Williams v. Gibbes - 58 U.S. 239 (1854)
U.S. Supreme Court
Williams v. Gibbes, 58 U.S. 17 How. 239 239 (1854)
Williams v. Gibbes
58 U.S. (17 How.) 239
In 1816, an association called the Baltimore Company was organized in Baltimore for the purpose of furnishing advances and supplies in fitting out a military expedition under General Mina against Mexico, then a part of the dominions of the King of Spain. See 52 U. S. 11 How. 529, and 53 U. S. 12 How. 111.
One of the shareholders having become insolvent in 1819, his trustee sold the share in 1825. The original transaction being illegal, the share could not be considered, by the laws of Maryland, as property passing by the insolvency to the trustee.
Consequently, the sale by the trustee passed nothing to the assignee. The Court of Appeals of Maryland so decided, and this Court adopts their construction of their own laws.
An act of the Legislature of Maryland, passed in 1841, made the sale of 1825 valid, so far only as defects existed for the want of a bond, by the trustee in insolvency, and the want of a ratification of the sale by the court. But it did not purport to cure other defects in the title of the trustee. Nor did the Court of Appeals decide that it went and further than to cure the two defects above mentioned.
In 1846, the Baltimore County Court distributed the fund and awarded the proceeds of the share in question to the executors of the assignee. This decree was affirmed by the Court of Appeals in 1849. But during this time there was no person authorized to protect the interest of the insolvent. He had died in 1836, and no letters of administration upon his estate were taken out until 1852.
In the distribution of a common fund amongst the several parties interested, an absent party, who had no notice of the proceedings and who was not guilty of willful laches or unreasonable neglect, will not be concluded by the decree of distribution from the assertion of his right by bill or petition against the trustee, executor, or administrator, or, in case they have distributed the fund in pursuance of an order of the court against the distributees.
The English and American cases upon this point examined.
The present claim being made by the administrator of the insolvent, against the executors of the assignee, it is not necessary, under the circumstances of the case, to turn the plaintiff over for his remedy against the distributees.
This appeal was in some respects similar to the preceding case of McBlair v. Gibbes, but it differed from it in the important point that the original holder of the share, namely, Williams, never made any assignment of it to Oliver. The title of the latter was derived exclusively from a purchase made by him from George Winchester, the trustee of Williams in insolvency.
The Mexican Company consisted originally of ten persons, each holding one share. One of the parties declining to pay up, the remaining nine advanced the necessary amount, and thus the company was reduced to nine persons or firms, namely D'Arcy and Didier, Hollins and McBlair, Descoves and Mercier, Dennis A. Smith, Jeremiah Sullivan and John Sullivan, John Gooding, James Williams, Thomas Sheppard, and Lyde Goodwin.
In 1819, James Williams applied for the benefit of the insolvent laws of Maryland, and George Winchester was appointed his trustee, from whom Mr. Oliver purchased the share, in 1825, for $2,000. Winchester had omitted to give bond or to have the sale ratified by the court, and an act was afterwards passed by the Legislature of Maryland to cure these defects.
Williams died in 1836, and no letters of administration were taken out until 1852, when the present appellant became his administrator and filed the bill in the present case. The ground assumed was the same with that taken by McBlair in the preceding case, namely that if the assignment to Oliver made by the trustee in insolvency was void, the interest of Williams must remain in his personal representatives.
