Palmer v. Company , 79 N.H. 28 ( 1918 )

Although the principal defendants were nonresidents not served with process before the entry of the suit, the court obtained jurisdiction of the plaintiff's controversy with the trustees by service in this state. Service can be made upon the defendants out of the state only in the event of the attachment of their property in the state. In the orderly disposition of the litigation the first step is the adjudication of the controversy between the plaintiff and the trustees.

The trustees have not given their disclosure nor has the plaintiff taken it, as either party might have done before the entry of the writ. P.S., c. 245, s. 11. Although the court under the rule might have discharged the trustees because of the plaintiff's failure to file their disclosure during the first week of the term (71 N.H. 685), the court had power to relieve the plaintiff and to grant further time for the disclosure. Whitcomb v. Quinlan, 75 N.H. 429, 431. The conclusion of the court as to what justice required in this matter of procedure is not open to exception. But without jurisdiction of the defendants, acquired by service upon them in this state, the action must be dismissed unless the trustees have in their hands money or property of the defendants. Whitcomb v. Quinlan, supra; Carleton v. Ins. Co., 35 N.H. 162.

To secure an early decision of the question, the plaintiff conceded in argument that upon disclosure the facts would appear as stated in the affidavits with the added fact that the claims he makes against the principal defendants are such as the trustees agreed by their contract to indemnify the defendants against loss or liability from.

The plaintiff in trustee-process proceeds against the trustee upon the strength of the defendant's right and title and in the absence of fraud can recover only what the defendant could against the trustee. To charge the trustee, it must appear that the trustee has in his possession property which the principal defendant has the legal right to take and carry away. Martin v. Whitney, 74 N.H. 505, 507; Corning v. Records, 69 N.H. 390, 396. As said in Nashua Co. v. Francestown Co., 74 N.H. 511, "the test to determine whether the trustee is chargeable is to inquire whether the defendants could maintain an action against him." The contract of indemnity or insurance upon which the plaintiff relies is an executory not an executed contract. Until there is a breach of the contract no action could be maintained by the defendants against the trustees. The trustees agreed to defend any suits brought against the defendants for damages for injuries for which the insured was or was alleged to be liable. Failure by the trustees to perform this contract would give the defendants a right of action against them. Similarly, a breach of their contract to indemnify against loss or liability would give the defendants a right of action against the trustees and title to money in their hands for which they could be charged as trustees. Lombard v. Company, 78 N.H. 110. But at the date of the service upon the trustees, or at the present time, if this be taken as the date of the disclosure, there was not and is not now any breach of the contract of insurance or indemnity. It does not appear that the trustees have failed to take upon themselves the defence of all suits that have been brought against the defendants, or that the defendants have suffered any loss or that the trustees have permitted any legal liability to be established against them. The defendants have not and never had a right of action on the policy contract. Consequently the insurers are not now chargeable as trustees. No property of the defendants is held by attachment in this state.

Nothing would be gained by postponing the taking of the disclosure until in a proceeding to which the defendants are not parties the plaintiff can obtain a finding of the validity and extent of his claim against them. A judgment rendered upon such a finding would not be a legal claim against the defendants and suffering its rendition would not be a breach of the trustees' contract to indemnify against legal liability. The defendants, unless some of their property is attached in this state, can suffer neither legal liability nor loss in this litigation. They have not now and cannot have as a result of this suit any claim against the trustees. It has not been necessary to consider the terms of the policy. Construing it without examination, as claimed by the plaintiff, as indemnity against liability, there is nothing in this state to which jurisdiction can attach and the action should be dismissed. If the court had jurisdiction of the person of the defendants a different result would be reached. In such a suit a judgment against the defendants would establish legal liability and failure to protect therefrom would be a breach of the policy. The trustees would owe the defendants and could be charged for the debt. Lombard v. Company, supra. Other considerations presented in argument relating to the chargeability of the trustees, it has been found unnecessary to discuss. Steer v. Dow, 75 N.H. 95, 98; P.S., c. 245, s. 5; Bucklin v. Powell,60 N.H. 119. The difficulty is not one of process but is fundamental. Without jurisdiction of the defendants the court would be equally without power to adjudicate the controversy between the parties in bill in equity or under any other form of process.

Case discharged.

All concurred.