Andrews v. Tuttle-smith Co.
| Decision Date | 15 May 1906 |
| Citation | 78 N.E. 99,191 Mass. 461 |
| Parties | ANDREWS v. TUTTLE-SMITH CO. et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Jesse C. Ivy, for plaintiff.
Chas S. Ensign, Jr., G. Putnam, J. L. Putnam, and W. A. Knowlton for defendants.
At common law a voluntary assignment by a debtor of his property for the benefit of creditors when accepted by the assignee establishes a trust, the enforcement of which may be compelled in equity by a creditor or the assignor, either of whom also may demand and is entitled to an accounting by the assignee of his administration of the assets. New England Bank v. Lewis, 8 Pick. 113, 118; Pingree v Comstock, 18 Pick. 46; Noyes v. West, 3 Cush. 423; Bouve v. Cottle, 143 Mass. 310, 9 N.E. 654; Hudson v. J. B. Parker Machine Co., 173 Mass. 242 53 N.E. 867; Cook v. Sawyer, 188 Mass. 163, 165, 74 N.E. 356. By assignments duly executed, and delivered by the defendant, the Tuttle-Smith Company, the assignees who accepted the trust were vested with the title to all is corporate property, which they were to marshal and administer for the benefit of such creditors as should accept in writing their provisions. While the bill alleges that the second was made in substitution for the first there was but one trust created by both assignments, although one of the assignees named in the second instrument is omitted from the first. By mesne conveyances the plaintiff has acquired all the title and interest of the creditors, who also are alleged to have duly become parties as required, as well as the residuary interest of the corporation, and therefore he is clothed with the right of each to demand and receive from the defendant assignees a full accounting. If by the established procedure of a court of equity such a bill cannot be maintained unless brought in the name of his vendors or assignors yet by Rev. Laws, c. 173, § 4, the right to sue in his own name has been unrestrictedly conferred. Walker v. Brooks, 125 Mass. 241; Gilman v. Producer's Controlling Co., 180 Mass. 319, 62 N.E. 267. Upon referring to the allegations of the bill in substance they set forth the creation of the trust, its acceptance by all of the assignees, their unfaithful administration, either jointly or severally, in permitting a large portion of the assigned property to be wrongfully appropriated by the Hood Rubber Company, one of the creditors, and the retention of a balance in their possession for which they refuse either to account, or to distribute under the terms of the assignments. An accounting, however, properly may be demanded, and an account must be rendered, even if these allegations had been omitted, as this right does not rest upon maladministration, but is based upon the ground that the beneficiaries, which here are composed of creditors, and the debtors are entitled at reasonable periods to be accurately informed as to the administration and disposition of the trust estate. Walker v. Symonds, 3 Swanst. 44, 58; Hardwicke v. Vernon, 14 Ves. Jr. 505, 510; Maverick Congregational Society v. Lovejoy, 6 Allen, 183, 189; Howe v. Morse, 174 Mass. 491, 55 N.E. 213. Ordinarily this is furnished by an interlocutory or final account, showing in detail the marshaling and distribution of the property. Hayes v. Hall, 188 Mass. 510, 74 N.E. 935. If there are a number of trustees, of whom one has failed in his duty without participation by his co-trustees, in the delinquency, he alone may be chargeable with the loss, although the unfaithful act may appear either in the joint accounting, or be shown by extrinsic evidence when the account is presented for settlement and allowance. Hayes v. Hall, 188 Mass., at page 514, 74 N. E., at page 936, and authorities cited. The alleged wrongful act of Hood as an assignee in joining with the Hood Rubber Company in an illegitimate diversion of the property if not participated in by either of his associates, would alone render him accountable for any loss suffered by the creditors, or the debtor, but a separate bill for this purpose would be unnecessary, as an accounting for this disbursement falls in with, and forms a part of the whole scheme of winding up, and of distribution alleged to have been adopted. That the assignees who are charged with misconduct may have been unfaithful in different ways, or that for some of the alleged fraudulent acts all may not be responsible does not render the investigation of their independent conduct so complicated that distinct and irrelevant issues must be tried to the confusion of the principal inquiry, and at great expense or inconvenience to the several parties. Cadigan v. Brown, 120 Mass. 493, 495; Sanborn v. Dwinell, 135 Mass. 236. There is but one inquiry, namely, the proper administration of the estate, in which all have participated, and the advantage which a court of equity has in such an investigation over a court of law is that multiplicity of suits can be prevented, and the liability of each defendant, who is connected with and involved in the principal inquiry may be adjusted by appropriate decree or decrees in the same suit, and the joinder of all participating parties thus becomes necessary for the purpose of affording complete relief. Bliss v. Parks, 175 Mass. 539, 543, 56 N.E. 566; Lenz v. Prescott, 144 Mass. 505, 11 N.E. 923; Dunphy v. Traveller Newspaper Ass'n, 146 Mass. 495, 499, 16 N.E. 426; Von Arnim v. American Tube Works, 188 Mass. 515, 520, 74 N.E. 680. It is true that if a creditor has received an unlawful payment the assignee, or assignees, who either directly or knowingly permitted such a misappropriation would be chargeable with the amount, and then must look to the creditor for reimbursement, yet there is no practical difficulty in making such a creditor a party to a bill which while seeking to charge the assignees also seeks reimbursement from the debtor, so that if the spoilation is established, and the creditor is liable to restore the property, or its value, both purposes can be accomplished in one suit, thus preventing circuity of action, and accordingly the joinder of the Hood Rubber Company as a party defendant does not render the bill multifarious. Ward v. Lewis, 4 Pick. 518; New England Bank v. Lewis, ubi supra; ...
To continue reading
Request your trial