Opinion
No. 5129.
Argued June 5, 1963.
Decided July 9, 1963.
1. The statutory performance bond (RSA 344:1 (1)) required as a condition to the issuance of a license for the buying and selling of live poultry for food is designed to protect resident poultry producers, and the proceeds of such a bond furnished pursuant to such statute by a poultry dealer and processor declared a bankrupt are to be pro rated among claimants having the status of resident producers only.
2. The filing and acceptance of a proof of claim in bankruptcy proceedings did not constitute a judgment or an election of remedies which precluded a claimant from receiving distribution of the proceeds of a performance bond furnished by the bankrupt to the Department of Agriculture, prior to his bankruptcy, as a condition to the issuance of a license to buy and sell live poultry.
3. The doctrine of election of remedies is severely confined and limited in its application in this state.
4. The superintending power of the Supreme Court over inferior tribunals does not depend upon, and is not limited by, technical accuracy of designation of legal forms of action, and parties are entitled to the most convenient procedure for the settlement of their controversy.
5. A petition for declaratory judgment by an obligee of a performance bond may properly be treated as a bill of interpleader to determine the rights of various claimants to the proceeds of the bond.
Petition for declaratory judgment by the State of New Hampshire seeking a determination of the obligation of the defendant, Peerless Insurance Company, under a bond issued by it and posted with the New Hampshire Department of Agriculture by Karanikas and Sons, a partnership, pursuant to RSA 344:1 (1). The petition also sought a determination as to how and to whom the proceeds of said bond, if any, should be distributed. The defendants are the trustee in bankruptcy of Karanikas and Sons, the Peerless Insurance Company and claimants under said bond.
At a preliminary hearing before the Court all parties represented by counsel filed a stipulation of facts upon which the Court reserved and transferred without ruling certain questions of law.
Peerless Insurance Company (hereinafter referred to as Peerless) issued a $10,000 bond to Karanikas and Sons, a partnership operating a poultry processing plant in Goffstown, New Hampshire (hereinafter referred to as Karanikas). This statutory bond, on which the Department of Agriculture of the State of New Hampshire is named beneficiary, was filed with the Department of Agriculture to satisfy the requirements of RSA 344:1 (1) and to enable Karanikas to receive a license under the statute. Karanikas purchased live poultry, for processing in its plant, from both producers and dealers. Producers are farmers who grow poultry for meat or eggs. Dealers are persons who buy poultry from producers or other dealers and transport and sell it to a poultry processor. Karanikas was adjudicated bankrupt on April 28, 1960 and the defendant Aaron A. Harkaway was appointed trustee. The trustee in bankruptcy makes no claim against the bond. The claimants are producers (New Hampshire and out of state) and dealers (New Hampshire and out of state). All claimants filed proofs of claim in the partnership bankruptcy. No claimant has a Superior Court judgment against Karanikas and all pending actions have been stayed by the bankruptcy.
The following questions were reserved and transferred without ruling by the Superior Court (Griffith, J.):
"(1) Did the filing of proofs of claim in the Karanikas and Sons bankruptcy proceedings constitute an election which bars the claimants from receiving any distribution from the bond proceeds?
"(2) Does the filing and acceptance of a proof of claim in the Karanikas and Sons bankruptcy proceedings constitute a `judgment' within the meaning of R.S.A. 344:1?
"(3) If question No. 2 is answered in the negative, how shall the amount due each claimant be determined?
"(4) Are the proceeds of the bond posted by Karanikas and Sons pursuant to R.S.A. 344:1 to be distributed only to poultry producers who have claims against Karanikas and Sons or are they to be distributed to poultry producers and poultry dealers who have such claims?
"(5) Are the proceeds of the bond posted by Karanikas and Sons pursuant to R.S.A. 344:1 to be distributed only to residents of this state, who are in the class determined in answer to question No. 4, or are they to be distributed to all such claimants regardless of residence?
"(6) Does the Superior Court have authority to treat the Petition for Declaratory Judgment in this action as a Bill of Interpleader and establish some method of determining the claims of the various parties and give judgment on the claims so established?"
William Maynard, Attorney General and Alexander J. Kalinski, Assistant Attorney General (Mr. Kalinski orally), for the State.
McLane, Carleton, Graf, Greene Brown and G. Marshall Abbey (Mr. Abbey orally), for Harkaway, trustee and for Hubbard Farms, Inc.
Velishka Kozlowski for Ernest J. Savoie, furnished no brief.
Harkaway, Ryan Pappagianis for Jasper Poultry Farm, furnished no brief.
Wiggin, Nourie, Sundeen, Nassikas Pingree for Peerless Insurance Company, furnished no brief.
