Rosenthal v. Maletz
| Decision Date | 08 April 1948 |
| Citation | 78 N.E.2d 652,322 Mass. 586 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | ISRAEL M. ROSENTHAL v. REUBEN MALETZ & others. |
December 4, 1947.
Present: QUA, C.
J., LUMMUS WILKINS, & SPALDING, JJ.
Jurisdiction Property of nonresident. Equity Jurisdiction, To reach and apply. Insurance, Life insurance: cash surrender value Disability insurance; Assignment of policy. Equity Pleading and Practice, Parties, Demurrer, Service of process. "Lack of indispensable . . . [defendants] before the court" was not a proper ground of demurrer to a bill in equity which named such defendants as parties and, although averring that they were nonresidents, did not show on its face that they had not been properly served with process in this Commonwealth.
A suit in equity to reach and apply the cash surrender value of a life insurance policy to satisfaction of indebtedness of the insured and of an assignee of the policy to the plaintiff could not be maintained where, although the insurer was before the court, the insured and the assignee were nonresidents not before the court and the policy, which was not in the physical control of either the plaintiff or the insurer, provided that the cash surrender value would be paid upon "surrender" of the policy. Apart from G. L. (Ter. Ed.) c. 175, Section 110A, inserted by St. 1938, c.
401, a suit in equity might be maintained under c. 214, Section 3 (7), to reach and apply the obligation of the insurer under a policy of disability insurance to satisfy indebtedness of the insured and of an assignee of the policy to the plaintiff where the insurer, a foreign corporation doing business in this Commonwealth, had been duly served with process here and the insured was disabled within the definition in the policy so that provisions for waiver of premiums and payment of disability benefits were in force, although the insured and the assignee were nonresidents not before the court and the policy was not within the possession or control of the plaintiff or the insurer.
An assignee of a policy of disability insurance was not "the person insured" thereunder within G. L. (Ter. Ed.) c. 175, Section 110A, inserted by St. 1938, c. 401, and that statute was inapplicable in a suit in equity to reach and apply the obligation of the insurer to make the disability payments to satisfaction of indebtedness of both the assignee and the insured to the plaintiff.
General Laws, c. 227, Section 1, is not applicable to suits in equity commenced by bill and subpoena.
Any requirement of seizure of the res at the commencement of a suit in equity to reach and apply an obligation to satisfaction of indebtedness to the plaintiff of a nonresident not before the court was fulfilled where such obligation was brought within the jurisdiction of the court by a temporary injunction issued against the obligor before hearing and decree, although long after the commencement of the suit.
In a suit in equity to reach and apply an obligation to satisfaction of indebtedness of a nonresident to the plaintiff, it was open to the plaintiff to apply to the Superior Court to issue notice to the nonresident defendant under Rule 14 of the Superior Court (1932) after this court had affirmed an order sustaining a plea because there had been no such substituted service.
BILL IN EQUITY, filed in the Superior Court on June 19, 1939. After hearing on a demurrer and a plea, the suit was reported by Donahue, J.
Lee M. Friedman, (S. Werlin with him,) for the plaintiff. B. Aldrich, for the New York Life Insurance Company.
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, Section 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, Section 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. Security Co-operative Bank v. McMahon, 294 Mass. 399 , 402. See Tyler v. Boot & Shoe Workers Union, 285 Mass. 54, 55. The second ground of demurrer, that "The bill is an attempt to violate G.L.c. 175, Section 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, and cases cited. Buckley v. John, 314 Mass. 719, 723. Baker v. Paeff, 318 Mass. 366 , 368. 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. Eliot v. McCormick, 144 Mass. 10. Hildreth v. Thibodeau, 186 Mass. 83 , 84.
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. It is provided in G. L. (Ter. Ed.) c. 214, Section 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...
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