Lane v. J. W. Lavery & Son, Inc.

• Decision Date: 16 April 1936
• Citation: 294 Mass. 288,1 N.E.2d 378
• Parties: LANE v. J. W. LAVERY & SON, Inc., et al. (two cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

294 Mass. 288

1 N.E.2d 378

LANE v. J. W. LAVERY & SON, Inc., et al. (two cases).

Supreme Judicial Court of Massachusetts, Suffolk.

April 16, 1936

Two suits in equity by Mary E. Lane, individually and as administratrix, against J. W. Lavery & Son, Inc. On report by the trial judge of interlocutory matters.

Cases remanded, with directions.

Appeal from Superior Court, Suffolk County; Greenhalge, judge.

J. F Cronan and W. J. McCarty, both of Boston, for plaintiff.

W. P Kelley and E. Donovan, both of Boston, for defendants.

DONAHUE, Justice.

These are two bills in equity in the first of which the plaintiff sought to recover as a stockholder on behalf of the defendant corporation certain sums of money alleged to have been taken or withheld wrongfully from the funds of the corporation by the defendant Lavery who was its treasurer, and, in the second, to recover from the defendant Lavery certain sums of money alleged to be due her intestate.

The cases were tried together before a master and were then heard on the master's report before a judge of the superior court who entered interlocutory decrees overruling the defendants' exceptions to the master's report and confirming the report. The defendants appealed from these interlocutory decrees.

The judge filed a ‘ Statement of Findings, Rulings and Order for Final Decrees.’ He therein ruled that the plaintiff might maintain her bills and was entitled to such measure of relief as they afforded, but suggested that, in view of the master's findings, more complete and satisfactory relief might be available to the plaintiff if she amended her bills or either of them and sought not only the sums alleged to be due her intestate but also property of which the master found her intestate had been defrauded in the organization of a corporation and the transfer of assets to it. Accordingly the order entered provided that unless the bills were amended within sixty days a final decree should be entered in the first case requiring the defendant Lavery to pay to the corporation within a reasonable time the sum of $77,023.87 with interest, and that a final decree should be entered in the second case requiring the defendant Lavery to pay the plaintiff administratrix within a reasonable time the sum of $3,180.75 and also requiring the delivery to her of a single share of stock standing in the name of another defendant.

The plaintiff within the time stated in the order for final decrees filed a motion in the case which she had brought as administratrix asking that she be permitted to amend the bill by making herself as an individual a party plaintiff and by substituting for the bill originally filed an amended bill of complaint filed with the motion. In the case brought by the plaintiff as an individual she filed a motion for leave to amend the bill by substituting an amended bill of complaint filed therewith. These motions were heard by another judge of the superior court. On the motion filed in the case originally brought by the plaintiff as administratrix the second judge entered the order: ‘ Allowed by the Court and defendant granted leave to file pleadings thereto’ on or before a day stated. On the motion in the other case he entered the order: ‘ * * * Allowed by the Court defendants not objecting thereto. Defendants allowed to and including * * * [a day stated] to file pleadings.’ On the day stated the defendants filed in the case brought by the plaintiff as administratrix an answer to the plaintiff's amended bill. In the other case they filed a plea, a demurrer and an answer to the plaintiff's amended bill.

The plaintiff thereupon filed motions to strike out the defendants' answers to the amended bills and motions to dismiss the defendants' plea and demurrer. The cases then came again before the first judge ‘ upon the demurrers and answers so filed and upon the plaintiff's motions to strike out such demurrers and answers and for final decrees.’

The judge acting under the authority of the second sentence of section 111 of G.L.(Ter.Ed.) c. 231, here reports for the determination of this court two matters: First his action in denying the plaintiff's motions to strike out the answers and demurrers filed by the defendants and second the question whether the defendants are entitled to a further hearing on the facts. The report states that he was in doubt whether he had the power or authority to strike out the demurrers and answers and to enter final decrees and that ‘ accordingly’ he denied the motions. The report further states: ‘ While I am myself satisfied that the issues covered by the amended bills have been fully heard by the master, it does not appear that these bills were allowed to be filed by reason of any ascertainment of that fact by the court or for the purpose of making the allegations of the bills conform to the facts found by the master or of affording the relief to which the plaintiff in the one or the other capacity in which she sues might be entitled. Moreover the court expressly permitted the demurrers and answers to be filed. * * * Believing, however, that the facts have been fully ascertained in respect to the matters alleged in the amended bills and that upon proper allegations being made, full and adequate relief may be afforded to the plaintiff without the further delay and expense necessarily involved in a second reference, and being of the opinion that the order denying the motions to strike out so affects the merits of the controversy that the matter ought before further proceedings to be determined by the Full Court, I report my action thereon and the question whether the defendants are entitled to further hearing upon the facts. * * *’

From the report it is apparent that the judge denied the plaintiff's motion to strike out pleadings filed by the defendants to the plaintiff's amended bills solely because he doubted his power and authority to allow them. His doubt was due to the fact that since the time when he had heard the cases they had come before a second judge who, in allowing the plaintiff's motions to amend, granted leave to the defendants to file pleadings thereto.

The cases when originally before the first judge were heard not merely on interlocutory matters but for the determination of the ultimate step to be taken by the superior court on all bills in equity, that is the entry of proper final decrees. With that purpose he considered the cases and reached in his mind and expressed in the order for final decrees which he filed, his conclusions. For one thing he found that the plaintiff was entitled to maintain the bills as they then read and was entitled to the limited relief which the allegations and prayers of the bills then permitted. But he also reached and expressed in his order a further conclusion namely, that a fact found by the master might entitle the plaintiff to further relief if the bills should be so amended as to include such relief. The fact referred to was fraud by the defendant Lavery which was perpetrated on the plaintiff's intestate in the organization of the corporation and the transfer to it of the partnership assets. That act of fraud was not known to the plaintiff when her bills were filed. Evidence of it appeared during the hearings before the master who by his findings established the fact of fraud. In his order for final decrees the judge suggested an amendment to the bills, manifestly to make the plaintiff's pleadings correspond to the proof. Shelley v. Smith, 271 Mass. 106, 113, 170 N.E. 826; Pizer v. Hunt, 250 Mass. 498, 504, 505, 146 N.E. 7. By that order the plaintiff was given the choice of taking the limited relief which her bills then afforded or of seeking an amendment which would permit her to obtain relief for the specific fraud established by the master's report as above stated. The plaintiff followed this suggestion as to amending and her motions for leave to amend the...