Merchants Discount Co. v. Esther Abelson, Inc.
| Decision Date | 28 June 1937 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | MERCHANTS DISCOUNT COMPANY v. ESTHER ABELSON, INC.& others. |
May 11, 1937.
Present: RUGG, C.
J., CROSBY, PIERCE DONAHUE, & QUA, JJ.
Equity Pleading and Practice, Bill, Decree, Amendment.
A demurrer to a bill in equity brought by a creditor against two defendants to reach and apply to satisfaction of a debt owed by one defendant merchandise conveyed by him to the second defendant, properly was sustained on the ground that the allegations were "vague, indefinite, and inadequate," and did not "specifically or sufficiently set forth facts" to inform the defendant "of the claim or claims of the plaintiff," where it did not clearly appear whether the plaintiff relied on a conveyance fraudulent under G. L. (Ter. Ed.) c. 109A, Section 7, or upon one
"fraudulent and void" under G. L. (Ter. Ed.) c. 106, Section 1.
Where the plaintiff, after a demurrer to his bill in equity had been sustained, did not avail himself of leave to amend given in the Superior
Court, a motion for leave to amend filed in this court was denied.
A final decree dismissing a bill in equity brought against several defendants after the sustaining of the demurrer of one, was construed as dismissing the bill as to that defendant only.
BILL IN EQUITY filed in the Superior Court on December 23, 1936. An interlocutory decree sustaining the demurrer by the defendant Cohen was entered by order of O'Connell, J., and thereafter a final decree dismissing the hill was entered by order of Williams, J. The plaintiff appealed.
E. M. Dangel, (L.
E. Sherry & S.
Andelman with him,) for the plaintiff.
P. Cowin, for the defendants.
This is a suit in equity brought to reach and apply, in satisfaction of a debt, a stock of merchandise conveyed by the defendant Esther Abelson to the defendant Jerome Cohen, in fraud of the plaintiff as a creditor.
The bill was filed December 23, 1936, and amended January 20, 1937. In paragraph 1 is alleged an indebtedness to the plaintiff on a promissory note made by the defendants Esther Abelson, Inc., S. Max Abelson and Esther Abelson. In paragraph 2 the plaintiff alleges that the defendant Esther Abelson owned and conducted the business of merchandise of embroideries and linens in her business establishment located on Boylston Street, in Boston. In paragraph 3 the plaintiff alleges "that the defendant, Esther Abelson, for the purpose of hindering, delaying, defeating, and defrauding her creditors, particularly the plaintiff, sold and conveyed all her interest in said business to the defendant Jerome Cohen on or about October 5, 1936, and that the defendant, Jerome Cohen, on or about October 5, 1936, filed a business certificate with the clerk of the city of Boston, city hall records; and that said sale by the defendant, Esther Abelson to Jerome Cohen was made in fraud of her creditors in that said defendants, Esther Abelson and Jerome Cohen did not notify the plaintiff of the time and place of said sale; that said sale of the stock of merchandise was otherwise than in the ordinary course of trade and in the regular and usual prosecution of the seller's business." In paragraph 4 it is alleged that "The defendant, Esther Abelson, has been and now is, insolvent and has no property which can be come at to be attached at law." The defendants Esther Abelson, Inc., Esther Abelson and S. Max Abelson filed answers, which need not be here set out.
The defendant Jerome Cohen filed a demurrer as follows: "Now comes the defendant Jerome Cohen and demurs to the third paragraph of the bill of complaint, and more particularly that portion of the third paragraph which sets forth the following `for the purpose of hindering, delaying, defeating and defrauding her creditors, particularly the plaintiff' on the grounds (1) That the allegations therein are vague, indefinite, and inadequate, and do not specifically or sufficiently set forth facts as to enable this defendant to be clearly informed of the claim or claims of the plaintiff in the entire bill, so far as the said third paragraph, and more particularly the portion thereof hereinabove mentioned is or may be material to such claim or claims. (2)
That the allegations therein are not direct and positive but are argumentative and state conclusions of law." The other defendants did not demur or join in Cohen's demurrer.
In support of his demurrer, Cohen contends that paragraph 3 of the plaintiff's bill attempts to set forth a cause of action against him based on two or on one of two grounds: (1) "That the defendant Esther Abelson made a transfer to him [Jerome Cohen] of her interest in a business for the purpose of hindering, delaying, defeating and defrauding her creditors and more particularly the plaintiff"; and (2) "That she made a transfer to him of said interest in violation of the sales in bulk act." Cohen asserts that it "is difficult to ascertain whether the plaintiff is proceeding on both the aforementioned grounds, or on one of them, and if on one, which one"; and that in "any event, the allegations in the third paragraph in connection with each of said grounds are vague, indefinite, uncertain, inadequate, insufficient and argumentative, and do not specifically or sufficiently set forth facts as to enable the defendant Jerome Cohen to be clearly informed of the plaintiff's claim." He directs attention to the fact that the allegation that the sale and conveyance were made "for the purpose of hindering, delaying, defeating and defrauding her creditors" states a conclusion of law, which is not admitted by the demurrer to be true as a matter of fact, because, as a matter of fact, the allegation is vague, indefinite and inadequate. Cohen v. Levy, 221 Mass. 336 , 338. Cosmopolitan Trust Co. v. S. L. Agoos Tanning Co. 245 Mass. 69 , 73.
The words used in paragraph 3 of the bill, contended by the plaintiff to be admitted to be true, as facts, by the demurrer, are words of art having a definite meaning in the law (St. 13 Eliz. c. 5) which was adopted in this Commonwealth, in 1924, in the uniform fraudulent conveyance law (now G. L. [Ter. Ed.] c. 109A, Section 7), which is as follows: "Every conveyance made and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay or defraud either present or future creditors, is fraudulent as to both present and future creditors." This section covers transfers with actual fraudulent intent, and it is elementary under this act that a transfer for a valuable consideration cannot be set aside, unless the purchaser knew of or participated in the fraudulent purpose of the...
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