205 Mass. 261 | Mass. | 1910
The Boston Club, a corporation organized under the R. L. c. 125, for social and other kindred purposes, became deeply indebted to many persons. It had small assets, and it made a voluntary assignment for the benefit of its creditors. Subsequently this bill in equity was brought in behalf of a judgment creditor for the benefit of herself and other creditors, against the corporation and the assignee, praying that a receiver
Inasmuch as the statutes of this Commonwealth relative to proceedings in insolvency by or against insolvent corporations (R. L. c. 163, §§ 143-149) are suspended by the bankrupt law of the United States, and as this class of corporations is not included in those whose estates may be settled under this law (bankruptcy act of 1898, § 4 (b)), we may assume that, upon its averments, the plaintiff’s bill was within the jurisdiction of the court. Upon this bill a receiver was appointed, who was directed to collect all the assets of the corporation and all moneys and debts due it from the members thereof.
The receiver filed a petition setting forth the names of all the alleged members of the Boston Club, more than three hundred in number, in which petition, as it was amended, he averred that these members were indebted to the club in the sum of $25 each for the half of the annual dues to June 1, 1908, under a by-law of the club, and in the same sum, under the same bylaw, for dues to December 1, 1908, and that forty-one of these alleged members were indebted to the club in various sums for ordinary charges for food and other refreshments which they had received, and praying that an account might be taken of the several amounts due from the several respondents, and for a decree requiring payment to the receiver of such sums as should be found due from each of them. Upon this petition there was an order of notice, the notice to be given by sending by mail a printed copy to counsel of record, and to twelve of the respondents “ designated by the court upon whom service of this order shall be made in lieu of serving upon all the persons mentioned in this petition.” After this service upon these designated persons most of them appeared and filed demurrers and answers to the petition. The demurrers having been overruled,
A second petition, similar in form, was presented to the court, to recover the amount of a special assessment made under a bylaw by the executive committee. Upon this petition, after similar proceedings, the judge found that the assessment was invalid because the by-law authorized it to be made only by a majority of the committee present at the time of making it, and a decree was entered dismissing the petition. From this decree the receiver appealed.
An appeal was also taken by some of the defendants from the decree of the court allowing claims against the corporation, and especially the claims of Shepard Nor well Company, Smith Patterson Company and McKinney and Waterbury Company.
The demurring respondents assigned six causes of demurrer, among which were want of equity, misjoinder of respondents and multifariousness. The first petition was to recover a large number of legal claims from debtors of the corporation. Upon the facts found by the judge, as appears in his order for a decree, the members of the corporation were indebted under a by-law of the corporation by which they had agreed to be bound. Many of them were also indebted for goods sold and delivered by the corporation. The case is quite unlike the summary proceedings which the receiver may take by application to the court to protect his right of possession to tangible property of a corporation which is transferred to him by the action of the court under his appointment. Such property is in the control of the court whose representative he is. The collection of a debt stands differently. Smith v. Johnson, 57 Ohio St. 486. State Bank of New Brunswick v. First National Bank of Plainfield, 7 Stew. 450. Andrews v. Paschen, 67 Wis. 413. Wheaton v. Daily Telegraph Co. 124 Fed. Rep. 61. Horn v. Pere Marquette Railroad, 151 Fed. Rep. 626, 629. As to these claims the receiver had no greater
Upon this subject there have been a great many decisions, with considerable conflict among them. The subject is very ably and fully discussed, with a citation of a large number of cases, in Pom. Eq. Jur. (3d ed.) §§ 251 to 274. It seems now to be settled by a great weight of authority that jurisdiction may sometimes be exercised on behalf of a single party against a numerous body, although there is no common title nor community of right or interest in the subject matter among those individuals, and where there is and because there is merely a community of interest among them in the questions of law and fact involved in the general controversy, or in the kind and form of relief demanded and obtained by or against each individual member of the numerous body. On the other hand, as was said by Mr. Justice Peckham, speaking for the court in Hale v. Allinson, 188 U. S. 56, 77, “ The single fact that a multiplicity of suits may be prevented by this assumption of jurisdiction is not in all cases enough to sustain it. It might be that the exercise of equitable jurisdiction on this ground, while preventing a formal multiplicity of suits, would nevertheless be attended with more and deeper inconvenience to the defendants than would be compensated for by the convenience of a single plaintiff, and where the case is not covered by any controlling precedent the inconvenience might constitute good ground for denying jurisdiction.” It seems too plain for doubt that the receiver’s first petition in this case, which joined legal claims for annual dues against all the different members of the corporation, and included charges against a large number of them for food and refreshments, cannot be sustained on any principle of equity jurisprudence. As to these charges, there was no community of interest among the respondents in any question of law or fact involved,
