Bailey v. Merchants' Ins. Co.

• Decision Date: 05 April 1913
• Citation: 86 A. 328,110 Me. 348
• Parties: BAILEY v. MERCHANTS' INS. CO. et al.
• Court: Maine Supreme Court

86 A. 328

110 Me. 348

BAILEY

v. MERCHANTS' INS. CO. et al.

Supreme Judicial Court of Maine.

April 5, 1913.

Report from Supreme Judicial Court, Penobscot County, in Equity.

Bill by Taber D. Bailey, administrator de bonis non of the estate of Ignatius Sargent, deceased, against the Merchants' Insurance Company and others. Case reported on bill, demurrer, answers, and proof. Bill sustained.

Argued before WHITEHOUSE, C. J., and SAVAGE, CORNISH, KING, BIRD, and HANSON, JJ.

Taber D. Bailey, of Bangor, for plaintiff. E. C. Ryder, of Bangor, for defendant Merchants' Ins.

Co. Philbrook & Andrews, of Augusta, for defendant Metropolitan Nat. Bank.

WHITEHOUSE, C. J. This is a bill in equity brought by the plaintiff as administrator de bonis non of the estate of Ignatius Sargent, of Machias, Me., against the Merchants' Insurance Company of Bangor, the Metropolitan National Bank, and Charles Sargent of Boston.

The following allegations are made in the several paragraphs of the bill:

(1) Ignatius Sargent died intestate in 1887, and August 2d of that year his son, the defendant Charles Sargent, was appointed administrator of the estate. Among the assets of the estate was a certificate of 20 shares of the defendant insurance company issued to the intestate, Ignatius Sargent, the year before he died.

(2) In September, 1900, Charles Sargent transferred this certificate of stock to himself personally, without the order of the probate court and without the knowledge or consent of the other heirs; and in July, 1904, delivered this certificate to the defendant National Bank as collateral security for a loan of $1,600, for which he gave his note to the bank with a power of attorney authorizing a transfer of the stock.

(3) In January, 1905, he gave to the bank a renewal note for the loan of $1,600, stating that the stock was held by the bank as collateral security.

4) No part of the principal of this loan or of the Interest thereon has ever been paid by Charles Sargent or any one in his behalf.

(5) September 9, 1902, by order of the probate court, Charles Sargent was removed as administrator, and there was no administrator of the estate until the appointment of the plaintiff in May, 1909.

(6) In May, 1908, the Metropolitan Bank brought a bill in equity against the Merchants' Insurance Company, asking that a new certificate of the 20 shares of stock be issued to the bank upon the surrender of the old one held by it.

In August, 1908, the insurance company brought a bill in the nature of an interpleader against the Metropolitan Bank, Charles Sargent of Boston, Ignatius M. Sargent of Machias. and Lincoln H. Newcomb of East-port, who was represented to be administrator de bonis non of the estate of Ignatius Sargent.

January 15, 1909, a final decree was signed and filed in the case, whereby the insurance company was ordered to issue to the Metropolitan'Bank a new certificate for the 20 shares of stock in question upon surrender of the old certificate, and it was declared that neither Ignatius M. Sargent nor Lincoln H. Newcomb either personally or as administrator de bonis non had any right or title to the stock.

(7) In pursuance of this decree the insurance company issued a new certificate to the bank, and paid to the bank the accumulated dividends on the stock amounting to $619.02.

(8) The plaintiff further says that Lincoln H. Newcomb was never administrator de bonis non of the estate of Ignatius Sargent; that there was no legal representative of the estate in said equity suit; that the estate was not made a party to it; that the court had no jurisdiction over it; and that the decree entered in that suit was without legal force or effect upon the estate.

(9) The plaintiff alleges that Charles Sargent, as administrator, had no authority to transfer said certificate of stock to himself personally and pledge the same for his personal debt; that the Metropolitan Bank had notice of that fact; that it was a fraud upon the estate for the administrator so to transfer and pledge the stock; and that the estate of Ignatius Sargent is the rightful owner of the stock.

(10) Finally, the plaintiff states that the stock in question has a market value of $175 per share; that it is pledged for only $80 per share; that the dividends are more than sufficient to pay the interest on the loan; and, even if the transaction of pledging the stock to the bank is valid, that it is inequitable for the bank to retain the whole of the stock for a debt amounting to only one-half of it.

