There are nine appeals in this record, which were argued together. Four bills of complaint were filed by Edward C. Carrington, Jr., receiver of the Hammond Ice Company, the Assets Realization Company and the International Trust Company of Maryland, trustee. For convenience we will refer to them by number as they appear in the record. In the first the Thomas C. Basshor Company, Ormond Hammond, Patrick Martin, William H. Evans, C.H. Basshor, and Frederick Dallam were defendants; in thesecond the De La Vergne Refrigerating Machine Company, Messrs. Hammond, Martin, Dallam and Charles T. Westcott were defendants; in the third Messrs. Hammond, Martin, Basshor, Evans, Dallam and John A. *Page 624 Sheridan were defendants, and in the fourth Messrs. Hammond, Martin, Evans and Dallam were defendants. The four bills are substantially the same, excepting in the tenth and eleventh paragraphs and in some particulars mentioned in an agreement of solicitors. Only the first was inserted in the record, together with the titlings of the other cases, the names of the defendants and the two paragraphs just mentioned. The Assets Realization Company was a holder of 354 bonds issued by the Hammond Ice Company, and the International Trust Company is the substituted trustee, under a mortgage or deed of trust given to secure bonds of the Hammond Ice Company. Messrs. Westcott, Martin, Evans, Basshor and Dallam composed the building committee of the Hammond Company and Mr. Hammond was the contractor for building an ice plant to be known as Plant No. 2 of that company. It is alleged in the first bill that moneys were improperly paid to the Thomas C. Basshor Company by Hammond, upon the authority and order of the other defendants in that case; in the second that they were likewise paid to the De La Vergne Refrigerating Machine Company by Hammond, on the orders of the other defendants; in the third, that they were so paid to John A. Sheridan by Hammond on the order of the other defendants, and in the fourth, that they were so paid to Hammond on the orders of those defendants.
As the appeals before us are from orders overruling demurrers, interposed by the defendants, and as they practically present the same questions, we will now consider the first bill mentioned and will then briefly refer to the fourth, as the appellants claim there is some distinction between it and the other three. The first alleges that the Hammond Ice Company, being about to build and equip another plant for the manufacture of ice, in order to provide the funds determined to issue 1,400 bonds of $1,000 each to be secured by a mortgage or deed of trust; that in the mortgage the company covenanted with the trustee and the holder of the bonds that the proceeds from them should be used for the purposes therein set out and none other — the purpose being to build and equip *Page 625 a complete new plant of a designated capacity, to purchase and acquire the necessary ground, property and materials for the erection and construction of storage houses and of a stable and to purchase and acquire all necessary and suitable ice wagons, trucks, horses and harness. A contract between the Hammond Ice Company and Hammond, which is spoken of in the bill and other papers as "Exhibit A" is filed, whereby Hammond undertook to do all that was to be done with the money as stated, and also to provide $125,000 working capital for the use of the company. In Exhibit A the company authorized the building committee to enter into such contracts as might be necessary to obligate the company to deposit the entire issue of bonds with a syndicate manager, but they were not to be sold at less than eighty per cent of their par value.
The building committee and Hammond were authorized to place any or all of said bonds, or the cash received from them, as security for any advance or loan which they thought wise and proper to make or obtain, for the purpose of facilitating the purchase and acquisition of the real and personal property and the erection of the plant. The consideration for what Hammond undertook to do was $1,400,000 of bonds and $2,800,000 of stock, and it was agreed in Exhibit A that the bonds, or the money derived from the sale thereof, or from a loan secured by them, and the stock "shall be delivered to the party of the first part (Hammond) ininstallments from time to time as the work on the plantprogresses, upon orders or certificates of said BuildingCommittee until the completion and acceptance of said plant," when the balance and the stock were to be delivered to Hammond, less $125,000 capital.
Other papers, including a prospectus, agreements, etc., are referred to and one of the agreements was between the City Trust and Banking Company, the building committee, acting on behalf of the Hammond Company, and Ormond Hammond, by which a loan of $300,000 was secured and placed to the credit of Hammond in a special account "to be withdrawn upon checks executed by him, accompanied by certificates or orders of the building committee, and to be used on account *Page 626 of the purchase and acquisition of the property, real, personal and mixed, and the erection of the plant known as Plant No. 2 in Baltimore City, and the storage houses and other property and effects incident thereto, which are particularly described in the said Exhibit hereto attached, as Exhibit A."
