Phoenix Insurance Company v. Abbott

• Decision Date: 27 October 1879
• Citation: 127 Mass. 558
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Phoenix Insurance Company v. Charles W. Abbott & another

127 Mass. 558

Phoenix Insurance Company v. Charles W. Abbott & another

Supreme Court of Massachusetts

October 27, 1879

Argued November 20, 1878

Suffolk. Bill in equity, filed January 17, 1878, against Charles W. Abbott and the Massachusetts Loan and Trust Company, a corporation established under the laws of this Commonwealth, alleging, that, on September 20, 1875, the plaintiff issued to Abbott a policy of insurance in the sum of $ 2500, on wool in a certain building, against loss by fire, payable in case of loss to the trust company; that the policy contained this clause, "all fraud or false swearing on the part of the assured shall cause a forfeiture of all claim under this policy;" that in March 1876 while the policy was in force, Abbott caused the building in which was the insured wool to be set on fire and destroyed in order to defraud the plaintiff; that subsequently Abbott made proof of loss, stating that a certain amount of wool was in the building at the time of the loss, whereas in fact not more than one fifth of the amount represented was in the building; that in June 1876, the plaintiff being ignorant of Abbott's fraud and that the amount represented was not destroyed, and believing that Abbott's proof of loss was correct, paid to the trust company, at Abbott's request the sum of $ 2478.79 being the full amount claimed; and that the defendants jointly and severally owed this amount, with interest, to the plaintiff; that Abbott had been adjudicated a bankrupt, and an assignee had been appointed, but no assets were disclosed; and that Abbott had no property which could be come at to be attached or taken on execution in a suit at law against him.

The bill further alleged, that the trust company was a banking association, having assets mostly invested in loans to individuals secured by their promissory notes not yet matured, in United States bonds, and in other forms of personal securities, not attachable at common law; that it had no property which could be come at to be attached or taken on execution in a suit at law; and that the plaintiff had not a plain, adequate and complete remedy at law.

The prayer of the bill was, that the defendants might answer, but not under oath; that the trust company be restrained by injunction from selling, assigning, transferring, pledging, mortgaging, or in any way alienating so much of its assets as at a fair valuation would amount to $ 5000, until the further order of the court; and for further relief.

The defendants severally demurred to the bill for want of equity, and for nonjoinder of the necessary parties thereto. Colt, J., sustained the demurrers; and reserved for the determination of the full court the question whether the decision was correct, and also the question whether, in case the decision was sustained, the plaintiff ought to be allowed to amend its bill under the St. of 1865, c. 179, by changing the proceeding into a suit at law, and, if so, on what terms.

Demurrer sustained.

A. Hemenway, for Abbott.

H. D. Hyde & F. R. Hall, for the other defendant.

J. P. Treadwell, for the plaintiff.

Soule J. Colt & Morton, JJ., absent.

OPINION

Soule, J.

The plaintiff seeks to maintain its bill on the ground that it states a case within that clause of the Gen. Sts. c. 113, § 2, which provides for reaching by bill in equity the property of a debtor, which cannot be come at to be attached or taken on execution in a suit at law. The purpose and effect of that clause have been passed upon in many reported cases. The result of the decisions is, that a bill may be maintained where the object of the plaintiff is to reach and apply to the payment of his debt any property of the debtor in the hands or control of a third person, which is of such nature or in such a situation that it cannot be attached or taken on execution. The suit will not be suffered to fail because the property is not money in specie, but is in the form of obligations to pay, or of property invested and concealed for the benefit of the debtor. The bill may be maintained by a single creditor for his own benefit, without making other creditors parties; and such other creditors will not be permitted to come in and share with the plaintiff the benefits obtained by the suit. But in most of the cases which have arisen, and in which the bill has been sustained, some person other than the plaintiff's debtor has been made a defendant, as being the holder of the property sought to be reached, and as being under obligation in some way to account for it to the plaintiff's debtor. In other words, the proceeding has been regarded as in the nature of an equitable trustee process, as distinguished from a creditors' bill. Silloway v. Columbia Ins. Co. 8 Gray 199. Sanger v. Bancroft, 12 Gray 365. Crompton v. Anthony, 13 Allen 33. Barry v. Abbot, ...