On the 4th of October, 1841, a bill was filed on the equity side of the County Court of the sixth Judicial District of Maryland (state court) by Philip E. Thomas and John White, trustees of Dennis A. Smith, against the following persons interested in the share of Dennis A. Smith, namely: Dennis A. Smith, James W. McCulloh, administrators; Job Smith, the President and Directors of the Mechanics' Bank of Baltimore, John Glenn, David M. Perine, William Gwyn, and James W. McCulloh, trustees; Mrs. Smith, William Brown, James Brown, John Patterson, Walter Smith, executor; Clement Smith, George Brown, Herman Perry, Virgil Maxcy, Samuel Nevins, _____ Nevins, Joshua Lippencott, John S. Smith, Richard Harding, and A. H. Lawrence, and the President, Directors, and Company of the Bank of the United States. The bill set forth the deed, the amount awarded to D. A. Smith, and the whole amount awarded to Glenn and Perine, the existence of charges and claims affecting in common their share of the fund and the residue in the hands of Glenn and Perine, and after suggesting in general terms
that they were advised there were other interests represented by Glenn and Perine, connected with the claims of Dennis A. Smith, of the particulars whereof they were not informed, but which Glenn and Perine could state, and which were proper subjects for distribution by the court, they pray for a proper distribution of the certificate &c., growing out of the awards aforesaid, for allowance of commissions for notice to the persons interested as aforesaid to present their claims before the auditor, and for general relief.
Glenn and Perine filed their answers, admitting the facts set forth in the bill, expressing their willingness to have the proceeds of the awards therein mentioned distributed under the direction of the court to the persons entitled thereto, including the award in favor of those respondents under the agreement in the bill, and joined in the prayer for a reference to the auditor.
A notice was ordered by the court and published on the 28th of October, 1841, requiring all persons interested in the claims of D. A. Smith and the Mexican Company on Mexico to present their vouchers, properly authenticated, on or before the 1st January, 1842.
The cause was continued from time to time until the 23d of January, 1842, when Nathaniel Williams intervened as the permanent trustee of James Williams, appointed in the place of George Winchester. He claimed the proceeds of the share of James Williams upon the ground that the assignment to Oliver by Winchester was irregular and void.
It is not necessary to state the numerous claimants who presented themselves or the grounds upon which they rested their claims.
Another order was published on the 5th of September, 1843, giving notice to all persons having claims on the funds awarded to the Mexican Company of Baltimore and Dennis A. Smith, to file their claims, with the vouchers and proofs, on or before the 5th October, 1843, else they might be barred from the benefit of the distribution of the fund.
On the 5th of December, 1846, the court pronounced its decree awarding, amongst other things, that the proceeds of the share of James Williams should be paid to the executors of Oliver, claiming under the assignment from Winchester, the defects of which were cured by an act of the legislature.
Upon an appeal from this decree to the Court of Appeals of Maryland, the decree of the county court in the above respect was affirmed.
In August, 1852, John S. Williams, as administrator of James Williams, deceased, filed his bill against the executors of Oliver, in the Supreme Court of Baltimore City. The executors removed
the cause into the circuit court of the United States upon the allegation that they were citizens of the State of New York. The part of the bill which brought up the question in the cause was the following:
"Your orator further states to Your Honor that the said James Williams departed this life on or about 20th day of September, in the year 1836, in Harford County; that no letters of administration were ever taken out upon his estate until they were in due form of law granted to your orator by the Orphans' Court for Harford County on the 15th day of March in the year 1852. That he has given bond, approved by said court, for the faithful performance of the trust reposed in him."
"That neither said Williams nor your orator were ever present, or parties to, or in any manner bound by any proceeding or order or decree had or passed in the aforesaid suit of Thomas White v. Dennis Smith in Baltimore County Court, as a court of equity, or in any appeal from the doings of said court, to the Court of Appeals for the Western Shore of Maryland, and that anything done or enacted in either of said courts was transacted in the absence of the said Williams and your orator; that the settlement and adjustment of the amount of the partnership funds of the said Mexican Company, and of the charges, and commissions, and costs, to which they were liable in solido, and the distribution of the remainder of said funds by the decree of the court, into the several shares to which each member of said company was entitled, are in no manner binding upon, or even evidence against the said Williams or your orator &c."
The respondents answered the bill, setting forth various grounds of defense, and particularly relying upon the decree of the Court of Appeals affirming the judgment of the county court. The opinions of the judges of the Court of Appeals have been published in extenso in one of the preceding volumes of Howard's Reports, and therefore need not be repeated here.
On the 3d of December, 1853, the circuit court dismissed the complainant's bill, with costs, and the complainant appealed to this Court.