Chesapeake & Ohio Canal Co. v. Gittings

Robinson, J.,

delivered the opinion, of the Court.

On the 22d of January, 1840, the Chesapeake, and Ohio Canal Company, the appellant in this case, with a view to provide a fund for the redemption of certain canal scrip previously issued by it, executed in pursuance of an order of its board of president and directors a'deed of trust to James Swan, John S. Gittings and William Gunton, of certain five per cent, sterling bonds of the State of Maryland, which had been authorized to be given to the company, by the Act of' 1838, ch. 386.

In consequence of some objections to the details of this deed, the trustees declined to accept the’ trust, and accordingly on the 15th day of April, 1840, a new deed of trust, conveying the same bonds to the same trustees, upon somewhat different conditions suggested by them, was prepared and executed by the company, and accepted by the trustees.

The deed provided, among other things, that the bonds should be sold by the trustees and the proceeds applied within six months from the date thereof, to the payment, in the mode therein pointed out, of the canal scrip described in a schedule appended to the deed. It also contained a provision that the trustees should, at the end of six months from its date, pay over to the appellant, all money they might then *295 have on hand, and deliver all bonds then unsold, whether all the scrip was redeemed or not. Under this deed five per cent, sterling bonds of the State of Maryland, amounting to £90,625, were delivered to the trustees.

On the day of the execution of the second deed, to wit: on the 15th of April, 1840, the appellant being indebted to the Alexandria Canal Company in the sum of §17,379.20, executed and delivered to it its bond payable six months after date; and by an order passed on the same day, the Chesapeake and Ohio Canal Company, pledged and set apart any surplus of money or State bonds in the hands of the trustees, under the deed of January 22d, 1840, after their trust was closed, as a security for the payment of said bond to the Alexandria Canal Company.

On the 24th of June, 1841, the president and directors of the Bank of Potomac being the assignees of said bond, filed a bill in the High Court of Chanceiy, against the trustees, Swan, Gittings and Gunton, the Chesapeake and Ohio Canal Company, and the Alexandria Canal Company, for the purpose of enforcing the payment of the same. In this bill they alleged the execution of the deeds of trust of the 22d of January and the 15th of April, the acceptance of the latter by the trustees, the delivery to and the sale by them of the sterling bonds, and it further charged that there remained in the hands of the trustees under said deed, a large surplus after satisfying all the legitimate objects of the trust, which was equitably pledged by the order of the Chesapeake and Ohio Canal Company, passed on the 15th of April, for the payment of said bond.

The trustees were required to answer under oath all matters touching the administration of the trust — the sale of the bonds — the disbursements of the proceeds, together with the vouchers thereof, and the bill prayed a decree for the payment by the trustees and other defendants, of the bond assigned to the complainants by the Alexandria Canal Company.

*296 By an amended bill the Chesapeake Bank, designated in the deed of trust as the place for the redemption of the canal scrip, was also made a party defendant.

John S. Gittings in .his answer admits the execution of the deeds of January 22d and April 15th, the acceptance by the trustees of the latter deed, the delivery to the trustees of the bonds, the sales thereof to the amount of $344,117.26, together with the sum of $16,958.62 interest on coupons received from the commissioners of loans, thus making $361,075.88, and claims credit for disbursements on account' of the same, the sum of $353,777.89, leaving a surplus due the trust fund of $7,297.99.

Eor further answer he says, that finding it impracticable to sell bonds enough for the redemption of the scrip and notes of the canal company, as presented to the trustees at the Chesapeake Bank, the said bank, at his instance, and with the knowledge of the canal company and his co-trustees, undertook to furnish the necessary funds, on a pledge of the bonds conveyed by the deed of April 15th, and that in pursuance of this agreement the bonds then in the hands of the trustees were delivered to the bank. That the subsequent sales of the bonds were made with the consent of the- bank, the latter, however, always receiving the proceeds of such sales, in lieu of the bonds; that at different times in the year 1840, and prior to notice of- the assignment of the bond of $17,379.20, which the complainants seek to enforce, the Chesapeake Bank purchased- of the holders thereof sundry acceptances of the Chesapeake and Ohio Canal .Company, to the amount of $26,402.00, the said acceptances being for work done by contractors on the canal; that at the time of the purchase of said acceptances, the bonds assigned in trust were in the possession of the bank; that they were discounted upon the faith and in the reliance that the surplus to come into the hands of the trustees from the sales of the bonds would be chargeable therewith; that the bank had also loaned the Chesapeake and Ohio Canal Company $5,000 upon the pledge by the *297 latter, that the same should be paid out of said surplus, and that upon these and other grounds the Chesapeake Bank claims to retain out of said surplus funds the loan of $5,000, and also the amount of the acceptances purchased as aforesaid.

The respondent denies the power of the Chesapeake and Ohio Canal Company to contract the debt for which the bond of $17,379.20 was executed, and denies that the same is a lien upon the surplus in the hands of the trustees. The exhibits, filed as part of the answer show that the sales of the bonds realized $344,117.26, which, together with $16,958.62 received as interest on coupons, makes the sum of $361,075.88 due the trust fund, and the disbursements on account of same, for canal scrip redeemed $305,225.88, cash loaned $4,375.63, acceptances $27,976.53, making $353,777.89, leaving a surplus duo the trust fund of $7,297.99.

The answer of the Chesapeake Bank is substantially the same as that of Mr. Gittings.