A question of more difficulty, which was included in the appeal and has been argued by counsel, and which may arise again in subsequent proceedings in the case, is whether the claims against all the members for the annual dues can be joined in a petition in equity. Similar questions have been passed upon by the courts. A bill was brought by a receiver of a State banking corporation in Iowa, to recover from stockholders assessments levied to enforce a personal liability for debts under a law of that State. It was held that the suit could not be maintained, and that the remedy was at law. Tompkins v. Craig, 93 Fed. Rep. 885. In Hale v. Allinson, 102 Fed. Rep. 790, there was an attempt by a receiver to enforce in equity a personal liability imposed by statute upon stockholders in a corporation, and it was held that there was no jurisdiction in equity. Judge McPherson in giving the opinion said: “Two classes of questions remain to be decided: The first is whether a given stockholder was ever liable as such; and the second is whether, if he were originally liable, his liability has ceased, either in whole or in part. Manifestly, as it seems to me, the defendants have no common interest in these questions, or in the relief sought by the receiver against each defendant. The receiver’s cause of action against each defendant is, no doubt, similar to his cause of action against every other, but this is only part of the matter. The real issue, the actual dispute, can only be known after each defendant has set up his defense, and defenses may vary so widely that no two controversies may be exactly or even nearly alike. If, as is sure to happen, differing defenses are put in by different defendants, the bill evidently becomes a single proceeding only in name. In reality it is a congeries of suits with little relation to each other, except that there is a common plaintiff, who has similar claims against many persons. But as each of these persons
The considerations which led to the decision in Hale v. Allinson, apply with almost equal force to the present case. There is one question presented by the receiver in which the respondents all have a common interest, namely, whether there was a by-law and a liability of members under it, as he avers. There are other questions which pertain to each individual respondent, namely, whether he became a member of the corporation so as to be subject to the liabilities of members, and if so, whether he ceased to be a member before this particular liability attached, and whether, if it attached, it was ever discharged. In none of these questions has any other member any interest. As to them, there must be a separate trial against each respondent.
This is not a case in which a decree for payment can be made against a particular respondent without service upon him. As to questions of the kind above stated, he is not a member of a class who can be represented by other members. Before he can be found liable as for a debt, he must be given notice of the claim against him, and an opportunity to make his defense. In
We are inclined to the view that this case should be governed by the decision above stated, and that it should be treated as presenting nothing but separate claims for the payment of debts in which different questions may arise, such that they cannot properly be-joined in equity for the purpose of preventing a multiplicity of suits.
The respondents contend that there can be no liability for these annual dues, because a receiver has been appointed for the property of the corporation, and the respondents have not enjoyed the expected benefits of membership. From what appears upon this record, we must assume that the liability for the dues for the year ending December 1, 1908, accrued on December 1, 1907, and that nothing had occurred at that time to relieve the respondents from liability for this annual assessment. We have no report of evidence, nor anything on the subject but the pleadings and the decrees. .Dealing with the case only upon the facts before us, we hold that this- defense is not made out.
Nor is there any good ground for the appeal of the respondents as to the allowance of the claims of creditors against the corporation, including the claims of Shepard Norwell Com-pony, Smith Patterson Company and McKinney and Waterbury Company. The decree as to these is founded upon findings of fact by the trial judge which are well sustained by the evidence.
The appeal of the receiver from the dismissal of the second petition rests upon the fact that a quorum of the executive committee were present when the special assessment was made, and the vote was passed by a majority of the quorum. The bylaw under which action was taken provides that an assessment may be made by a majority of the executive committee. The committee consisted of twenty members, fifteen chosen specially, and five other officers who were members of the committee ex offieiis. By article 3, section 10, five members of the committee constitute a quorum. The question is whether the by-law
Decree reversed; demurrers sustained; decree as to allowance of claims affirmed; decree dismissing receiver's second petition affirmed„
In the Superior Court this suit was heard at all its stages by Richardson, J., who made all the orders and decrees therein.