Albre v. Sinclair Const. Co.
| Decision Date | 04 April 1963 |
| Parties | Laurence ALBRE, Junior, et al. v. SINCLAIR CONSTRUCTION COMPANY, Inc., et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Joseph B. Manello, Boston (Julius Thannhauser and David J. Cohen, Boston, with him), for plaintiffs.
Robert J. Sherer, Boston, for Chiswick Arms, Inc. and another.
Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER and KIRK, JJ.
The Superior Court, after hearing and before answer, by separate decrees appointed receivers of the property of Chiswick Arms Inc. (Chiswick) and the property of The Regency Arms Inc. (Rogency), and Chiswick and Regency have appealed. No evidence is reported and the only question is whether the decrees could have been entered on the allegations of the bill. Commissioner of Ins. v. Commonwealth Mut. Liab. Ins. Co., 297 Mass. 219, 220, 8 N.E.2d 759. Each decree imports the finding of every fact necessary to support it. Ibid. Smith v. Wheeler, 326 Mass. 223, 225, 93 N.E.2d 544, 18 A.L.R.2d 516.
The decrees were so far final in nature as to be appealable. New England Theatres, Inc. v. Olympia Theatres, Inc., 287 Mass. 485, 490, 192 N.E. 93. See Lynde v. Vose, 326 Mass. 621, 622-623, 96 N.E.2d 172.
The bill of complaint is brought by assignees (for convenience of suit) of creditors of Sinclair Construction Company, Inc. (Sinclair). It discloses that the plaintiffs' assignors are unpaid suppliers of Sinclair as the contractor on two defaulted building construction projects who rely on special circumstances to give them rights to proceed against the owners, although the assignors are not creditors of the owners.
It is alleged that Sinclair in October, 1961, contracted separately with Chiswick and with Regency to construct for each an F. H. A. housing project. The defendant The Provident Institution for Savings in the Town of Boston (Provident) is the construction mortgagee of each project. The defendant Peerless Insurance Co. (Peerless) is the surety on two bonds on which Sinclair is principal given respectively to Chiswick and Regency, each conditioned on the performance by Sinclair of the construction contract and the full payment of labor and materials furnished pursuant thereto. The plaintiffs' assignors supplied labor or materials to Sinclair. Their unpaid claims total over $361,000.
In July, 1962, Chiswick and Regency declared Sinclair in default under their respective contracts and refused to make further payments. Sinclair denies default and claims $200,000 due for extras and that Chiswick and Regency are in default. Provident advanced approximately $1,875,903 and on September 12, 1962, made entry and intends to engage another contractor to complete the projects. Peerless refuses to pay the suppliers claiming that its first obligations are to Chiswick, Regency, and Provident, and also that Sinclair is not in default.
Provident on July 23, 1962, paid over to the defendant Frederick W. Roche, Esquire, attorney for Chiswick and Regency, $136,512, which is due and owing to the suppliers and which he refuses to pay to them. There is a ten per cent retainage of about $200,000 held by Provident.
The foregoing allegations do not portray an unusual situation. The plaintiffs, however, rely on additional averments: The defendant James S. Turner caused Sinclair to be incorporated and is its sole stockholder, president, and treasurer and the person in charge of its business. Turner also caused Chiswick and Regency to be incorporated and was a stockholder, the president, and a director of each. The defendant Gerald Schuster was an incorporator and stockholder and the treasurer and a director of Chiswick and of Regency. Turner owned the land on which the housing projects were begun and in October, 1961, conveyed to Chiswick and Regency, respectively, for a nominal consideration, the parcel or parcels on which its project stands. Sometime in 1962 the interests of Turner and Schuster in Chiswick and Regency were sold or otherwise transferred to the defendants Lewis Baskin, Charles H. McLaughlin (now officers and directors of each) and Carl Baskin (now a director of each). The 'books and records of * * * Turner, Schuster, Sinclair, Chiswick, and Regency, with respect to the two construction projects are such that it is difficult, if not impossible, to determine their true financial condition.' Sinclair, Regency, and Chiswick are insolvent in that they are unable to pay their debts as they mature. The 'assets of Sinclair, Chiswick, and Regency have been so intermingled, concealed, and hidden by * * * Turner, Schuster, the Baskins, and McLaughlin, that they cannot be reached in any type of law action to satisfy the claims of the suppliers.' Receivers are essential for Sinclair, Chiswick, and Regency 'to prevent dissipation and concealment of assets.' Several suppliers have attachments on real estate of Regency or Chiswick in actions against Sinclair, Regency or Chiswick.
The plaintiffs also stress that the building loan agreements with Provident require that 'the Borrower * * * receive all advances hereunder as a trust fund to be applied first for the purpose of paying for the cost of the improvements before using any part of the total for any other purpose.' They rely also on G.L. c. 266, § 38A, which imposes a criminal penalty for applying the proceeds of a building or construction loan to any use other than the 'payment for labor * * * and/or materials' before such payment is made.
The bill prays for an injunction against any disposition of the assets of Sinclair, Chiswick or Regency; that Mr. Roche be enjoined from paying out the sum held by him, that Provident be enjoined from making a new construction contract, that Chiswick and Regency be enjoined from disposing of their real estate, that the liability of the defendants other than Chiswick and Regency to make payment to suppliers be determined, and that the 'assets of Sinclair, Chiswick, and Regency which may have been concealed, secreted, or otherwise improperly disposed of, be reached and applied in satisfaction of the claims of the plaintiffs and other suppliers of labor and material used in connection with the construction of said projects.'
The appellants' brief informs us that a receiver was also appointed for...
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