Rosenthal v. Maletz

• Decision Date: 08 April 1948
• Citation: 78 N.E.2d 652,322 Mass. 586
• Parties: ROSENTHAL v. MALETZ et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

322 Mass. 586

78 N.E.2d 652

ROSENTHAL

v.MALETZ et al.

Supreme Judicial Court of Massachusetts, Suffolk.

April 8, 1948.

Report from Superior Court, Suffolk County; Donahue, Judge.

Bill in equity by Israel M. Rosenthal against Reuben Maletz and others to reach and apply in payment of notes the interest of certain of the defendants in life policies. The insurance company filed a demurrer, which was overruled, and a plea, which was heard on agreed facts and was sustained, and the case is in the Supreme Judicial Court on report of such interlocutory orders.

Orders affirmed.

Before QUA, C. J., and LUMMUS, WILKINS, and SPALDING, JJ.

Lee M. Freidman, of Boston, and S. Werlin, of Malden, for plaintiff.

B. Aldrich, of Boston, for New York Life Ins. Co.

WILLIAMS, Justice.

This bill in equity by the holder of certain promissory notes, of which the defendant Tuller is the maker, the defendant Reuben Maletz is the payee, and the defendants Reuben and Frances Maletz are indorsers, seeks to reach and apply in payment of the notes the interest of the defendants Maletz in certain policies of insurance issued by the defendant New York Life Insurance Company on the life of the defendant Reuben Maletz and by him assigned to the defendant Frances Maletz. G.L. (Ter.Ed.) c. 214, § 3(7). The bill, as amended, alleges that the defendant Tuller is a resident of Brookline; that the insurance company is a corporation having a usual place of business in Boston; and that the defendants Maletz ‘are not domiciled in this Commonwealth.’ Annexed to the bill are copies of eleven promissory notes, each dated July 10, 1937, in the sum of $300 payable to R. Maletz, signed as maker by Joseph Tuller, and indorsed by Reuben Maletz and Frances Maletz. The first note is payable January 15, 1938, and one note is payable in each succeeding month. It is alleged that the defendants Maletz indorsed and delivered the notes to the plaintiff for value and before maturity; that the plaintiff is the owner and holder in due course; that payment was demanded of the defendant Tuller who did not make it; that due notice of nonpayment was given to the defendants Maletz; that the policies contain cash surrender clauses and provisions for disability payments; that the insured has become disabled and the insurance company is obligated to pay him certain sums; and that ‘the disability payments provided for under all of these policies * * * in each case exceed’ $35 weekly.

The insurance company filed a demurrer, which was overruled, and a plea, which was heard upon agreed facts, and was sustained. The case is here upon report of these interlocutory orders. G.L.(Ter.Ed.) c. 231, § 111.

The first ground of demurrer is ‘Lack of indispensable parties before the court.’ This refers to the defendants Maletz, who are named as parties in the bill, which, while alleging that they are not domiciled here, does not show that they have not been personally served within this jurisdiction. This objection, relating to process and not to pleading, is not a proper subject for demurrer, which lies only to what appears on the face of the bill. Homer v. Abbe, 16 Gray, 543, 545;Pond v. Simpson, 251 Mass. 325, 328, 146 N.E. 684;Security Co-operative Bank v. McMahon, 294 Mass. 399, 402, 2 N.E.2d 214. See Tyler v. Boot and Shoe Workers Union, 285 Mass. 54, 55, 188 N.E. 509. The second ground of demurrer, that ‘The bill is an attempt to violate G.L. c. 175, § 110A,’ inserted by St.1938, c. 401, relating to partial exemption of disability insurance from legal or equitable process, cannot be successfully addressed to the entire bill, which also seeks to reach the cash surrender values. Carleton & Hovey Co. v. Burns, 285 Mass. 479, 484, 485, 189 N.E. 612, and cases cited. Buckley v. John, 314 Mass. 719, 723, 51 N.E.2d 317;Baker v. Paeff, 318 Mass. 366, 368, 61 N.E.2d 650. Nor would it be valid if addressed only to part of the bill. The allegation is that disability payments exceed $35 on each policy weekly. This is in excess of the statutory exemption. A third ground of demurrer, ‘Failure to assert grounds entitling the complainant to equitable relief against this respondent,’ we shall consider along with the plea.

The plea states the cash surrender provisions, and sets forth that the defendant insurance company, while it has a usual place of business in Boston, is a New York corporation; that none of the policies is in the possession and control of the plaintiff or of itself; and that all the policies, ‘including disability provisions, were assigned to Frances Maletz, wife, in 1933, and are so assigned on its records today.’

