Source: http://masscases.com/cases/sjc/322/322mass586.html
Timestamp: 2019-04-22 20:30:56+00:00

Document:
ISRAEL M. ROSENTHAL vs. REUBEN MALETZ & others.
Present: QUA, C.J., LUMMUS, WILKINS, & SPALDING, JJ.
"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.
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.
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."
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.
property of a nonresident debtor. Davis v. Werden, 13 Gray 305, 306-307. McCann v. Randall, 147 Mass. 81, 85. Pettibone v. Toledo, Cincinnati, & St. Louis Railroad, 148 Mass. 411, 419. A debt for the purpose of collecting it is situated where the debtor is amenable to suit. Rothschild v. Knight, 176 Mass. 48, 54; affirmed 184 U.S. 334. Biggert v. Straub, 193 Mass. 77, 79. Bayer v. Lovelace, 204 Mass. 327, 329. Arlington Trust Co. v. Le Vine, 291 Mass. 245, 249. 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, and cases cited. Bayer v. Lovelace, 204 Mass. 327, 329. National Shawmut Bank v. Waterville, 285 Mass. 252, 253. Louisville & Nashville Railroad v. Deer, 200 U.S. 176. Baltimore & Ohio Railroad v. Hostetter, 240 U.S. 620, 624. St. Louis, Brownsville & Mexico Railway v. Taylor, 266 U.S. 200. Rorick v. Devon Syndicate, Ltd. 307 U.S. 299. See Harris v. Balk, 198 U.S. 215. "`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." Alper v. MacPherson, 318 Mass. 433, 435-436.
think that this means what it says, and requires as a condition precedent the physical relinquishment of each policy to the company, an act which, so far as appears, may not be impossible, but which the plaintiff nevertheless cannot perform. See Kothe v. Phoenix Mutual Life Ins. Co. 269 Mass. 148, 151-152; United States v. Massachusetts Mutual Life Ins. Co. 127 Fed. (2d) 880, 883; Isaac Van Dyke Co. v. Moll, 241 Mich. 255, 258. We need not decide in what circumstances a court of equity might dispense with this condition. Jurisdiction in personam over the defendants Maletz is lacking, and the plaintiff has not shown that the granting of relief will not jeopardize the legitimate interests of those who have contracted for the performance of the condition. See Martin v. New York Life Ins. Co. 104 Fed. (2d) 573, 575 (C. C. A. 7). Compare Foley v. Equitable Life Assurance Society, 290 N. Y. 424, 435.
Our conclusion is quite apart from the consideration of any question of the creditor's right to achieve an exercise of the option which the insured himself has not exercised. On that question, where a policy has not matured by the expiration of an endowment period (see Bassett v. Parsons, 140 Mass. 169; Talcott v. Field, 34 Neb. 611, 614-615), the weight of authority is against a creditor having such a right. See Farmers & Merchants Bank v. National Life Ins. Co. 161 Ga. 793; Isaac Van Dyke Co. v. Moll, 241 Mich. 255; Couch, Insurance, Section 1932; 44 A. L. R. 1188; 57 A. L. R. 695; 14 Am. Jur., Creditors' Bills, Section 91. See also United States v. Massachusetts Mutual Life Ins. Co. 127 Fed. (2d) 880 (C. C. A. 1); United States v. Metropolitan Life Ins. Co. 130 Fed. (2d) 149 (C. C. A. 2). It is also unnecessary to consider G. L. (Ter. Ed.) c. 175, Section 125; Section 126 (see now Section 126, as amended by St. 1943, c. 227, Section 5). Rosenberg v. Robbins, 289 Mass. 402. Furthermore, the agreed facts do not show who are the beneficiaries or whether the defendant Frances is a married woman.
that reason, the doctrine of Kling v. McTarnahan, 277 Mass. 386, has no pertinency.
