Lyman v. Bonney
| Decision Date | 03 September 1875 |
| Citation | 118 Mass. 222 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | Susan B. Lyman v. Pelham Bonney & others |
Argued November 19, 1874
Suffolk. Bill in equity against the president and directors of the State Mutual Fire Insurance Company, and against the said company, to recover the amount unpaid upon a policy of insurance against fire, upon which a judgment had been recovered and execution issued, and alleging that the defendants, having the funds of the company in their hands sufficient to pay this claim, neglected and refused to pay it, and applied the funds to other purposes by distributing them among themselves and the other stockholders, and conducted the affairs of the company with gross negligence and in fraud of the rights of the plaintiff. The case was referred to a master to hear the parties and report the facts to the court, and, upon the coming in of the master's report, was reserved by Devens, J., for the consideration of the full court, upon that report, the nature of which appears in the opinion.
Bill dismissed, with costs.
R. M Morse, Jr., for the plaintiff.
B. F Thomas & T. S. Harlow, for the defendants.
OPINION
The funds of the insurance company of which the individual defendants were directors were held in trust to pay the debts of the company. The bill charges that the directors negligently and fraudulently applied these funds to other purposes by distributing them among themselves and other stockholders and these allegations, as already held in this case on demurrer, are sufficient to give the court jurisdiction in equity. 101 Mass. 562.
The case was sent to a master to report the facts, and is reserved upon his report. It appears that the plaintiff is the holder of a judgment against the company, in part unsatisfied, which was recovered upon a policy of insurance held by her, at the end of a protracted litigation in which the company denied all liability. While that litigation was in progress, the business of the company was closed up by vote of the directors, the outstanding policies were cancelled and dividends paid to policy holders. The master finds that the plaintiff's claim was contested in good faith by advice of counsel; that a sum was reserved by the directors which was thought in good faith to be sufficient to meet expenses and all claims against the company, including the plaintiff's; that the defendants did...
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Cosmopolitan Trust Co. v. Mitchell
...Mass. 499, 502;Ashley v. Winkley, 209 Mass. 509;Pine v. White, 175 Mass. 585, 590.' It also is there pointed out that cases like Lyman v. Bonney, 118 Mass. 222, and Hill v. Murphy, 212 Mass. 1, 98 N. E. 781,40 L. R. A. (N. S.) 1102, Ann. Cas. 1913C, 374, to the effect that directors of pure......
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Cosmopolitan Trust Company v. Mitchell
... ... Winkley, 209 Mass. 509 ... Pine v ... White, 175 Mass. 585 , 590 ... " It also is ... there pointed out that cases like Lyman v. Bonney, ... 118 Mass. 222 , and Hill v. Murphy, 212 Mass. 1 , to ... the effect that directors of pure business corporations ... acting ... ...
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...249 N. Y. 335, 164 N. E. 242. The conclusion that the defendants have committed no actionable wrong is supported in principle by Lyman v. Bonney, 118 Mass. 222;New England Trust Co. v. Abbott, 162 Mass. 148, 38 N. E. 432,27 L. R. A. 271;Fillebrown v. Hayward, 190 Mass. 472, 475, 477, 478, 7......
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