The bill then charges that on November 20th, 1902, Hammond drew a check upon the account to the order of the T.C. Basshor Company for $21,000 and the other defendants executed and delivered contemporaneously with the check, an order and certificate directing the payment thereof out of said special account, and the check was paid to that company. It is then specifically alleged that the check was not given for anything in connection with the construction, equipment, or acquisition of Plant No. 2, that at the time the work of acquiring property and constructing the plant had not been begun, no payment was due under Exhibit A nor was the check given for any of the purposes to which, by the terms of the mortgage and contracts, the fund on deposit in said special account was to be devoted, "but it was in fact given in payment of personal debts of said Hammond to the said Thomas C. Basshor Company, wholly unconnected with the construction of said Plant No. 2, or the acquisition of property therefor." It is alleged that the company, Hammond and C.H. Basshor had full notice and knowledge of the purposes for which the fund was deposited and to which it was devoted, and that the payment of the check was a diversion of said fund from said purposes, and that Messrs. Martin, Evans and Dallam "had also full knowledge of the fund out of which said check was being paid, and at the time of the issue of the said certificate either knew that said check was not given for any of the purposes to which said fund was devoted, or made no inquiry and recklessly and negligently executed and delivered the said certificate." It further charges that the Hammond company became insolvent, default was made in the payment of the interest on the bonds, the property was sold and the proceeds paid a little less than 15 per cent on account of the bonds, which remain unsatisfied and unpaid, except to the extent *Page 627 of that dividend, and claims that the defendants are jointly and severally liable and accountable for said entire sum of money with interest. The bill prays that the defendants and each of them be required to bring into court and to pay the plaintiffs the said sum of $21,000 with interest from November 20th, 1902, and for general relief.
The demurrers allege the following grounds: 1. That the plaintiffs have not stated in the bill such a case as entitles them to any relief in equity: 2. That there is a misjoinder of plaintiffs and that the Assets Realization Company and the International Trust Company of Maryland, trustee, are improperly joined therein because there is no privity between them and the defendants, to enable the plaintiffs to maintain said bill against the defendants: 3. That the bill is multifarious because of the joinder of the several plaintiffs therein: 4. For other reasons to be shown at the hearing. The demurrers were sustained as to the Assets Realization Company, and the bill dismissed in so far as it was the bill of that company, and were overruled as to the other two plaintiffs. From that action of the Court the defendants appealed.
The agreements filed as exhibits with the bill sustain the allegations made therein, in reference to their contents. In addition to the one between the company and Hammond, known as Exhibit A, there was one made between the building committee, Hammond and a certain Frank J. Kohler, who was designated the "Syndicate Manager," which is called Exhibit D, and another was made between the City Trust and Banking Company, the building committee and Hammond, called Exhibit E. Exhibit A was expressly made a part of each of those and both were signed by all the members of the building committee, as well as by Hammond. It was by the last one (Exhibit E) that the loan of $300,000 was provided for and it was placed to the credit of Hammond with the Trust Company, with the provisions as to the withdrawal of the money above set forth. Large powers were vested in the building committee by the Hammond Company, and the members of that committee were fully advised as to the terms of *Page 628 the agreements, including their duties, powers, etc. By Exhibit A they were authorized by the company to enter into such contracts and agreements as were necessary for the sale, use, or disposition of the bonds, including a loan to be secured by them for the purpose of facilitating the purchase and acquisition of the property and the erection of the plant, and Exhibit E refers to the powers and authority vested in them by Exhibit A to make or secure loans or advances. As that committee was authorized to act for the Hammond Company, any contracts made by them within the power and authority granted them, would, of course, be binding on the company. Whether or not they had knowledge of what the check to the T.C. Basshor Company was given for, or recklessly and negligently executed and delivered the certificate, is a question of fact, but for the purposes of the demurrers must be assumed to be true. The first question then is, whether a Court of equity has jurisdiction to give relief, if the facts be as alleged in the bill, which we must assume to be true.
It would seem to be clear that this deposit must be treated as a trust fund. It was a special deposit, to be used for specific purposes and could only be withdrawn in a way clearly designated. The Hammond Company had covenanted with the trustee and the bondholders that the proceeds of the bonds should be used for the purposes named in the mortgage "and none other," and in order to protect the company and the bond holders the agreements above referred to were entered into. Although Mr. Hammond was the president of the Hammond company, in this transaction he was a contractor and the building committee represented the company and at the same time undertook to do what would be necessary for the protection of the bond holders. Hammond was a party to the several agreements and knew he had no right to use the money excepting for the purposes designated. It is true it was deposited in his name, but it could not rightfully be withdrawn excepting for some of those purposes and then only on the order or certificate of the committee. Even if he had partly performed his contract, Hammond was not authorized *Page 629 to withdraw any of the fund upon his own checks, but was required to accompany them by the certificates or orders of the building committee and that committee had no authority to give such certificates or orders excepting "in installments from time to time as the work on the plant progresses."
