Hopedale Manufacturing Co. v. Clinton Cotton Mills

• Decision Date: 19 May 1916
• Citation: 224 Mass. 193
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: HOPEDALE MANUFACTURING COMPANY v. CLINTON COTTON MILLS& others.

224 Mass. 193

HOPEDALE MANUFACTURING COMPANY v. CLINTON COTTON MILLS& others.

Supreme Judicial Court of Massachusetts, Suffolk.

May 19, 1916

March 8 9, 1916.

Present: RUGG, C.

J., LORING, BRALEY CROSBY, & PIERCE, JJ.

Equity Jurisdiction, To reach and apply equitable assets. Words "Any property . . . or interest."

A suit in equity cannot be maintained against a foreign corporation having no usual place of business in this Commonwealth and a firm with which the corporation had a contract of agency for the sale of its goods to reach and apply toward the payment of a debt of the corporation to the plaintiff property of the corporation alleged to be in the possession of the firm and not to be subject to process in an action at law, where it appears that at the time of service of process upon the firm they did not have possession of any property of the corporation or owe it anything, although, under their contract with the corporation if the corporation fulfilled certain unperformed contracts for goods which the firm had placed with it on behalf of their customers, the firm might at some future time owe money to the corporation.

The "property right, title or interest, legal or equitable, of a debtor" which can be reached and applied by a suit in equity under R.L.c. 159,

Section 3. cl. 7, are those in eidstence when the suit is brought.

BILL IN EQUITY, inserted in a writ of trustee process dated June 25, 1915, seeking to have the defendant Clinton Cotton Mills adjudged indebted to the plaintiff in the sum of $8,096 and interest and to reach and apply in satisfaction, of that debt "any money or moneys due or that may hereafter become due from" the defendants Harding and Tilton to the Clinton Cotton Mills "under any contract or contracts now existing" between them.

The case was heard by McLaughlin, J., on an application for a preliminary injunction against Harding and Tilton, on the bill without an answer, and there were in evidence, besides the contract between Harding and Tilton and the Clinton Cotton Mills, a statement, signed by the plaintiff and the attorney for Harding and Tilton, of what Harding, who was absent, would testify if he were present.

One clause of the contract between Harding and Tilton and the Clinton Cotton Mills was as follows:

Article III, clause 2. "The Agents shall make general advances to the Mill from time to time as required up to the aggregate maximum amount of Two Hundred and Twenty-five Thousand Dollars ($225,000), but not more. They shall also make advances up to the full market value against unsold merchandise consigned to them up to an amount of Twenty-five Thousand Dollars ($25,000), but not more. The Agents shall accept consignments of manufactured products against sales and make payments therefor or advances thereon up to the full market value of such consignments, less commissions, expenses and New York freight allowance. The $225,000 general advances and also any advances up to $25,000 against unsold merchandise shall be covered by six months' notes of the Mill bearing interest at the rate of six per cent (6%) per annum and renewable at the request of the Agents. These notes shall be endorsed by Mercer S. Bailey and William J. Bailey and may be retained by the Agents or used by them in their own loans."

Other provisions of the contract are described in the opinion.

From the statement of Harding it appeared that the entire advance of $225,000 had been made by his firm to the corporation, for which they held the corporation's unmatured notes; that the corporation also owed the firm $7,528.03 for advances by the firm beyond the amounts of sales made by the firm of the corporation's goods, which included sales of goods on ten days' credit for which the firm had not been paid by the customers.

It further appeared from the statement that there also were amounts, probably double in amount the sum claimed by the plaintiff, covered by contracts already entered into by the firm with their customers for delivery of Clinton Cotton Mills products to be manufactured in the future. Such amounts were not payable to the firm in any event until after delivery of the products had been made; but by the terms of the firm's contract they were bound to make deliveries as called for in the contracts, and orders to that effect in every instance had been given by the firm to the Clinton Cotton Mills. As deliveries under such contracts were made the firm would be in position to apply such amounts, less commissions, freight allowances and other charges, to the credit of the Clinton Cotton Mills.

The judge, after finding the facts above described, ruled that under the contract between the Clinton Cotton Mills and Harding and Tilton, the right of the corporation, in accordance with the terms and conditions therein contained, to receive the proceeds of sales of its products under those contracts of sale already made by Harding and Tilton when the notice was served, was not property or any right, title or interest of the Clinton Cotton Mills which could be reached to be attached or taken on execution in an action at law, but was property, right, title and interest of the Clinton Cotton Mills which could be reached and applied under the provisions of R.L.c. 159, Section 3, cl. 7; and accordingly an interlocutory decree for a temporary injunction was issued. Harding and Tilton appealed.

Thereafter Harding and Tilton filed a demurrer and a plea and the Clinton Cotton Mills filed a special appearance and a motion to dismiss the suit, and the plaintiff filed a motion to strike from the record the special appearance and the motion to dismiss.

The suit was further heard upon the demurrer, plea and motions by McLaughlin, J., and by his order an interlocutory decree was issued overruling the demurrer and plea and denying both motions; and, being of the opinion that the two interlocutory decrees above referred to so affected the merits of the controversy that the matter ought to be determined by this court before further proceedings, the judge reported the case, "the decrees to be affirmed or such...