May 1864, it held an election, by which it invested the Managers then elected with capacity to exercise their functions for a period of twelve months. The present Board took office accordingly; and the inquiry resolves itself into this: whether officers elected for a special and limited term, have the power to extend their term at pleasure ? If the present Board, by its own act, can hold office until November 1865, having been elected to hold till May 1865, there is nothing to prevent their extending their term to May 1866, and so on, ad infinitum. The power is to be found, if anywhere, in the authority given to the Managers to specify in a by-law the time of the annual election. Nothing can be plainer than that the object of such a provision is to facilitate the holding of an annual election, and not thereby to enable the Managers to prevent such annual elections.

In this instance, an election had been held, and the stockholders had declared the term for which the Board was to serve. No exercise of power on the part of the Board could be meant to have a retrospective effect. Of what avail was it to elect a Board for a definite period, one year, if as soon as they came into office, their authority was to be so construed as that they could undo the past action of the stockholders, and make the limitation on their term of service a nullity ?

Undoubtedly the Board of Managers have the power to fix the time of’ the annual election; but the construction of that power must not overturn the principles on which alone corporations can safely be carried on. All of them, without exception, limit tbe term of office of those invested with the management of the corporate affairs ; and no interpretation of their powers can be a safe one, which invests them with a capacity to perpetuate themselves in office. Independently of the changed management so essential to the safety of all corporate bodies, no scope can be allowed by law for the abuse of official power for the benefit of incumbents. Hoffman Steam Go. vs. Gwmb. Goal & Iron Go., 16 Md. Bep., 50T, 508. Grant on Oorp., YY, 91.

2nd. The answer alleges the existence of frauds perpetrated by members of former Boards, which are now the subjects of equity suits instituted by the Company; and charges that it is the object of the petitioner, in collusion with the perpetrators of those frauds, to get possession of the Company, in order to dismiss the suits. It is conceded by the answer, that the petitioner and those who are alleged to act with him, own a majority of the stock of the said corporation ; and the objection consequently concedes that a change of management at the next election is desired and intended by the parties entitled to it, but that the .present management for what they pretend to think for the interests of the stockholders, can properly interfere to prevent the stockholders making the change they contemplate.

The Managers are merely agents for the stockholders, and the principals have the right to manage their affairs as they, and not as their agents, think best.

It is not very probable that the parties affected injuriously by a fraud, will abandon the proceedings for its redress, but if they do, it is their own affair, and, at all events, a Board of Managers, in order to save the stockholders from themselves, have no right to deprive the stockholders of their privilege of an annual election given to them by their charter. If it be said that the minority of the stockholders are entitled to protection against the action of the majority, the legal mode of protection is'not by denying the majority their right annually to elect their Board of Managers. Any individual stockholder, if he is aggrieved by the refusal of the corporation to institute or continue proceedings for the redress of injuries to the corporation, has his remedy in equity against the corporation and the wrong-doer. Dodge vs. Woolsey, 18 How., 331.

Bartol, J.,

When this ease was argued some reasons were suggested, why an immediate decision was necessary; the proceedings were considered, and this Court being of opinion that there was no error in the ruling of the Superior Court, upon the questions presented by the record, directed that the order appealed from should be affirmed. We now proceed to state, briefly the grounds of our decision :

By the second section of the Act of 1852, ch. 221, under which the Loudon Park Cemetery was incorporated, it is provided, that the Company may, at such time and place as its By-Laws may specify, elect annually, a Board of Managers, &c. The charter declares that the Board shall consist of six persons.

On the 3rd Tuesday of May 1864, the time fixed for the annual election by the By-Law, then in force, the appellants were elected Managers, to hold their office for one year, and until their successors should be elected and qualified.

On the 14th day of January 1865, at a meeting of the Board, at which were present four of their number, being a quorum, it was resolved, that thereafter, the annual election of Managers; should be held on^ the 2nd Tuesday in November of each year. The effect of that resolution, was to extend the term of office of the Board, six months beyond the time for which they had been elected; and the main question in the case is, whether the passage of that resolution was a valid exercise of authority on the part of the Board of Managers.

It is contended, that their power to pass the “resolution, is to be found in the authority given to them to specify in a By-Law, the time for the annual election. It is plain that the object of this provision is to enable the Board to carry out the intent of the Act, by securing an annual election, and not to authorize them to defeat that intent, by preventing such election. The power to fix the time for the annual election, cannot be construed into a power in the incumbents, to extend their term of office indefinitely, so to hold would defeat the provisions of the charter, and overturn the principles upon which, alone, the corporation can be safely carried on, by depriving the stockholders of the right secured to them by law, of controling the management of the Company.