This fund was therefore as clearly impressed with a trust as if it had been in terms delivered to the committee in trust, to be paid out according to the terms of an instrument creating such trust. If that be not so then such arrangements (intended to enable a company or individual to borrow money for the purposes of purchasing property and erecting improvements thereon) could never be made, as no judicious investor would accept the bonds, especially to such a large amount. "Wherever there is a fiduciary relation, although the fiduciary may not hold the legal title to property, in which the beneficiary has only an equitable estate, the dealings of the parties with each other and with the subject matter of the relation are governed by the same rules which determine the duties of actual trustees towards their cestuisque trustent, and the beneficiaries are, in general, entitled to the same remedies which are given to cestuis que trustent, against those who are truly express trustees." 3 Pomeroy's Eq.Juris. 1088. And after stating that the equitable obligations resting upon, and the equitable remedies given against guardians, committees of lunatics, directors, partners, agents, etc., are analagous to those resting upon and given against actual trustees, the author says; "they result direct from the theory of trusts, and are not mere applications of the doctrine concerning accounting." Can it be denied that the company, or the trustee representing the bond holders, could have sought the aid of a Court of equity, if it had been discovered before the money was paid out that Hammond was going to check upon it, or any part of it, for his own purposes, and that the committee was about to give him a certificate to enable him to do so? Clearly not, and for the obvious reason that a Court of equity would treat the fund as impressed with a trust. Why cannot that Court grant then relief to require them to restore what has been improperly *Page 630 diverted from the purposes for which it was thus set apart?
"It is well settled that every violation by a trustee of a duty which equity lays upon him, whether wilful and fraudulent, or done through negligence, or arising through mere oversight or forgetfulness, is a breach of trust. The term, therefore, includes every omission or commission which violates in any manner either of the three great obligations already described; of carrying out the trust according to its terms, of care and diligence in protecting and investing the trust property, and of using perfect good faith. This broad conception of breach of trust and the liabilities created thereby are not confined to trustees regularly and legally appointed; they extend to all persons who are acting trustees or who intermeddle with trust property." 2 Pom. sec. 1079. That statement of the principle applicable to such cases has been approved by this court inDuckett v. Mechanics Bank, 86 Md. 403. Inasmuch as the building committee was appointed for the purpose of representing the Hammond Company and its members undertook the performance of the duties devolved on them by the agreements we have referred to, it would seem clear that they would at least be liable to the company to the same extent that managing officers of a corporation would be. In 3 Pom. sec. 1088, etc., the author has under consideration corporation directors, officers and otherquasi trustees, and he concludes a discussion as to trust relations in stock corporations as follows: "Directors and managing officers, in addition to their functions as mere agents, occupy a double position of partial trust; they are quasi orsub modo trustees for the corporation with respect to the corporate property, and they are quasi or sub modo trustees for the stockholders with respect to their shares of the stock."Ibid. sec. 1090. When the management of an important undertaking, such as this, is placed in the hands of a committee, the principles announced by Mr. Pomeroy are as applicable to the members of the committee as they would be to ordinary managing officers. They are "quasi or sub modo trustees for the corporation with respect to *Page 631 the corporate property" placed under their control, and under such circumstances as we have in this case they should at least be held to the same liability to the bond holders, or their representative, the trustee, as directors and managing officers are to stock holders for their stock, for they had undertaken to see that this money, which primarily belonged to the Hammond company, should be applied to no other use than those provided for in the deed of trust and the contracts. The members of the committee who either knowingly or through carelessness or negligence permitted Hammond to divert part of the fund would, under the principles above announced, be amenable to the company as well as to the trustee. There could be no doubt that Hammond would be, and it would seem to be equally clear that the T.C. Basshor Company would. It was said in Duckett's case, supra, "There is in such instances no primary or secondary liability as respects the parties guilty of, or participating in the breach of trust; because all are equally amenable." And it was said inSafe Deposit Company v. Cahn, 102 Md. 535, that "It is a general principle that all persons who knowingly take part or aid in committing a breach of trust are responsible for the money thus withdrawn from the trust estate, and they may be compelled to replace the fund which they have been instrumental in diverting." The Basshor Company is alleged to have used the check in payment of an individual debt of Hammond due it, and it is charged that it had full knowledge of the purposes to which the fund was devoted and that the payment of the check was a diversion of said fund from those purposes. It was suggested by the appellants that to hold the Basshor Company to such liability would interfere with the ordinary transactions of business, as Hammond might have had that much due him for money he had already spent, for the purposes for which the fund was to be used. But the bill alleges not only that the work of acquiring property and constructing the plant had not been begun and no payment was due him, but that the Basshor Company knew that the payment of the check was a diversion of the fund from the purposes for which *Page 632 it was intended. So without citing other cases which have been decided in this Court, which furnish illustrations of what it has determined to be breaches of trust, we are of the opinion that the allegations in the bill are sufficient to give a Court of equity jurisdiction, and to require the defendants to answer.