The purchase, sale and transportation of poultry in this state has been regulated with increasing stringency since 1935. Laws 1935, c. 61. The controlling statute requires a license (RSA 344:1 (1)) as follows: "An unlimited license to each person who shall furnish a bond with sufficient surety in an amount to be determined by the commissioner, but not to exceed ten thousand dollars, payable to the state of New Hampshire and conditioned for the faithful performance of all legal obligations incurred in the buying and selling of live poultry the meat or product of which is to be sold or used for food; such bond shall be held by the commissioner to satisfy any court judgment obtained or execution issued against any licensee because of failure to perform such legal obligations . . . ."
The principal issue in this case is whether the proceeds of the statutory bond should be distributed only to New Hampshire poultry producers. This is the nub of the fourth and fifth questions which were transferred by the Superior Court. The legislative history of RSA ch. 344 is not particularly helpful in determining what class of claimants are to be protected by the statutory bond and no rules and regulations have been issued under RSA 344:12. However the statute is geared to regulating dealers and processors who buy, sell and transport poultry rather than the farmers who raise and produce poultry. Payne v. Kansas, 248 U.S. 112. This is evident from RSA 344:10 which provides in effect that no license is required of the poultry producer who sells poultry at his own farm or the merchants who sell at their stores. The statute, by no means unique, is directed at protecting the local producer from "fly-by-night" operators who may leave the state with the rustic retaining a "rubber check." State v. Mason, 94 Utah 501; Garretson Co. v. Robinson, 178 Wn. 601; Annot. 117 A.L.R. 347, 350. Cf. RSA 344:15-18. While there is nothing to preclude the Legislature from protecting nonresident dealers and producers of poultry (Bozied v. Edgerton, 239 Minn. 277), the provisions of RSA ch. 344 disclose a purpose to protect only resident poultry producers. Annot. 117 A.L.R. 347, 363. The answer to the fourth question is that the proceeds of bond posted by the bankrupt pursuant to RSA 344:1 are to be distributed to poultry producers only. The answer to the fifth question is that distribution of proceeds of the bond is limited to New Hampshire residents only. In this connection it may be noted that nonresidents may apply under the law of their state inasmuch as neighboring states have similar statutes.
The first question transferred is whether the filing of proofs of claim in the Karanikas bankruptcy constitutes an election which bars the claimants from receiving any distribution from the bond proceeds. The answer is no. Gehlen v. Patterson, 83 N.H. 328; Stefani v. Savings Bank, 90 N.H. 10. The doctrine of election of remedies is a harsh one which frequently causes injustice and the doctrine has been severely confined and limited in its application in this state. Ricker v. Mathews, 94 N.H. 313, 317. The doctrine has no application to this case and does not preclude the claimants from receiving a distribution from the proceeds of the statutory bond.
Questions 2 and 3 may be treated together. The filing and acceptance of a proof of claim in the Karanikas bankruptcy proceedings does not constitute a "judgment" within the meaning of RSA 344:1 (1) and the answer to the second question is no. See Gardner v. New Jersey, 329 U.S. 565. It is apparent from the agreed statement of facts that the "status of the claimants as to whether they are dealers or growers [producers] and as to the state of their residence has not been determined; nor has the amount of their claims . . . ." Since all claimants are before the court, it can determine the status of each claimant and the amount of each claim and then make the necessary orders for a pro rata distribution of the bond proceeds. This is consistent with the provisions of the bond itself which does not refer to judgments but provides that the principal "shall faithfully perform all legal obligations incurred in the State of New Hampshire in the buying and selling of live poultry . . . ." Cf. Annot. 76 A.L.R. 941.
The suggestion of the Presiding Justice in the Superior Court (Griffith, J.) that the petition for declaratory judgment be treated as a bill of interpleader is a sound and practical one which finds a precedent in an important but underrated dictum of this court on procedure in New Hampshire generally. The statement in Dinsmore v. Mayor and Aldermen, 76 N.H. 187, 190 reads as follows: "But in this state it is unimportant whether the process be called certiorari, or be given some other Latin or English name. If it is an appropriate and convenient mode of vindicating legal right, it is perhaps not essential that it should have a technical name. The superintending power of the court over inferior tribunals does not depend upon, and is not limited by, technical accuracy of designation of legal forms of action. The parties' rights in this action do not depend upon our definition of certiorari. They are entitled under the established practice in this state to the most convenient procedure for the settlement of their controversy." See also, 3 Davis, Administrative Law Treatise, s. 24.06, p. 426 (1958); Nashua v. Public Utilities Commission, 101 N.H. 503, 506. As already indicated the Court may then proceed to determine to whom and in what amounts the bond proceeds should be distributed. Since the claims exceed the bond proceeds, it will be necessary to make a pro rata distribution.
Remanded.
All concurred.