In our opinion the passage of the resolution of the 14th of January was not warranted by the terms of the charter, and not justified by the grounds and reasons set forth in the appellants’ answer.”

It is alleged in the answer, ‘ that frauds upon the Company had been committed by members of former Boards, which were the subject of suits in equity, pending in the Circuit Court for Baltimore county; and the answer charges substantially, that it is the object of the petitioner, in collusion with the parties by whom those frauds had been perpetuated, to get control of the Company, in order to dismiss those suits, and thus prevent an investigation of their fraudulent acts; and the answer alleges that the respondents deemed that the interest of the Company required that such fraudulent scheme should be defeated; and that the election should be postponed, that the cases may be tried, and for such purpose only, and not for the benefit of the respondents, the change was made.”

The inference from this answer is, that the petitioner, and those who are alleged to act with him, own a majority of the stock, and consequently, a change of management would be effected at the next election, by those entitled to make such change; but, in order to defeat such change, the Board of Managers altered the day of election from May till November, thereby extending their own term of office; for the alleged purpose of protecting the interests of the stockholders from their own apprehended mismanagement. But the Board of Managers are merely agents, and the right of determining who shall constitute the Board, belongs not to them, but to the stockholders, who are their principals.

The argument of the appellee on this point is conclusive. “ While the minority of the stockholders are entitled to protection against the fraudulent or illegal action of the majority; that protection is not to he had by denying to the majority, their right annually, to elect the Board of Managers.” Any individual stockholder, if he is aggrieved by the refusal of the corporation to institute or continue proceedings for the redress of injuries to the corporation, has his remedy in equity against the corporation or the wrongdoer. Dodge vs. Woolsey, 18 How., 331.

Some technical objections to the granting of the writ have been presented by the appellants, which it is necessary to notice :

1st. It is contended, that the real and personal estate of the Company being situated in Baltimore county, the Superior Court of Baltimore city had no jurisdiction in this case. Though the Cemetery is situated in the county, by the charter it is declared, that ‘ the Company shall be located, and its principal business transacted, in Baltimore city.” The charter was acknowledged and recorded in the city, and we have no doubt of the jurisdiction of the Superior Court over the case.

2nd. It is objected that no previous- demand was made upon the respondents to appoint a judge and tellers, for the purpose of holding an election in May, and there having been no refusal by them so to do upon demand, the writ ought to be denied.

Whatever may be the rule in the English Courts, the law and practice in Maryland, in such cases, do not require a previous demand and refusal, in order to support an application for a mandamus, at least, not in a case like the present. See, Runkel vs. Winemiller, 4 H. & McH., 431. Ellicoit vs. Levy Court, 1 H. & J., 359. Brosius vs. Reuter, Id., 480. Smith vs. Erb, 4 Gill, 442. See, also, 37 Pa. Rep., 246.

The writ not being ex débito, but in all cases resting in the sound discretion of the Court, there may be some cases in which the Court, in the exercise of its discretion, would refuse the writ where no previous demand and refusal had been made; as where the claim of the petitioner, or the duty to he performed, is uncertain or not clearly known to the respondent. Such, however, is not the case here. The plain duty of the respondents was, to provide for holding the election in May; the passage hy them of the resolution of January, was an open and public declaration of their determination to defer it till November, and to require of the petitioner a previous demand upon them to discharge their duty, would have been to require a useless and nugatory act.

3rd. The objection founded upon the terms of the 8th By-Law, which required ten days’ public notice to precede an election, is one which the appellants cannot he allowed to urge in this case. Inasmuch as the necessity for a resort to the Court was caused hy their own act; and the impossibility of a literal compliance with that By-Law, was also a consequence of the same wrongful act of the respondents.

The purpose of the application, was to obtain a peremptory writ, requiring the election to be held on the 3rd Tuesday in May 1865, so that the appellants had notice in fact, from the time the petition was filed.

We concur in the opinion expressed by the Judge of the Superior Court, that this is not a case in which, under the Code, an appeal bond is authorized to be given.

Order affirmed.

( Motion to dismiss decided, and summons and severence ordered October 9th, 1865. See p. 494; and appeal decided November 2nd, 1865.)