The plaintiff accordingly prays that the insurance company may be ordered to cancel the certificate of stock issued to the Metropolitan Bank, and issue a new one to the estate of Ignatius Sargent, and pay to the plaintiff the dividends accrued thereon. But, if the transfer of stock by Charles Sargent to the bank is valid, then upon the payment by the estate to the bank of the amount of the loan with interest, less the dividends received by the bank, that the bank be ordered to transfer the certificate of stock to the estate, and the insurance company ordered to record such transfer upon the books of the company.

There is also a prayer for general relief.

The Metropolitan Bank filed a demurrer to the plaintiff's bill, and both the bank and the insurance company have filed answers, but the bill has been taken pro confesso against Charles Sargent. The case is reported to the law court on bill, demurrer, answers, and proof.

The causes of demurrer assigned by the bank are, first, that the matters set out in the bill are insufficient to entitle the plaintiff to equitable relief; second, that the plaintiff is not entitled to the relief prayed for because the decree in the bill of interpleader filed by the bank, a copy of which is annexed to the bill, is still in full force, and because the plaintiff has an adequate remedy at law.

For the purpose of considering the sufficiency of the plaintiff's bill, the demurrer admits all allegations of fact well pleaded. As above shown, the bill now before the court alleges that Lincoln H. Newcomb was never administrator de. bonis non of the estate of Ignatius Sargent; that he never represented the estate in any capacity; that there was no legal representative of the estate in court in the interpleader suit; and that the estate was not a party to that suit. These allegations of fact are admitted by the demurrer.

It is also alleged in the bill, and admitted by the demurrer, that upon the record of the bill of interpleader Lincoln H. Newcomb was made a party to that suit "under the name and style of administrator de bonis non of the estate of Ignatius Sargent, and that the bill of interpleader was taken pro confesso as to him in that capacity." Thus, from an examination of the bill and demurrer in this suit, it satisfactorily appears that the decree in this interpleader case was erroneous, that it was entered through mistake, but that the error is not apparent upon the face of the record.

In support of the demurrer it is contended by counsel for the bank that, inasmuch as the prayer in the present bill asks for a cancellation of the certificate of stock issued to the bank and the issuance of a new certificate to the estate of Ignatius Sargent, it is equivalent to a prayer for the revocation of the decree in the interpleader suit, and that the only method by which the plaintiff could attack that decree was by a strict bill of review.

On the other hand, the plaintiff contends that, inasmuch as the want of a necessary party in the former suit is not an error or defect apparent on the record, the decree cannot be attacked by the ordinary bill of review, and admits that his bill is not strictly a bill of review, but an original bill brought by the plaintiff as administrator of the estate, primarily to obtain affirmative relief for the benefit of the heirs, and incidentally to impeach the decree in the former suit, so far as that decree, void against the estate of Ignatius Sargent, has interfered with the property and impaired the rights of the estate.

It is undoubtedly a general rule in chancery practice that a decree signed and entered cannot be impeached or vacated except by a bill of review, or by an original bill for fraud. But there are exceptions to this general rule in general chancery practice as well as under our statutes. Thus, in cases not heard on the merits, a decree obtained through surprise, accident, or mistake may be impeached by an original bill for that purpose in general chancery practice. Herbert v. Rowles, 30 Md. 278; Bank v. Eccleston, 48 Md. 145; Cawley v. Leonard. 28 N. J. Bq. 467; Whitehouse, Eq. Prac. 302.

In Arnold v. Moyers, 1 Lea (Tenn.) 308 a decree had been entered apparently binding upon the estate of a deceased person at a time when, by reason of his death and of the failure to bring in the administrator, the estate was without representation in court; and it was held that it was not "error apparent" because the defect was not apparent on the records, and that it did not furnish the basis for an ordinary bill of review.

Furthermore, it is said to be the prevailing rule that, when the return or record shows the service of a bill to have been made upon the proper person or official, this can be contradicted in a collateral proceeding so as to show the judgment void. Raymond v Rockland Co., 40 Conn. 401; State Ins. Co. v. Waterhouse, 78 Iowa, 674, 43 N. W. 611; Jones v. Ore Co. (N. J.) 3 Atl. 517; Vanneet's Collateral Attack, 462.

[41 The plaintiff's present bill substantially meets all of the requirements of an original bill in the nature of a bill to impeach a decree. It not only states the decree complained of, but annexes a copy of it to the bill. It sufficiently alleges the entire failure of any representation of the estate in the former suit as the ground upon which the incidental impeachment of the decree is sought, and states the facts and circumstances by which it is made apparent that...