Powers v. Heggie

Citation268 Mass. 233,167 N.E. 314
PartiesPOWERS v. HEGGIE (two cases).
Decision Date02 July 1929
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

OPINION TEXT STARTS HERE

Reports from Superior Court, Suffolk County; Stanley E. Qua, Judge.

Action at law and suit in equity by Walter Powers, trustee in bankruptcy of the New England Guaranty Corporation, against James J. Heggie. On reports from superior court. Orders in action at law denying motion to dismiss and overruling plea in abatement affirmed, and interlocutory decree dismissing motion to dismiss and overruling plea and interlocutory decree on demurrer in suit in equity affirmed.W. Powers, A. C. Sullivan, and W. White, all of Boston, for plaintiff.

H. W. Blake, of Gardner, and D. A. Rose, of Dorchester, for defendant.

PIERCE, J.

These cases, one at law and the other in equity, come before us on reports from the superior court under the provisions of G. L. c. 231, § 111, and G. L. c. 214, § 30, respectively. They were brought simultaneously for the same cause of action, the plaintiff alleging that he is in doubt whether his remedy is at law or in equity. The declaration alleges that the plaintiff believes the suit in equity to be well founded, and concedes that if he should recover thereon for the full amount the action at law should then be dismissed, and prays that the action and the suit be heard together.

In the action the defendant seasonably filed a motion to dismiss and a plea in abatement, each based upon the pending of the suit in equity. The judge denied the motion to dismiss and overruled the plea in abatement, and reported the case to this court.

In the suit in equity the defendant seasonably filed a motion to dismiss and a plea, each based upon the pending of the action at law. He also filed a demurrer and assigned 20 causes therefor. The judge dismissed the motion and overruled the plea. He overruled all the assigned causes of demurrer except that of the pending of the action, ruled that the demurrer be sustained unless within 30 days the plaintiff should discontinue the action, in which case the demurrer should then be overruled. Subsequently, on the representation of the plaintiff that he was willing to discontinue the action, but, if he should do so and thereafter this court should decide that his right is at law and not equity, the statute of limitations would bar his recommencing to prosecute his action at law, the judge entered an interlocutory decree upon the demurrer, in substance as follows: ‘That the demurrer be sustained unless the plaintiff discontinue his action at law in this court against the same defendant for the same cause of action, being No. 212845 on the court docket, within 30 days after rescript from the Supreme Judicial Court, and upon proof satisfactory to this court that said action at law has been discontinued, this demurrer is to be overruled.’ The case was then reported to this court upon the “rulings and orders,' the motion to dismiss, the decree dismissing such motion, the plea, the decree overruling the plea, the demurrer, and the decree upon the demurrer.'

The declaration is on an account annexed for money had and received to the use of the plaintiff, and received under the ‘guise of dividends,’ by the defendant while a stockholder of the then insolvent New England Guaranty Corporation. The declaration, in substance, alleges that the action is based upon the same facts as are stated in a complaint in equity simultaneously filed.

In substance, the bill of complaint alleges (1) that the plaintiff brings the suit as he is trustee in bankruptcy of the New England Guaranty Corporation, which is organized and existing under the laws of the state of Delaware, with a usual place of business in the city of Boston; (2) that the defendant at all times between March 15, 1922, and August 1, 1925, was a stockholder of both the preferred and common stock of the corporation; (3) that at all times between March 15, 1922, and February 1, 1923, the corporation was insolvent or on the verge of insolvency, at all times between February 1, 1923, and August 1, 1925, it was insolvent, and at no time between March 15, 1922, and August 1, 1925, did the corporation have a surplus from which to pay dividends or have any assets from which dividends might properly be paid; (4) that ‘there were wrongfully withdrawn from the treasury of the corporation and paid to the defendant * * * as unlawful and improper dividends and as unauthorized reductions of the capital of the corporation [on] April 1, July 1, and October 1, 1922, January 1, April 1, July 1, and October 1, 1923, January 1, April 1, July 1, and October 1, 1924, and January 1, April 1, and July 1, 1925, dividend of $1.75 a share upon the preferred stock and 25 cents a share upon the common stock on July 1, 1925, aggregating $612.50’; (5) that at the time of each such payment of dividend or reduction of capital the corporation owed debts, which are still due and unpaid, to an aggregate amount greater than the aggregate amounts withdrawn and paid to the stockholder as aforesaid; (6) that the corporation is insolvent and in bankruptcy, it is impossible for any creditor to obtain judgment against it, but if any judgment were obtained it would be impossible for the corporation to pay the same; (7) that the plaintiff has duly demanded from the defendant the payment of the amounts of the aforesaid dividends or reductions of capital, but the defendant has neglected and refused to pay the same or any portion thereof. The prayer is that the defendant be ordered to pay the plaintiff the amounts received by him as hereinbefore stated, and for general relief.

In each case disregarding the form adopted by the defendantto present his requests that the action and the suit be dismissed, we find no error in the interlocutory decrees extending the time for discontinuance of the action at law, dismissing the motion to dismiss, and overruling the plea in the suit in equity. The institution of simultaneous proceedings at law and in equity, based upon the same facts, as matter of law does not require the court to dismiss both suits or either of them. In such a situation the court may be called upon to determine whether the two proceedings result from doubt or mistake as to the proper form of action, or whether the action or suit is vexatious and intended to harass and hector the defendant in his defense, or that such is the natural result of two or more proceedings for the same cause of action. Finding that the prosecution of two or more proceedings may impede the defendant, the court may require the plaintiff to elect between them. Sandford v. Wright, 164 Mass. 85, 41 N. E. 120;Spear v. Coggan, 223 Mass. 156, 111 N. E. 793;Consolidated Ordnance Co. v. Marsh, 227 Mass. 15, 116 N. E. 394;Corey v. Tuttle, 249 Mass. 135, 144 N. E. 230. The pending of a suit in equity is not in itself a reason for abating a similar action at law Colt v. Partridge, 7 Metc. 570, 576.Mattel v. Conant, 156 Mass. 418, 424, 31 N. E. 487. Nor does a suit in equity abate by reason of the pendency of an action at law for the same cause of action. Corey v. Tuttle, supra.

