Foster v. Evans

• Decision Date: 11 December 1981
• Citation: 429 N.E.2d 995,384 Mass. 687
• Parties: Ira C. FOSTER 1 v. Philip A. EVANS et al. 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 995

429 N.E.2d 995

384 Mass. 687

Ira C. FOSTER ¹ v. Philip A. EVANS et al. ²

Supreme Judicial Court of Massachusetts, Essex.

Argued Sept. 14, 1981.

Decided Dec. 11, 1981.

Sumner H. Smith, Lynn, for defendants.

William H. Sheehan, III, Danvers, for plaintiff.

Before HENNESSEY, C. J., and WILKINS, LIACOS, ABRAMS, NOLAN and LYNCH, JJ.

LYNCH, Justice.

This case is before this court on the plaintiff's application for further appellate review following a decision of the Appeals Court that the Probate Court lacked jurisdiction under G.L. c. 215, § 6, to entertain a creditor's suit to reach property fraudulently conveyed by a judgment debtor and to apply that property toward satisfaction of a Superior Court judgment. Foster v. Evans, --- Mass.App. ---, Mass.App.Ct.Adv.Sh. (1980) 2063, 412 N.E.2d 915. We affirm the judgment of the Probate Court.

On June 12, 1972, the plaintiff recovered a judgment in the Superior Court in the sum of $17,728.63 on a promissory note made by the defendants, Philip A. Evans and his son Philip W. Evans, in connection with the purchase of a business. On May 23, 1974, the plaintiff brought this action in the Probate Court for Essex County, seeking to reach and apply the interest of Philip W. Evans in certain residential real estate in Danvers toward satisfaction of the plaintiff's Superior Court judgment and alleging that Philip W. Evans fraudulently conveyed his interest in the property to his wife, Mary P. Evans. The Probate Court judge found for the plaintiff, ordered a reconveyance of the property from Mary P. Evans as sole owner to Philip W. and Mary P. Evans, as tenants by the entirety, and ordered a sale of Philip W. Evans's interest in the property, with proceeds of the sale to be applied toward satisfaction of the plaintiff's judgment. The defendants appealed.

The Probate Court judge relied on G.L. c. 214, § 3(8), and on the first paragraph of G.L. c. 215, § 6, as granting jurisdiction. The Appeals Court concluded that an action attacking a fraudulent conveyance was unknown to traditional equity jurisdiction and thus the plaintiff's reliance on G.L. c. 215, § 6, was misplaced. Foster v. Evans, supra, --- Mass.App. at --- - --- Mass.App.Ct.Adv.Sh. (1980) at 2064-2065, 412 N.E.2d 915. We conclude that actions of this nature may be classified as statutory or nonstatutory, that the Probate Court acquired jurisdiction of nonstatutory creditors' actions under G.L. c. 215, § 6, and that the essential elements of a nonstatutory action were before the Probate Court. ³

1. Statutory or special jurisdiction. Since 1963, ⁴ the Probate Court has had original and concurrent jurisdiction with the Supreme Judicial and Superior Court over "all cases and matters of equity cognizable under the general principles of equity jurisprudence," with certain exceptions not here material. G.L. c. 215, § 6, as amended through St.1975, c. 400, § 55. The Supreme Judicial and Superior Courts have, in addition to the general equity jurisdiction conferred upon them by G.L. c. 214, § 1, special jurisdiction over the types of actions enumerated in G.L. c. 214, § 3. Section 3 "authorizes the courts to do certain things which they could not do under their general (equity) jurisdiction, and impliedly authorizes them to take any measures analogous to ordinary proceedings of courts of equity which may be necessary or proper to accomplish the work which they are set to do." Wilson v. Martin-Wilson Automatic Fire Alarm Co., 151 Mass. 515, 519, 24 N.E. 784 (1890).

Clause 8 of G.L. c. 214, § 3, as appearing in St.1973, c. 1114, § 62, grants the Supreme Judicial and Superior Courts jurisdiction over "(a)ctions to reach and apply in payment of a debt any property ... of a debtor, liable to be attached or taken on execution ... and fraudulently conveyed by him with intent to defeat, delay or defraud his creditors ...." The Probate Court judge relied in part on cl. 8 in granting relief to the plaintiff here, and the Appeals Court correctly held that reliance to be misplaced.

The Legislature, in enacting the predecessor of G.L. c. 214, § 3, made available to creditors a means of obtaining relief that was not within traditional equity jurisdiction. Stockbridge v. Mixer, 215 Mass. 415, 418, 102 N.E. 646 (1913); Pettibone v. Toledo, Cincinnati & St. Louis R.R., 148 Mass. 411, 417-418, 19 N.E. 337 (1889). The Legislature clearly limited jurisdiction over this statutory action to reach and apply to the Supreme Judicial and Superior Courts, and we so held in Moseley v. Moseley, 240 Mass. 1, 132 N.E. 417 (1921). The subsequent enactment of St.1963, c. 820, § 1, which gave the Probate Court jurisdiction over "all cases and matters of equity ... jurisprudence," did not grant the Probate Court jurisdiction to hear actions brought under G.L. c. 214, § 3, since such actions were not cognizable under traditional principles of equity jurisprudence.

