244 Mass. 259 | Mass. | 1923
This case is before this court on a report of a judge of the Superior Court, after the entry of an interlocutory decree overruling the exceptions of the claimant and sustaining the exceptions of the receiver to the master’s report upon the intervening petition of the claimant, and otherwise confirming the said report, and denying to the said claimant priority over other creditors.
It is agreed that “the original bill above entitled was a creditor’s bill for the appointment of a receiver of the defendant corporation, that Sydney R. Wrightington was duly appointed receiver thereof and has assets in his possession for distribution, that the issues involved in the report ... to the full bench . . . relate solely
The facts found by the master show that the claimant was a dealer in motor cars and was the Lynn representative of the Puritan Motors Corporation; that as such he had entered into an agreement with the Puritan Motors Corporation, a copy of which is attached to the claimant’s specifications, and under paragraph “10” of this agreement had deposited with'the Puritan Motors Corporation the sum of $500, which amount (interest having been waived), the claimant asked to be allowed as a preferred claim and paid in full. Said paragraph “10” reads as follows: “The Dealer shall deposit and keep with the Distributor during the life of this agreement the sum of $500 as a guarantee for the satisfactory performance of the provisions hereof, and the Dealer authorizes the Distributor, without prejudice to any other rights the Distributor may have, to apply such portion of the said deposit or of any other money which the Distributor may have in the Distributor’s possession due the Dealer, by way of bonuses or otherwise, as the Distributor may consider reasonable indemnity therefor to the discharge or partial discharge of any liability arising under this agreement, to the Distributor, or to any other person, either liquidated or unliquidated. Said deposit shall draw interest at the rate of 5% per annum, and in the event any deductions are made by the Distributor as above provided, the Dealer shall immediately remit funds sufficient to restore the same to the original amount. At the conclusion of this agreement the amount of the Dealer’s deposit remaining after all claims are satisfied shall be returned to the Dealer.”
As regards the deposit of $500 in accordance with paragraph “10” above quoted, the master found (the evidence is not reported), that “there was no evidence offered before me that this deposit was kept separate from the general funds of the Puritan Motors Corporation, and no evidence was offered that the amount of said deposit or any part thereof ever came into the hands of the receiver.” He further found from his interpretation of paragraph “10,” and from testimony not reported, “that it was the intention of both parties that this deposit should be kept intact, and in the event of any deductions sufficient funds should be at
The receiver objected to the master’s report, contained in the paragraph last above quoted, on the ground “that no evidence was offered before the master bearing upon the interpretation of the said clause 10 and that there is no ambiguity in the said clause 10, which would have warranted the consideration of oral evidence to interpret it;” and also to the statement considered as a ruling of law interpreting the said clause 10 “ on the ground that the meaning of the said clause 10 read in the light of the remainder of the contract is not to establish a trust fund of $500 for the benefit of the said Downey or the bankrupt or both, of which the bankrupt should be trustee, but that it establishes the relation of debtor and creditor with respect to the said $500.” The receiver duly excepted to the report for the reasons assigned in his objections.
Upon this branch of his case the claimant made objection to the statement of the master and to his refusal to expunge and strike from the report the following paragraph: “No evidence was offered that the amount of said deposit or any part thereof ever came into the hands of the receiver; and the burden being on the claimant, in view of his failure to sustain it, I am of opinion that he is not entitled to maintain his claim to recover the deposit as a preference. If, however, I am wrong in this view of the law, and it is not necessary that the fund should be kept intact or that the fund should be traced into the hands of the receiver, then I am of opinion, in view of the wording of the contract, that the claimant is entitled to maintain his claim of a preference.” He also objected to the refusal of the master to rule that upon all the evidence “the deposit of $500 made by the claimant, was a trust fund and that the claimant should be entitled to priority and should be paid in full as a preferred claim.” The claimant duly excepted to the master’s report for the reason stated in his objections.
The master further finds that the claimant in addition to the deposit of $500 had an account with the Puritan Motors Corporation known as a “Car Account” and had made various payments on account of cars, which he had arranged to purchase, for resale
At the hearing in the Superior Court upon the exceptions the court “ordered, adjudged and decreed that the exceptions of the claimant, Joseph F. Downey, to the master’s report on his claim be overruled and the exceptions of the receiver thereto be sustained, and that the master’s report otherwise be confirmed, and that the claim of the said Downey as a general creditor of the estate, not entitled to priority, be allowed in the sum of $2,780.67.” From tMs decree the claimant duly appealed.
The decree sustaining the exceptions of the receiver and overruling the exceptions of the claimant was clearly right. Article “10” is not ambiguous, and clearly does not have as its object the creation of a trust fund which the Puritan Motors Corporation, as trustee, shall hold separate and apart from its own funds, as an indemnity fund from which it may discharge any liability arising under the agreement to the Puritan Motors Corporation or to any other person either liquidated or unliquidated, — the motors corporation paying to the claimant interest thereon at the rate of five per cent per annum. The obligation to pay interest upon deposited money imports naturally that the money may be used to earn money from which the interest may be paid, which increment from the use of the money would come to the depositor directly had the deposit not been made. Such an arrangement presumptively creates a debt as distinguished from a trust obligation. If, however, we assume with the claimant that a trust was created notwithstanding the obligation of the trustee to pay interest upon the res without the right to use it as his own, subject
What has been said as to the necessity of tracing the $500 fund into a specific property or fund which can be distinguished from the general assets of the insolvent applies with greater force to the claim that the $645.27 is to be treated as a trust fund and as such entitled to priority and payment in full. There is no evidence reported that the payments amounting to $645.27 were ever in fact or were ever expected to be kept separate from the general assets of the motors corporation.
Decree affirmed.