The Chesapeake and Ohio Canal Company admits the execution of its bond of $17,379.20 to the Alexandria Canal Company — the order of the 15th of April passed by its president and board of directors, pledging the surplus in the hands of the trustees, under the deed of January 22d, as a security for the payment of said bond, but denies that the same is a lien upon the surplus arising under the deed of April 15th; admits the delivery to and sale by the trustees of the sterling bonds, and charges that there is a large surplus in the hands of the trustees, after satisfying the legitimate objects of the trust, to which said surplus it claims to be entitled.

Proof was taken, and at the March Term, 1851, the case W'as argued and submitted to Judge Brewer, sitting as Chancellor, who decided:

1. That the Chesapeake and Ohio Canal Company had the power to contract the debt, for which its bond of $17,379.20 had been executed to the Alexandria Canal Company.

2. That the object of the order of April 15th was to create a lien upon the surplus in the hands of the trustees for the *298 payment of said bond, but that this lien could not be asserted in the then state of the pleadings, inasmuch as the bill relies upon the order of the 15th of April, which only pledges the fund under the deed of January 22d, while the fund held by the trustees arose under the deed of April 15th.

3. That the Chesapeake Bank had the right to retain out of the suplus an amount sufficient to pay the loan of $4,375.63.

• 4. That as against the complainants, assignees for a bona 'fide consideration, the bank had no right to retain out of the surplus the amount of acceptances purchased by it.

The complainants, not being entitled to the relief prayed in the then state of pleadings, filed an amended bill, and at the September Term, 1851, the Chesapeake Bank and John S. Gittings having withdrawn their exceptions to the insufficiency of the averments in the original bill, the amended bill was dismissed and the case again submitted to the Chancellor, and on the 3d day of November following a decree was passed by which it was ordered, adjudged and decreed that the Chesapeake Bank should pay to the complainants the sum of $11,960.14, and also to deliver to them a sterling bond of the State of Maryland for £375, being one of the bonds conveyed by the deed of trust, but not disposed of by the trustees."

It was further decreed that the Chesapeake and Ohio Canal Company pay to the complainants the sum of $14,780.30.

Whilst the above suit was pending, and after having answered thereto, the Chesapeake and Ohio Canal Company, on the 14th of January, 1842, filed in the High Court of Chancery a bill of complaint against the Bank of Potomao, the Alexandria Canal Company, and the trustees under the deed of April the lbth, claiming that there was a large surplus in the hands of the trustees after satisfying all the objects and purposes of the trust; that the Bank of Potomac, as assignee of the Alexandria Canal Company, was seeking to enforce the payment of the bond of $17,379.20 as a lien upon the same; that the said surplus belonged to the complainant, and praying for an account of the trust, Ac.

*299 The answer of John S. Gittings and the exhibits filed therewith in regard to the sales of the bonds, and the disbursements on account thereof, are substantially the same as filed in the suit of the Bank of Potomac.

The Bank of Potomac admits the assignment of the bond of §17,379.20, and that it is seeking, as ássignee, to enforce the payment of the same, as a lien upon the surplus in the hands of the trustees.

No further proceedings were taken in the case until the 28th of October, 1870, nearly twenty-seven years after the above answers were filed, and nineteen years after the final decree in the case of the Banh of Potomae, when a general replication is entered by the present solicitors for the complainant.

The appellee, Gittings, in his supplemental answer relies upon the decree passed on the 3d of November, 1851, in the case of The Banh of Potomae, and to which the complainant was a party, as a bar to the further prosecution of this suit.

It is conceded that a judgment of a Court of competent jurisdiction is final and conclusive as between the parties thereto in regard to the subject-matter therein litigated and decided. The question then narrows itself down to this, was the subject-matter of this bill of complaint in issue and was it decided in the case of the Banh of Potomac ? The pleadings, proof and proceedings settle this question beyond all controversy. In that suit as in this, the whole administration of the trust created by the deed of April 15th, the sales of the bonds, the disbursements on account of the same, the surplus, if any, in the hands of the trustees, the rights respectively of the Chesapeake and Ohio Canal Company and the Bank of Potomac, as assignee of the Alexandria Canal Company, to this surplus, in a word all matters touching the trust and the rights of the several defendants in regard to the same, were in issue, and the Court by its decree of November 3d, decided that there was a surplus in the hands of the trustees after satisfying the legitimate objects of the trust to the amount of §11,960.14, and that said surplus should be paid to the Bank *300 of Potomac, as assignee of the bond of $17,379.20, executed by the Chesapeake and Ohio Canal Company to the Alexandria Canal Company, and it was further decided that the sum of $14,780.30, the balance due on said bond, after deducting therefrom the aforesaid payment and a sterling bond of ¿6375, which had not been disposed of, should be paid by the Chesapeake' and Ohio Canal Company, the complainant in this suit. This judgment was rendered in a cause to which the appellant was a party, and from which it had the right of appeal, and in regard to the same subject-matter involved in this case, and we are of opinion therefore that it operates as a bar to the further prosecution of this suit. There is nothing on record to show that this was a consent decree, passed at the instance of the Bank of Potomac and Chesapeake Bank, and without the knowledge of the appellant. There was ah agreement'signed by the solicitors, by which the money paid by the Chesapeake Bank was to be returned, if the Chesapeake and Ohio Canal Company appealed from the decree, thus showing that parties litigant, contemplated at that time, that such action might be taken by the present appellant. No appeal however was taken and no further steps were taken to prosecute this suit, until nearly twenty years after the date of said decree. We cannot escape the conclusion that this complainant, together with .the other parties to the suit of the Bank of Potomac, considered that decree as virtually 'deciding all matters growing out of the trust created by the deed of April 15th. Be that however as it may, we are of opinion that said decree is a bar to the further prosecution of this suit. .

(Decided 19th June, 1872.)

Decree affirmed.