Baltimore & Ohio Rail Road v. Glenn , 1868 Md. LEXIS 20 ( 1868 )

Stewart, J.,

delivered the opinion of this Court.

The able argument of the counsel, on both sides, in this cause, has been mainly directed to the consideration of the validity and effect of the deed of the 20th September, 1866, made by the Express Company to the trustees. The invalidity of this instrument is the sole reliance of the complainant, upon which all the other proceedings depend. Our conclusion upon that proposition will dispose of this appeal. The question is one of much importance, and having been re-argued, has been examined with more than ordinary care. The bill of complaint, the deed itself, the agreement of counsel filed, the proceedings and testimony, all represent, that this Express Company is a body politic and corporate of’ the State of Virginia. The deed purports to have been signed by Jos. E. Johnston, President of the Company, by virtue of authority, vested in him by an order and resolution of the Board of Directors of the Company, and that he affixed the common seal of said corporation to the deed, as the act of the corporation. The agreement filed further admits, that the office of the President of the Company has been kept at Eichmond; that the deed was executed there and admitted to record, according to the law of Virginia. It further admits, that at the time of the execution of the deed, and for several months previously, the company had an office in the city of Baltimore, at which the offices of its Treasurer and General Superintendent were kept, and a large amount of the general business transacted.

The grantor, being a corporation of the State of Virginia, its domicil is there. In the case of The Bank of Augusta vs. Earle, 13 Peters, 519, Chief Justice Taney states: “that a corporation can have no legal existence out of the boundaries of the sovereignty by which it is created. It exists by force of the law, and where that ceases to operate, the corporation can have no existence. It must dwell in the place of its creation, and cannot migrate to another sovereignty.”

It was urged, in the argument for the appellees, that the company by transacting business, having an office, and its Treasurer and Superintendent here, acquired a habitation at the same place. This could make no difference, if not only those offices, but the office of the President also had been here. They were but the agencies of the corporation. In the same case, Bank of Augusta vs. Earle, the doctrine is plainly announced, that “although it (the corporation) must live in that State only, (the State from which its charter is derived) there is no insuperable objection to its power of contracting in another. Katural persons, through the intervention of agents, are continually making contracts, where they do not reside, and what greater objection can there be to an artificial person, by its agents, to make a contract within the scope of its limited powers, in a sovereignty in which it does not reside; provided such contracts are permitted to be made bjr the laws of the place.” Art. 75, secs. 99 to 104, Art. 88, secs. 33 to 44, of the Code of Public General Laws, provide for enforcing process against the agents of a corporation having existence beyond the State, but holding and exercising franchises therein, thus recognizing their authority to transact business here. Natural persons having no residence here, may have dealings through their agents, but that gives them no domicil here, much less a corporation, whose corporate franchises being against common right, are construed more strictly; natural persons may change their domicil, not so with corporations, who have a stationary habitation and can only have transactions, from their home, through their agents. Personal and individual rights are original, whilst the powers of a corporation are derivative and prescribed by their charters.

The authority in 18 Md. Rep., 213, State vs. Northern Central Railway Company, relied upon by the appellees to sustain their view, that the company doing business here, must be considered as having a domicil here, we think sustains our conclusion. In that case the corporation held its existence by two charters from different States, or its existence in part from a charter of another State. “ Such a corporation must, for the purposes of justice, be treated as a separate corporation by the Courts of each government, from which it derives its being, that is, as a domestic legal entity, to the extent of the government under which it acts, and as a foreign corporation, as regards the other sources of its existence.” This is in accordance with the principle we have stated, because having two charters, it is as to eacli distinct, and is treated in each State, giving it being, as a legal entity. If this corporation held a charter from the State of Maryland, it would have a domicil here to the extent of that authority. But deriving its charter from Virginia alone, that State must be be esteemed its domicil exclusively. It could, not reside here and in Virginia at the same time under the one charter.

The deed in question having been made in the State of Virginia, and by a corporation, created by the laws of that State, its validity must depend upon those laws. “It is a general principle admitting of few exceptions, that in construing contracts made in a foreign country, the Courts are governed by the lex loei as to the essence of the contract; that is the rights acquired, and the obligations created by it.” De Sobry vs. De Laistre, 2 H. & J., 191; Trasher vs. Everhart, 3 G. & J., 244. The rule of comity, where the lex loei is foreign, adopts the law of the country where the contract is made, in placing a construction upon it. They look to the foreign law to ascertain the true character of the contract, that efficacy may be given to its obligations between the parties, unless contra bonos mores, or against some positive law of their own. This is necessarily the rule, otherwise, no reasonable interpretation could be given to such contract. It can have no validity, except conformable to the law where made. It must have a legal origin. “Vo right can be derived under any contract, made in opposition to the law where it is made.” Hall vs. Mullin, 5 H. & J., 193.

