New Amsterdam Cas. Co. v. Estes

• Decision Date: 30 June 1967
• Parties: NEW AMSTERDAM CASUALTY COMPANY v. Burnett ESTES et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 440

228 N.E.2d 440

353 Mass. 90

NEW AMSTERDAM CASUALTY COMPANY v. Burnett ESTES et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 3, 1967.

Decided June 30, 1967.

Avram G. Hammer, Boston, (Samuel H. Cohen, Boston, with him) for plaintiff.

Robert J. Sherer, Boston, for defendant Estes.

Ronald F. Kehoe, Boston, (Lewis L. Wadsworth, Jr., Boston, with him) for defendant American Employers Insurance Co.

Before WILKINS, C.J., and SPALDING, KIRK and SPIEGEL, JJ.

SPIEGEL, Justice.

This bill in equity by an issuer of certain surety bonds, as to which the defendant Estes is an indemnitor, seeks to reach and apply in satisfaction of any present or future liability of Estes to the plaintiff certain shares of stock owned by Estes but in the possession of the defendant American Employers Insurance Company (American). The only service on Estes, a resident of Dallas, Texas, was substituted service of notice pursuant to Rule 14 of the Superior Court (1954). ¹

American filed a motion 'that the Court decline to take jurisdiction of this case for the reason that complete justice cannot be done by this Court retaining jurisdiction, that the defendant, American * * *, will be subjected to great and unnecessary inconvenience and expense and that the trial will be attended, if conducted here, with many if not insuperable difficulties which all would be avoided without special hardship to the plaintiff if proceedings were brought in the State of Texas.' The plaintiff appealed from the judge's allowance of this motion and from the final decree dismissing the bill.

The following relevant facts appear from the allegations in the bill. The plaintiff is a New York corporation, having a usual place of business in Boston, and engages in the insurance business. American is a Massachusetts corporation with a usual place of business in Boston and also engages in the insurance business. Estes, 'on or about June 27, 1963, and for some time prior thereto * * * was interested in and associated with * * * Clarence H. Everett & Co., Inc., of Dallas, Texas, * * * (Everett Co.) (which) was and is engaged in the construction business.' On or about June 27, 1963, Everett Co. applied for surety bonds to be issued to the owner and financer of a certain construction project in Dallas, Texas, to guarantee the performance by Everett Co. of its construction contract, 'and further guaranteeing the payment of all suppliers of labor and/or materials furnished and/or delivered in the course of said construction.' Everett Co. agreed to indemnify the plaintiff 'and save it harmless against all liability, loss * * *' whereupon the bonds were issued. Similar bonds were issued in connection with two other construction projects undertaken by Everett Co. The payment bonds were required by Texas law to be furnished and their terms and conditions were fixed by statute.

Estes joined with Everett Co., Clarence H. Everett (Everett), a principal of Everett Co., and Everett's wife in executing an agreement of indemnity with the plaintiff covering all losses and liabilities sustained by the plaintiff in connection with issuance of the bonds.

None of the projects has been completed. Forty-four claims and notices of liens aggregating the sum of $466,732.82 have been filed by unpaid suppliers of labor and material of Everett Co. against the three payment bonds. Four such claimants have filed suits in the State courts of Dallas County, Texas. The plaintiff expects to become responsible for additional obligations of Everett Co.

The plaintiff alleges that Everett Co. has violated its obligations on the surety bonds by failing to pay these various claimants, and that numerous demands have been made by the plaintiff on Everett Co. to pay those claimants. Consequently, the plaintiff claims to be entitled to exoneration and indemnification by Estes, pursuant to his agreement.

American holds certain shares of stock, owned by Estes, as security for the performance of his agreement to indemnify American against its losses on bonds issued by it on behalf of one Almond Electric Company of Dallas. This indemnity agreement was executed April 15, 1955, and the stock was assigned and pledged on October 26, 1959, and delivered to American on January 14, 1960. The plaintiff acknowledges that its rights are subject to American's prior lien.