2. The second ground of demurrer was that there was a misjoinder of plaintiffs, and that the two corporations were improperly joined because there was no privity between them and the defendants, to enable them to maintain the bill against the defendants. As we have said, the demurrers were sustained as to the Assets Realization Company and hence we are only required to consider this question as to the International Trust Company. It is not necessary in order to sue in equity that the same technical privity exist as might be required in order to sue at law. In this mortgage there is a covenant by the company with the trustee that the proceeds of the bonds should be used for the purposes named, and for none other, and from what we have said in discussing the subject of jurisdiction, it will be seen that in our opinion any portion of the $300,000 that may be recovered should be applied towards the payment of the bonds, as it was a fund deposited in a special account which was to be applied to the purchase and improvement of property covered by the mortgage. The trustee, as the representative of the bond holders, is interested in the recovery of the money which has been diverted from the trust, and under the circumstances its right to be a party plaintiff cannot be defeated on the theory that there is no privity between it and those alleged to have been responsible for the diversion. As is well said in the brief of the appellees, "The proceeds of these bonds having been impressed with a trust by the provisions of the mortgage itself, and these other agreements being executed for the purpose of carrying out these provisions of the mortgage, the defendants who accepted the office of a committee under these agreements assumed the charge of a trust fund, and they, as well as the other defendants who more directly benefited by its misappropriation and diversion, are responsible to the bond holders or their representative *Page 633 on this theory, and not as in an action at law where the sole question would be as to who was entitled to sue for breach of a contract."
The receiver, as the representative of the company, is entitled to unite in the suit because it was also one of the parties for whose benefit the special trust was created, and it is his duty to aid in the recovery of any funds that belong to the company. It may be that all that may be recovered, if anything, will be applied to the payment of the bonds, but it will to that extent extinguish the indebtedness of the company. If all of this fund had still been on deposit when the receiver was appointed, and Hammond was not entitled to it under the terms of the agreement, the receiver would have collected it, but it would have been subject to an equitable lien in favor of the bonds, and both are now interested in having that which is alleged to have been improperly diverted restored by those responsible for its diversion.
3. Nor do we think there is a misjoinder of parties. It is certainly to the advantage of the defendants that these plaintiffs join in one suit, rather than subject them to the annoyance and risk of two suits. They cannot be injured by the joinder of the two. It is a general rule of equity that "all persons having an interest in the object of the suit ought to be made parties." Millers Eq. Procedure, 26 and cases cited. InPhelps Jurid. Eq., sec. 41, it is said "It has been seen that plaintiffs having conflicting or alternative interests cannot be joined. But if plaintiffs several interests are not antagonistic, it matters not that they are distinct, and unconnected plaintiffs may join where there is one connected interest among them all centering in the point in issue." There is no conflict between the plaintiffs, but on the contrary the theory of the bill is that the fund was impressed with a special trust for the benefit of the bonds which both are interested in having paid. For other cases on the subject of multifariousness, see Peters v. VanLear, 4 Gill, 249, Simons Sons Co. v. Maryland Tel. Co.,99 Md. 180, and Neal v. Rathell, 70 Md. 599. In the last case it is said "While there are some general rules applicable *Page 634 to this subject, all the authorities concede that much must be left to the discretion of the Court in particular cases."
4. The point is also made that the members of the building committee are not liable if they acted in good faith and only permitted reasonable advances at the request of Hammond. Of course, we know nothing of the facts, excepting such as are alleged in the bill, and in discussing the questions considered above we only assumed those so alleged to be true for the purposes of the demurrer, but it is distinctly alleged that the work of acquiring property and constructing the plant had not been begun, and no payment was due Hammond under the contract, and the check was not given for any of the purposes to which by the terms of said mortgage and contracts the said fund on deposit in the special account was to be devoted. Inasmuch as Hammond was not entitled to any of the money and the committee was not authorized to execute certificates excepting in installments from time to time as the work on the plant progressed, of course the committee was not authorized to advance money to him for his own purposes, not connected with the contract. Whether or not they had such knowledge or were so negligent, as to be liable to the plaintiffs must depend upon the proof, but we are of the opinion that the demurrers must be overruled and the cases remanded in order that the defendants may answer. We see no difference between the payments made to the third parties by the order of Hammond from those made to him, so far as the questions before us are concerned. The Court below can determine what time shall be allowed the defendants in which to answer.
Orders in the nine appeals (Nos. 75, 76, 77, 78, 79, 80, 81,82 and 83, office docket) affirmed and causes remanded forfurther proceedings. *Page 635