We next consider the effect of G. L. (Ter. Ed.) c. 175, Section 110A, as inserted by St. 1938, c. 401, which reads, "So much of any benefit under a policy of insurance insuring against disability from injury or disease as does not exceed thirty-five dollars for each week during any period of disability . . . shall not be liable to attachment, trustee process or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or by operation of law, either before or after payment of such benefit, to pay any debt or liabilities of the person insured under such policy . . .." A purpose of this suit is to reach the disability payments now due by assignment to the defendant Frances in payment of a debt or liability of hers. She is not "the person insured under such policy." We are of opinion that the exemption does not extend to her. See Norris v. Massachusetts Mutual Life Ins. Co. 131 Mass. 294, 295-296. To be sure, the indebtedness of the insured upon the same obligation would be equally reduced by any payment on account of her obligation, but this fact cannot serve to enlarge the scope of the act. See Peters v. Goodwin, 190 Ark. 24, 27; Goza v. Provine, 140 Miss. 315, 322-323.
discriminated between original writs in actions at law and writs of subpoena in suits in equity (see, for example, Sections 1-3, 6-8, 10, 116-119) and the distinction has been carried forward in the process of revision. See now G. L. (Ter. Ed.) c. 223, Sections 16, 21, 22, 24; c. 214, Section 7. The language of G. L. (Ter. Ed.) c. 227, Section 1, it may be observed, is hardly appropriate to embrace a suit in equity, which is not aptly described as an action. Mahar v. O'Hara, 9 Ill. 424, 429. Appleton v. Turnbull, 84 Maine, 72, 76. McKinney v. Mires, 95 Mont. 191, 197. Dawes v. New York, Philadelphia & Norfolk Railroad, 96 Va. 733, 734. Mynes v. Mynes, 47 W. Va. 681, 694. And a decree in such a suit is not properly called a judgment. Fairbanks v. McDonald, 219 Mass. 291, 298. Parkhurst v. Almy, 222 Mass. 27, 35. Malloy v. Carroll, 287 Mass. 376, 390-391. Nor does the exercise of jurisdiction over persons or property by a court of equity constitute an attachment within the meaning of G. L. (Ter. Ed.) c. 227, Section 1. See Squire v. Lincoln, 137 Mass. 399, 402-403; Fish v. Fiske, 154 Mass. 302, 304; Snyder v. Smith, 185 Mass. 58.
in the bill is brought within the jurisdiction of the court by service upon the insurance company, that meets any requirement of seizure at the commencement of the suit. See Matthews v. Matthews, 247 N. Y. 32, 34; Geary v. Geary, 272 N. Y. 390, 401; Restatement: Conflict of Laws, Section 106, comment e.
The agreed facts show that no substituted service has been made upon the defendants Maletz as required by Rule 14 of the Superior Court (1932). The plea, therefore, was rightly sustained. See Birdsall v. Taylor, 1 How. Pr. 89. As this was a matter of process, it could not, as has been seen, be raised by demurrer. It is open to the plaintiff to make application to the Superior Court to issue notice under Rule 14.
[Note Page591-1] The provision in four of the policies is: "Surrender values. -- In event of default in payment of premium after three full years' premiums have been paid, the following benefits shall apply: (a) Temporary Insurance. -- . . . (b) Participating Paid-up Insurance. -- . . . (c) Cash Surrender Value. -- If the Policy shall not have been indorsed for Participating Paid-up Insurance, the Insured, within three months after such default, but not later, may surrender this Policy and all claims thereunder and receive its Cash surrender Value as at date of default less any indebtedness hereon." The provisions of the other two policies in all material respects are substantially the same.
[Note Page594-1] "A personal action shall not be maintained against a person not an inhabitant of the commonwealth unless he or his agent appointed under section five has been served with process in the commonwealth, or unless an effectual attachment of his property within the commonwealth has been made upon the original writ, and in case of such attachment without such service, the judgment shall be valid only to secure the application of the property so attached to the satisfaction of the judgment."

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.