Clair v. Colmes

• Decision Date: 25 May 1923
• Citation: 139 N.E. 519,245 Mass. 281
• Parties: CLAIR v. COLMES et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

245 Mass. 281

139 N.E. 519

CLAIR

v.COLMES et al.

Supreme Judicial Court of Massachusetts, Suffolk.

May 25, 1923.

Appeal from Superior Court, Suffolk County; Hammond, Judge.

Bill in equity by Harry Clair against Max Colmes and others. From a decree sustaining a general demurrer to the bill and dismissing the bill, complainant appeals. Reversed.

J. W. Tushins and Donald Stahl, both of Boston, for appellant.

David Stoneman and J. P. Sylvia, Jr., both of Boston, for appellees.

DE COURCY, J.

The bill in equity alleges, in substance, that in the course of certain transactions the plaintiff intrusted to the defendant Max Colmes (hereinafter called the defendant), certain diamonds and jewelry, valued at approximately $4,020, the title of which was to remain in the plaintiff; that they were to be sold in Rutland, Vt., and accounted for to the plaintiff, with a 10 per cent. profit; that after the sale the plaintiff at Boston demanded the return of his merchandise, but the defendant reported that he had been robbed of said property. The bill also avers ‘that said diamonds and jewelry were intrusted to the respondent Max Colmes in a fiduciary capacity for the sole purpose of caring for them and to be returned to your complainant’; that said Colmes was not in fact robbed, ‘but has fraudulently retained, misappropriated, and converted them while in a fiduciary capacity.’ It further alleges that subsequently the defendant was adjudicated a bankrupt, that the plaintiff received a proportionate dividend in the bankruptcy proceedings, and that said Colmes is a member of a copartnership with the other defendants. The defendant filed a demurrer. It was sustained on the ground that no cause for equitable relief was shown by the bill.

An examination of the bill does not clearly disclose on what ground for equitable relief the plaintiff relies. The prayer for an order compelling the defendant to return the goods indicates that the plaintiff is seeking an equitable replevin, under G. L. c. 214, § 3, cl. 1. But the general frame of the bill is one to reach and apply the defendant's interest in a partnership, under section 3, cl. 7. The specific statement that the defendant ‘is still indebted to him in the sum of $2,912.85’ must be taken as true for the purpose of the demurrer, and presumably what the plaintiff means is that he waives the tortious conversion and sues in contract. Although the allegations are uncertain and confusing, we are not prepared to say that the bill as a whole fails to show any ground for equitable relief. See Kilbourne Co. v. Standard Stamp Co., 216 Mass. 118, 103 N. E. 469;Mathieu v. Goldberg (C. C.) 19 Am. Bankr. Rep. 191, 156 Fed. 541.

As to the effect of the defendant's bankruptcy: Under section 17 of the Bankruptcy Act (U. S. Comp. St. § 9601):

‘A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (2) are liabilities * * * for willful and malicious injuries to the person or property of another, * * * or (4) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity.’

As to (4) it has long been settled that the term ‘fiduciary capacity’ relates to technical or express trusts, and does not include trusts implied by law from contracts of agency or bailment. Woodward v. Towne, 127 Mass. 41, 34 Am. Rep. 337;Chapman v. Forsyth, 2 How. 202, 11 L. Ed. 236;Noble v. Hammond, 129 U. S. 65, 9 Sup. Ct. 235, 32 L. Ed. 621;Upshur v. Briscoe, 138 U. S. 365, 11 Sup. Ct. 313, 34 L. Ed. 931. Further, the language of the act apparently applies only to debts created by a person who was already a fiduciary, independently of the particular transaction out of which the debt arose. Cronan v. Cotting, 104 Mass. 245, 6 Am. Rep. 232;Crawford v. Burke, 195 U. S. 176, 25 Sup. Ct. 9, 49 L. Ed. 147. See cases cited in note 42 L. R. A. (N. S.) 1094; 1 Collier on Bankruptcy (4th Ed.) 447. The allegations of the bill do not bring the defendant within this exception. The statement that he retained the property ‘while in a fiduciary capacity’ is a mere conclusion of law and not an averment of fact.

[6][7] The liabilities for ‘willful and malicious injuries,’ which are excepted from the operation of a discharge in bankruptcy under said section 17a(2) relate...