The agreed facts show the following: The defendants Maletz since before the filing of the bill on June 19, 1939, have been domiciled and resident outside this Commonwealth. The defendant insurance company is a New York corporation, doing business in this Commonwealth with a usual place of business in Boston, and has been duly served by subpoena. On three occasions orders of notice were issued and returned without service on the defendants Maletz. On subsequent orders of notice service was made in 1945 on the defendants insurance company and Tuller. In 1946 a temporary injunction was issued against the insurance company, which between July 5, 1922, and March 31, 1930, had issued six policies upon the life of the defendant Reuben Maletz, the face amounts being respectively $5,000, $4,000, $3,000, $1,000 $3,000, and $2,000. Each policy pays benefits of one per cent of its face amount monthly and waives premiums during ‘continuous total and presumably permanent disability.’ On March 8, 1933, the defendant Reuben assigned all the policies to the defendant Frances, and the insurance company was notified. About August 10, 1937, the defendant Reuben became totally and presumably permanently disabled within the meaning of the policies. The insurance company has waived premiums and has been paying to the defendant Frances $180 monthly except as modified by the temporary injunction. Under the policies payments must be continued during the lifetime and disability of the defendant Reuben. Each policy (as shown in a subsequent footnote) provides that at certain times the insured ‘may’ surrender it and receive its cash surrender value. No policy is in the physical possession or control of the plaintiff or of the insurance company.

The court acquired no jurisdiction to proceed in personam against the defendants Maletz. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565;Eliot v. McCormick, 144 Mass. 10, 10 N.E. 705;Hildreth v. Thibodeau, 186 Mass. 83, 84, 71 N.E. 111,104 Am.St.Rep. 560.

The main question is whether there is jurisdiction quasi in rem to proceed against the interest in the policies of the defendant Frances as assignee. Freeman v. Alderson, 119 U.S. 185, 187, 7 S.Ct. 165, 30 L.Ed. 372. It is provided in G.L.(Ter.Ed.) c. 214, § 3(7), that by suit in equity creditors may reach and apply ‘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, although the property * * * is of uncertain value, if the value can be ascertained by sale, appraisal or by any means within the ordinary procedure of the court.’ The insurance company, although a foreign corporation, is engaged in business in this Commonwealth and was duly served with process. G.L.(Ter.Ed.) c. 175, § 151, Third; § 154. It is not a valid objection that the defendants Maletz have not been served with process within the Commonwealth. Section 3(7) expressly allows a creditor to reach property of a nonresident debtor. Davis v. Werden, 13 Gray, 305, 306, 307;McCann v. Randall, 147 Mass. 81, 85, 17 N.E. 75,9 Am.St.Rep. 666;Pettibone v. Toledo, Cincinnati, & St. Louis R. Co., 148 Mass. 411, 419, 19 N.E. 337,1 L.R.A. 787. A debt for the purpose of collecting it is situated where the debtor is amenable to suit. Rothschild v. Knight, 176 Mass. 48, 54, 57 N.E. 337, affirmed 184 U.S. 334, 22 S.Ct. 391, 46 L.Ed. 573;Biggert v. Straub, 193 Mass. 77, 79, 78 N.E. 770,118 Am.St.Rep. 449;Bayer v. Lovelace, 204 Mass. 327, 329, 90 N.E. 538;Arlington Trust Co. v. Le Vine, 291 Mass. 245, 249, 197 N.E. 195. An attachment by way of trustee process of a debt owed to a nonresident defendant by a debtor residing in this Commonwealth gives jurisdiction to render a judgment which will be valid everywhere as against the property attached. Rothschild v. Knight, 176 Mass. 48, 53, 54, 57 N.E. 337, and cases cited. Bayer v. Lovelace, 204 Mass. 327, 329, 90 N.E. 538;National Shawmut Bank v. Waterville, 285 Mass. 252, 253, 189 N.E. 92;Louisville & Nashville R. Co. v. Deer, 200 U.S. 176, 26 S.Ct. 207, 50 L.Ed. 426;Baltimore & Ohio R. Co. v. Hostetter, 240 U.S. 620, 624, 36 S.Ct. 475, 60 L.Ed. 829;St. Louis, Brownsville & Mexico R. Co. v. Taylor, 266 U.S. 200, 45 S.Ct. 47, 69 L.Ed. 247, 42 A.L.R. 1232;Rorick v. Devon Syndicate, Ltd., 307 U.S. 299, 59 S.Ct. 877, 83 L.Ed. 1303. See Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023,3 Ann.Cas. 1084. ‘The remedy provided by this statute [section 3(7)] often has been referred to as an equitable trustee process. * * * In its essential nature the remedy thus afforded is the same as that given by the trustee process in an action at law. The same general principles have been applied in determining whether the equitable process lies as in deciding whether attachment could be made by trustee process in an action at law.’ Travelers Ins. Co. v. Maguire, 218 Mass. 360, 362, 105 N.E. 1023.' Alper v. MacPherson, 318 Mass. 433, 435, 436, 61 N.E.2d 842, 843.

The insurance company contends that there is no jurisdiction of the subject matter. We agree as to the cash surrender values of the policies, all of which, in one form or another, afford the insured at various times the option of surrendering the policy and receiving the cash value. ¹ We think that this means what it says,...