McMurray v. Commonwealth

• Decision Date: 20 September 1924
• Citation: 144 N.E. 718,249 Mass. 574
• Parties: McMURRAY et al. v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

249 Mass. 574

144 N.E. 718

McMURRAY et al.

v.COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 20, 1924.

Case Reserved from Supreme Judicial Court, Suffolk County.

Action by Robert McMurray against the Commonwealth, to have the treasurer thereof authorized to administer trust created by deposit of the New England Equitable Insurance Company for benefit of creditors of that company, in which the Galloway-Pease Company and others intervened. Reservation on bill, answer, intervening petitions, and agreed statement of facts. Case continued until entry of appropriate decree in receivership suit.

E. M. Shanley, of Boston, for plaintiff McMurray.

H. H. Ham, of Boston, receiver of New England Equitable Ins. Co., pro se.

Walter A. Buie, of Boston, for Galloway-Pease Co.

Jay R. Benton, Atty. Gen., and Roger Clapp, Asst. Atty. Gen., for the Commonwealth.

RUGG, C. J.

The New England Equitable Insurance Company (hereafter called the insurance company), organized as an insurance company under the laws of this commonwealth, was engaged prior to 1917 in the business of insurance of various kinds in forty states and territories. In 1917, information was filed against the insurance company under St. 1907, c. 576, § 8. A receiver has been appointed. The insurance company is in fact insolvent. ‘On September 9, 1918, a decree was issued by the Supreme Judicial Court, establishing rules and orders for winding up the affairs of the insurance company. These rules established October 15, 1918, as the date as of which claims of creditors should be computed. The last date set thereunder for filing claims was April 15, 1919, except that creditors whose claims were then in suit were to be allowed upon special petition to file late proofs of claim. On December 23, 1919, the decree was modified by permitting the receiver to accept and allow claims by injured employees of persons and firms insured by the insurance company under workmen's compensation policies, from time to time as they should accrue, and the receivers were authorized to pay, and did pay, by weekly installments, to such employees claiming under workmen's compensation policies, 75 per cent. of their claims as they accrued until July 10, 1918.’ Allowed and undisputed claims aggregate $414,828.98. A large number of claims are known to be in existence, some of which have been filed, but not allowed, and some of which have not been filed. A considerable number of surety and fiduciary bonds on the insurance company are still outstanding, the penal sums in which make a large total.

The insurance company, in 1910 and 1911, in order to do business in such states as made by law such requirement, deposited with the treasurer and receiver general bonds having a par value of $301,000, pursuant to the provisions of St. 1907, c. 576, § 99. See Now G. L. c. 175, § 185.

The plaintiff has an established claim as an employee who has received an injury arising out of and in the course of his employment by an employer insured in the insurance company under the Workmen's Compensation Act. G. L. c. 152. A substantial sum remains due him from the insurance company. He brings this suit in equity against the commonwealth to enforce payment of the balance due him out of the bonds so deposited with the treasurer and receiver general.

The receiver of the insurance company and two creditors of the insurance company resident in other states severally have been allowed to intervene. The case has been reserved for our determination on the bill, answer, the intervening petitions and an agreed statement of facts. The question for decision is of novel impression in this commonwealth. That question is: What is the proper method of distribution of the deposit with the treasurer and receiver general where the insurance company is in fact insolvent and its affairs are being settled by a receiver appointed by the court?

The governing statute makes no specific provision for the disposition of the deposit with the treasurer and receiver general in the event which has occurred. It is enacted that ‘the treasurer and receiver general in his official capacity shall take and hold in trust deposits made by any domestic insurance company for the purpose of complying with the laws of any other state to enable such company to do business in such state, * * *’ and that the Supreme Judicial Court for Suffolk county shall have jurisdiction of a suit such as the one at bar ‘to enforce, administer or terminate the trust created by such deposit.’ These are the only statutory words pertinent to the facts here disclosed. According to the agreed statement of facts the deposit here sought to be reached ‘was made for the benefit of all the policy holders and creditors of the insurance company.’ See St. 1907, c. 576, § 85; G. L. c. 175, § 155.

The statute under which the deposit was made declares a legislative policy. The deposit was required in the first instance in order that the insurance company might be enabled to do business in other states. That is the statutory declaration of its design. Its manifest purpose was to afford assurance to policy holders and beneficiaries in other jurisdictions of the degree of monetary responsibility disclosed by the depost of such an amount of securities with the chief fiscal officer of the Commonwealth. The deposit is in trust. It is a part of every insurance business to settle obligations as well as to attract new contracts of insurance. The trust declared by the statute cannot be said to have been executed until all obligations of the insurance company to policy holders and creditors have been either settled in full and its business closed up on that footing, or if that cannot be done, until all its assets have been distributed fairly and according to law among its policy holders and creditors. The terms of the statutory trust do not in express words restrict the disposition of the deposit to the settlement of obligations due to policy holders. The agreed facts are that it was made ‘for the benefit of all the policy holders and creditors' of the insurance company. This is not in conflict with the statute but is in aid of its general design. It is in accordance with the general legislative policy declared in our statutes. See G. L. c. 175, § 155. The distinction and importance under out frame of government of...