We shall consider the grounds assigned as reasons for the demurrer in the order in which they are argued on the defendant's brief. The first ground argued has to do with the dismissal of the law action or the suit in equity. It was within the power of the judge to sustain the demurrer unless the plaintiff shall discontinue his action at law within 30 days after rescript from the Supreme Judicial Court, and that power was properly exercised.

Under the second and fifth assigned grounds of demurrer the defendant contends that the bill of complaint does not allege sufficient facts to show the first four dividends paid between March 15, 1922, and February 1, 1923, at a time when the corporation was insolvent or on the verge of insolvency, were illegal. He bases this contention on his assertion that the term ‘verge of insolvency’ in very indefinite and does not indicate that the assets remaining after payment of said dividends were insufficient to pay the debts and obligations of the then existing creditors, and that the allegation in item 3 of the bill of complaint, that ‘at no time between March 15, 1922, and August 1, 1925, did the corporation have a surplus from which to pay dividends or any assets from which dividends might properly be paid’ is an allegation of law and not of fact, and does not supply the necessary allegation of facts required in a bill in equity-citing Drew v. Beard, 107 Mass. 64, 73;Nye v. Storer, 168 Mass. 53, 55, 46 N. E. 402; and Cosmopolitan Trust Co. v. S. L. Agoos Tanning Co., 245 Mass. 69, 73, 139 N. E. 806. The bill of complaint sufficiently alleges in items 3 and 4 that 11 of the dividends were declared and paid to the defendant while the corporation ‘was insolvent,’ and that 4 others had been previously declared and paid to the defendant while it was ‘insolvent or on the verge of insolvency.’ The allegation in the declaration of payment of the dividends to the defendant while the corporation was insolvent was sufficient in form, and, that fact being admitted by the demurrer, it became unnecessary for the purpose of the case to determine the legal effect of the declaration and payments of dividends to the defendant while the corporation was on the verge of insolvency. See, in this connection, Parkman v. Welch, 19 Pick. 231, 236, 255;Blake v. Sawin, 10 Allen, 340, 342;Winchester v. Charter, 12 Allen, 606, 609;Gray v. Chase, 184 Mass. 444, 449, 68 N. E. 676;Briggs v. Sanford, 219 Mass. 572, 574, 107 N. E. 436;Smith v. Clark, 242 Mass. 1, 136 N. E. 66, 23 A. L. R. 582;Dorr v. Tracy, 248 Mass. 201, 205, 142 N. E. 781.

The defendant in the third assigned cause argued contends that the plaintiff has an adequate remedy at law, and that the aid of a court of equity cannot be invoked where the relief sought is exactly the same as that which would be afforded by a judgment at...

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26 cases
  • Chamberlain v. James
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • 2 d1 Março d1 1936
    ...v. MacClaskey, 278 Mass. 238, 242, 243, 179 N.E. 600; Compare Thomas v. Burnce, 223 Mass. 311, 312, 111 N.E. 871;Powers v. Heggie, 268 Mass. 233, 241, 242, 167 N.E. 314. See G.L. (Ter.Ed.) c. 214, § 3. First. We need not decide whether the bill states a cause of action for breach of contrac......
  • Bankers Trust Co. v. Hale & Kilburn Corporation
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 22 d1 Junho d1 1936
    ...a defendant has obtained possession of money which, in equity and good conscience, he ought not to be allowed to retain." Powers v. Heggie, 268 Mass. 233, 167 N.E. 314; Kretschmar v. Stone, 90 Miss. 375, 43 So. 177, are in accord. See, also, 12 Fletcher, Cyclopedia of Corporations (1932 Ed.......
  • Buckley v. John
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • 28 d4 Outubro d4 1943
    ...authorize by implication the use of all equity powers necessary to the final satisfaction of the creditor's claim. Powers v. Heggie, 268 Mass. 233, 241, 242, 167 N.E. 314;Proctor v. MacClaskey, 278 Mass. 238, 242, 243, 179 N.E. 600;Walworth Co. v. Lock Stevens & Sanitas, Inc., 300 Mass. 557......
  • Perkins v. Becker's Conservatories
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • 21 d4 Junho d4 1945
    ...c. 109A, Section 7. At the instance of the trustee in bankruptcy it will be set aside. Bailey v. Wood, 211 Mass. 37 , 41. Powers v. Heggie, 268 Mass. 233 , 241. v. Wylde, 308 Mass. 268, 275. Thomas E. Hogan, Inc. v. Berman, 310 Mass. 259 , 261. See U. S. C. (1940 ed.) Title 11, Section 110 ......
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1 books & journal articles
  • The inherent irrationality of judgment proofing.
    • United States
    • Stanford Law Review Vol. 52 No. 1, November 1999
    • 1 d1 Novembro d1 1999
    ...Excavating, Inc., 93 B.R. 84, 88 (Bankr. W.D. Va. 1988) (voiding dividends issued with intent to defraud creditors); Powers v. Heggie, 167 N.E. 314, 317 (Mass. 1929) (holding that dividend payments by insolvent corporations are fraudulent); Cox ET AL., supra note 59, [sections] 20.26, at 20......

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