1. The jurisdiction of the Superior Court to hear this suit is grounded in G.L. c. 214, § 3, which states in material part, 'The * * * (Superior Court) shall have * * * jurisdiction in equity of the following cases: * * * (7) Suits by creditors to reach and apply, in payment of a debt, any property, right, title or interest, legal or equitable, of a debtor, within or without the commonwealth, which cannot be reached to be attached or taken on execution in an action at law.' Estes argues that jurisdiction cannot be founded on this section because '(t)he plaintiff's claim against Estes 'for exoneration and indemnity' could not be the subject matter of an action at law, but is, if anything, a purely equitable proceeding. As such, it does not come within the provisions of G.L. c. 214, § 3(7). * * * Garsson v. American Diesel Engine Corporation, 310 Mass. 618 (39 N.E.2d 566).' The plaintiff, on the other hand, argues that the existence of a debt 'is sufficiently alleged in the bill of complaint. It is not necessary that the bill allege a legal as distinguished from equitable claim. * * * Ginn v. Almy, 212 Mass. 486 (99 N.E. 276). * * * Nor is it required that the claim be reduced to a certainty,' citing the Garsson case, in which we said, 310 Mass. at pp. 621--622, 39 N.E.2d at p. 568, '(T)he word 'debt,' as appearing in the statute, is to be construed broadly rather than narrowly, and * * * may comprehend not only liquidated demands * * * but also an agreement for the payment of money which will require some calculation or determination of extraneous facts before its exact amount can be ascertained provided the debtor has made a distinct and binding promise to pay.' The plaintiff points out that, '(i)n the case at bar, the bill sets forth a binding agreement by Estes to indemnify the plaintiff against any claims arising out of the bonds in question, and describes claims in liquidated amounts against the bonds because of the principal obligor's failure after demand, to pay its suppliers. * * * The defendant's obligation, being calculable and presently enforceable, is a debt within the meaning of the statute.'

In view of our disposition of this case it is not necessary for us to decide whether the plaintiff's claim against Estes is a 'debt' within the meaning of G.L. c. 214, § 3(7). We shall assume for the purpose of this decision that the court did have jurisdiction.

2. American's motion to dismiss was grounded on the doctrine of forum non conveniens. In the case of Universal Adjustment Corp. v. Midland Bank, Ltd., 281 Mass. 303, 313, 184 N.E. 152, 158, 87 A.L.R. 1407, we discussed this doctrine in some detail. 'Where it appears that complete justice cannot be done here, that the defendant will be subjected to great and unnecessary inconvenience and expense, and that the trial will be attended, if conducted here, with many if not insuperable difficulties which all would be avoided without special hardship to the plaintiff if proceedings are brought in the jurisdiction where the defendant is domiciled, where service can be had, where the cause of action arose and where justice can be done, our courts decline to take jurisdiction on the general ground that the litigation may more appropriately be conducted in a foreign tribunal. Stated succinctly, the principle is that where in a broad sense the ends of justice strongly indicate that the controversy may be more suitably tried elsewhere, then jurisdiction should be declined and the parties relegated to relief to be sought in another forum.' See GREEN V. GREEN, MASS., 221 N.E.2D 857^A.

The doctrine has received support in numerous jurisdictions (see cases collected in 87 A.L.R. 1425, at 1434--1440; 90 A.L.R.2d 1109). The essential elements to be considered by the judge were aptly stated in the case of Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508--509, 67 S.Ct. 839, 843, 91 L.Ed. 1055: 'Wisely, it has not been attempted to catalogue the circumstances which will justify or require either grant or denial of remedy. The doctrine leaves much to the discretion of the court to which plaintiff resorts, and experience has not shown a judicial tendency to renounce one's own jurisdiction so strong as to result in many abuses. If the combination and weight of factors requisite to given results are difficult to forecast or state, those to be considered are not difficult to name. An interest to be considered, and the one likely to be most pressed, is the private interest of the litigant. Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be...