2. General equity jurisdiction. The Probate Court judge also found jurisdiction under G.L. c. 215, § 6, the statute granting general equity jurisdiction to the Probate Court. The Appeals Court held that it was error to find jurisdiction under G.L. c. 215, § 6, because the statutory action to reach and apply, created by G.L. c. 214, § 3(8), is not "one known to traditional equity jurisdiction." Foster v. Evans, --- Mass.App. at ---, Mass.App.Ct.Adv.Sh. (1980) at 2065, 412 N.E.2d 915. The Appeals Court cited Blumenthal v. Blumenthal, 303 Mass. 275, 278, 21 N.E.2d 244 (1939), and referred to a number of our earlier decisions: Geen v. Old Colony Trust Co., 294 Mass. 601, 602-603, 3 N.E.2d 9 (1936); Stockbridge v. Mixer, supra, 215 Mass. at 415-418, 102 N.E. 646; Pettibone v. Toledo, Cincinnati & St. Louis R.R., supra 148 Mass. at 416-418, 19 N.E. 337; Powers v. Raymond, 137 Mass. 483, 484 (1884).

The difficulty with this resolution of the jurisdiction issue is that it relies heavily on the language of Blumenthal v. Blumenthal, supra, ⁵ while failing to take cognizance of a long established but seemingly divergent body of law in this Commonwealth to the effect that nonstatutory creditors' bills could be brought in courts of equity by creditors "who have in vain attempted at law to obtain satisfaction of (their) judgments, and who sue in equity for the purpose of reaching property which could not be taken on execution at law." Pettibone v. Toledo, Cincinnati & St. Louis R.R., supra, 148 Mass. at 417, 19 N.E. 337. This use of nonstatutory creditors' bills as an aid to litigants seeking to satisfy their judgments has been recognized by a long line of cases and by leading writers on the subject of equity jurisprudence in this Commonwealth. Wax v. Monks, 327 Mass. 1, 3, 96 N.E.2d 704 (1951); Beacon Oil Co. v. Maniatis, 284 Mass. 574, 188 N.E. 386 (1933); Pickard v. Clancy, 225 Mass. 89, 113 N.E. 838 (1916); Geer v. Horton, 159 Mass. 259, 261, 34 N.E 269 (1893); Powers v. Raymond, supra; Carver v. Peck, 131 Mass. 291, 293 (1881); L.A. Reed, Equity Pleading and Practice § 292 (1952); J. R. Nolan, Equitable Remedies § 388 (1975). See generally 21 Am.Jur.2d, Creditors' Bills, § 1 et seq. (1981).

Thus while this court has said that suits in equity to set aside a fraudulent conveyance are not cognizable under general equity jurisdiction, our decisions have long recognized that there was available in equity a remedy called a "creditor's bill", a remedy similar, but not identical, to what is now commonly known as a bill to reach and apply.

This court has also pointed out that the creation of a statutory action to reach and apply did not abolish the older equitable action. See Wax v. Monks, supra ("The bill in the present case was not a bill to reach and apply under (G.L. c. 214, § 3(8) ), but was a nonstatutory creditors' bill"); First Nat'l Bank v. Nichols, 294 Mass. 173, 182, 200 N.E. 869 (1936); Rioux v. Cronin, 222 Mass. 131, 137, 109 N.E. 898 (1915); Parkhurst v. Almy, 222 Mass. 27, 33, 109 N.E. 733 (1915) ("It is not sought in the present bill to establish a claim against the ... defendants (since judgments against them have become final).... What is sought is to have applied to the satisfaction of these (judgments) property which cannot be taken on execution at law.... (A) creditor who has reduced his claim to a judgment ... can ... maintain a bill in equity to reach and apply in satisfaction of it property which cannot be taken on execution at common law").

What might appear to be an inconsistency between Blumenthal v. Blumenthal, supra, and those decisions recognizing creditors' bills disappears when the opinions are carefully analyzed in the context of their historical genesis. In 1851 the Legislature supplemented the common law creditor's bill in equity with a new statutory remedy for creditors. ⁶ "The manifest purpose of the Legislature ... was to ... provide in equity in aid of the law a remedy analogous to that of creditors' suits under general equity jurisdiction." Orange Hardware Co. v. Ryan, 272 Mass. 413, 416, 172 N.E. 654 (1930). This new statutory action to reach and apply, unlike the creditor's bill, did not require the creditor to reduce his claim to judgment or to exhaust his legal remedies. Pettibone v. Toledo, Cincinnati & St. Louis R.R., supra, 148 Mass. at 417-418, 19 N.E. 337. The statutory creditor's action, now authorized by G.L. c. 214, § 3(8), "combines in a single proceeding two different matters or steps in procedure, one at law and the other in equity. The first is the establishment of an indebtedness on the part of the ... defendant to the plaintiff. The second is the process for collecting the debt, when established, out of property rights which cannot be reached on an execution. In essence the first is an action at common law and the second a well recognized head of relief in chancery." Stockbridge v. Mixer, supra, 215 Mass. at 418, 102 N.E. 646. Thus, since 1851, the Legislature has provided a more efficient remedy for creditors than the...