“ Courts of justice always expound and execute it (the contract) according to the laws of the place where made.” Bank of Augusta vs. Earle, 13 Peters, 588. Judge Story, in his Conflict- of Laws, says: “ in the silence of any rule affirming, denying or restraining the operation of foreign laws, Courts of justice presume the tacit adoption of them by their own government, unless repugnant to its policy or interest. It is not the comity of the Courts, but of the nation, which is administered in the same way, and guided by the same reasoning, by which all other principles of municipal law are ascertained.” In other words, the universal interests of all enlightened nations prescribe this as common law to be administered by their Courts.

If this deed is a legal instrument in Virginia, where it was made, it is so here, unless it violates good morals or is repugnant to some law or policy of this State. If it is fraudulent and void, according to the law of Virginia, the fraud attaches to it here and vitiates it. Is the recognition of the validity of this deed obnoxious to any law or policy of this State ?

We are not aware of any law or rule of construction, which prohibits the enforcement of a contract not made in this State, according to the law of the place where it was made, although our citizens, from reasons of State policy, may not be permitted to make a similar contract here. A different rule would be to attempt the enforcement of our local policy upon all other people, and recognize no contract not conformable to our peculiar views.

Transfers of personal property within our limits, belonging to parties abroad, may be made according to the foreign law, where our own citizens, in transferring similar property, are required to conform to our laws regulating such transfers. Wilson & Co. vs. Carson & Co., Garn., 12 Md. Rep., 54; Houston vs. Nowland, 7 G. & J., 480. The case of Gardner vs. Lewis, 7 Gill, 377, was between citizens of Maryland, who had gone outside of the State and made a contract, and there was no evidence of what was the foreign law, and therefore the law of Maryland was the only one to be applied. In Green and Trammell vs. Treiber, 3 Md. Rep., 28, the deed was set aside as being contrary to the law of Maryland, having been executed by parties in the State of Virginia, but there was no evidence of what was the law of that State. It is not materia] in this enquiry to define what would be our construction of such a deed as this, if made here according to our views of the statute of 13 Elizabeth, ch. 5, because, having been made in Virginia by a corporation having its domicil there, its validity must be determined according to that law. The deed has been assailed by the bill of complaint, as fraudulent upon itsfaee, and because of its alleged illegal reservations and preferences. Because it reserves a use to the grantor, to hold the property under the title of the trustees, from the 20th of September to the 1st of November, ensuing, if the trustees be not required to take possession. Because it requires the trustees to pay out of the trust fund, all debts that shall become due from the grantor to its officers and agents for a like period. Because it requires the Trustees to pay out of the trust funds, all debts which the grantor may incur to rail road companies, for transportation from September 20th to Kovember 1st, over and above the net receipts for such transportation. Because it reserves to the grantor all tolls and compensation for the transportation of express matter not yet delivered to consignees, or not yet transported under existing contracts.

These are the principal objections made, and which are embraced by the 1st, 5th and 8th reservations and clauses of the deed. Are these reservations fatal to the validity of the deed according to the Virginia Law?

That law is a fact to be proved in our Courts, as other facts; if unwritten, by the testimony of experts; if statutory, by the law itself or exemplified copy. Gardner vs. Lewis, 7 Gill, 377; De Sobry vs. De Laistre, 2 H & J., 191.

As to what is the Virginia law, applicable to the character of this deed, it seems assumed we are confined to the testimony of the experts, introduced under the commission, so far as the Baltimore and Ohio Rail Road Company is concerned, because they are not parties to the agreement, admitting resort to other sources. It is not necessary to decide as to the correctness of this assumption, because there is no conflict between the testimony of the witnesses and the reported decisions of the Virginia Courts. These witnesses, the experts, Grattan, Steger, Carrington, Page, Imboden, Baldwin and Hunter, eminent jurists, and experienced in the law of Virginia, testify that under that law the deed is valid, and its provisions would be recognized as legal for the purposes set forth in it. Such is the uniform tenor of this evidence, which is conclusive, as to the validity of this deed under the Virginia law, outside of the agreement in the cause.

Besides this testimony of the experts, the agreement of the .trustees, the Express company and the complainant, requires us to resort to the decisions of the Courts, or opinions of Judges of Virginia, reported in any printed book, &e., to ascertain the law of that State pertinent to this question. From the examination we have given to the reports of the Virginia Courts, construing this statute of 13th Elizabeth, its construction has undergone modifications in their Courts, very analagous to the changes which have taken place in the Courts of other States, and in England, since the trial of Twyne, who was one of the first victims to the penal provisions of that law.

The Court of Appeals of the State of Virginia, in the case of Davis vs. Turner, 4 Grattan, announce very distinctly a change in their construction of this statute of 13th Elizabeth, contrary to a series of prior decisions. Judge Baldwin “ expressed his opinion against the doctrine that the non delivery of possession on a sale, is in itself, in all cases, conclusive evidence of fraud, and against the principle that the inconsistency of the possession, with the terms and effect of the deed, is also conclusive evidence of fraud, holding that the fraud, contemplated by the statute, is to be found in the .falsehood of the transaction.” Upon a review of the Virginia cases, he added “that it seems now conceded, on all hands, the continued possession of the vendor after an absolute sale, is open to explanation.”

Judge Cabell stated “ that an entire change had taken place in his views, that he was now entirely convinced of the correctness of the modern English decisions.”

In the later case of Forkner vs. Stewart, 6 Grat., 198, 204, the Court “ declared that the proper instruction to be given to the jury was, that if it appeared to them that an absolute sale had been made, but that the possession did not accompany such sale, but remained with the vendor," such retention of possession was prima fade evidence of fraud, but not eon-elusive, and could be rebutted by proof of the fairness and good faith of the transaction.”

In the later ease of Dance vs. Seaman, 11 Grat., 778, much relied upon by appellees’ counsel, the Court say: “ the fact that creditors may be delayed, is not of itself sufficient to vacate a deed, if there is absence of fraudulent intent. Every conveyance to trustees interposes obstacles in the way of the legal remedies of creditors, and may, to that extent, be said to binder creditors. The fraudulent intent is denied by the grantor, and there is no proof, except that arising from the face of the deed. That the Court cannot presume the fraud, unless the terms of the instrument preclude any other inference. That the reservation of an interest in the property, by postponing the time of sale, or directing a sale on a credit, &g., do not, of themselves, furnish evidence of fraudulent intent. That such questions have been settled by a series of adjudications in that Court; that it would disturb titles, if the principle, heretofore established by the practice of the Courts, were now to be- questioned; that, if inconvenience result from the construction given to the statute, the correction should be administered by the law-making power.”

Nor does the case of Quarles vs. Kerr, 14 Grat., 54, 58, referred to by appellees’ counsel, sustain their theory. The deed in that case was sot aside, owing to the circumstances of that case, the Court saying “that a delay of two years was equivalent to giving up all claim to the property; that the Courts in Virginia have gone as far, or farther to sustain the owner’s dominion; that the owner may, in good faith, convey his property, or a part of it, to secure the payment of his debts, may postpone for a reasonable time, (to be judged of in each case,) the period for executing the powers of the conveyance,” &c.

From the purport of these decisions, we do not perceive that the law of Virginia is different, from the exposition of it, by the testimony of the experts. The Virginia doctrine, as to the construction of this celebrated statute of 13 Elizabeth, ch. 5, amounts to this, that the presumption of fraud to be deduced from the face of a deed, where its provisions may be explained as consistent with good faith, is discountenanced if not exploded.

(Decided 25th February, 1868.)

The impeached instrument is valid, or otherwise, according to the evidence of its fairness or fraud; the purpose — the fraudulent intent — is the subject of proof, and not necessarily to be inferred, by any fixed and inflexible rule of law; that the Courts will not, as a general rule, pronounce from the face or terms of a deed that it is fraudulent, but permit the fullest investigation to be made by proof as to any fraudulent, intent, or otherwise, admitting evidence dehors, to determine the fraud or honesty of purpose, thus giving what they appear to consider a more reasonable construction of the statute.

From all the testimony, we conclude the law of Virginia does not invalidate this deed from its faee or provisions, and there is no evidence aliunde to authorize this Court to declare it invalid. Differing from the Circuit Court, in its construction of this deed, we reverse the orders of that Court, from which appeals, have been taken; the injunction must be dissolved and the cause remanded for further proceedings in the Court, below to accord with this reversal. The validity of the sales made by the receiver, in the discharge of his duty as an officer of that Court, is not to be affected by this decision, nor his accountability for the proceeds of sale, or other funds remaining in his hands, but he may be required to account with the trustees, in the further proceedings in the Court below. The costs of these appeals to be paid out of the funds in the hands of the receiver.

Orders reversed, injunction dissolved and cause remanded.