173 Mass. 261 | Mass. | 1899
The plaintiff sues upon a promissory note, by. which the defendant, on August 7,1896, promised to pay in four months after date to the order of Cunningham, Banks, and Company the sum of $1,000. Before the giving of this note, the defendant had bought merchandise of the payee, but the accounts, between them had been previously closed, and he then owed the payee nothing. The payee, being short of money, asked the
“$1,500. Boston, August 11,1896. On demand, after date, for value received, we promise to pay to the Beacon Trust Company, of Boston, or order, at the said Trust Company, fifteen hundred dollars, with interest at the rate of . . . per centum per annum, having deposited with the said Trust Company as collateral security for the payment of this or any other direct or indirect liability of ... to the said Trust Company due, or that may be hereafter contracted, the following described security: note Frank S. Robbins, dated Aug. 7th, payable in 4 months, for $1,000, and note Laconia Car Co., dated July 27th, payable in 4 months, for $987.53, both notes payable to order of Cunningham, Banks, & Co.”
Then followed, before the signature, the usual provisions relating to depreciation of the collateral, the deposit of additional security, and the sale of the property pledged or to be deposited as collateral. About September 16,1896, the plaintiff informed the defendant by mail that the plaintiff held the note now in suit,
As a result of interviews and conversations between a member of the firm and the president of the plaintiff corporation, concerning a proposed settlement of the plaintiff’s claims against the firm, on November 27, 1896, the firm paid the plaintiff the sum of $1,138.24, for which the plaintiff executed and delivered to some member of the firm an instrument which stated that, in consideration of the sum named “paid by E. B. Hunting of Baltimore,” the plaintiff assigned to Hunting “all claims represented by said company (the plaintiff) against the firm of Cunningham, Banks, & Co., of said Boston, such claims being
The sum of $1,138.24 so paid to the plaintiff was arrived at by taking twenty-five per cent of the Bailey note for $565.17, the Drake note for $600, the Laconia Car Company note for $850, the $1,500 note of August 11, 1896, and the Laconia Car Company note of $987.53, with some addition for accrued interest. At the time the payment was made and the instrument of November 27,1896, was executed, the plaintiff knew that the firm had made a common law assignment and were then settling with their creditors, so far as they could, on a basis of twenty-five cents on the dollar, and that this settlement took the form of assignments of the claims against the firm to one Hunting. No directions were given by the firm as to the application of the sum of $1,138.50, and no notice was given by the plaintiff to the defendant or to the firm of an appropriation of that payment. Upon receiving it, the plaintiff, on November 27,1896, debited on its paying teller’s cash book as “ time loans paid ” the Bailey note $565.17, and Laconia Car Company note (on account of release of indorsement) $73.07, and also as “ call loans paid ” Cunningham, Banks, and Company $1,500, and credited as “ Time Loans ” the Robbins note, now in suit, $1,000. In other words, if these entries were under the circumstances an appropriation by the plaintiff of the sum of $1,138.24, then paid by the firm in settlement of the plaintiff’s demands against it, the plaintiff then, and before notice that the defendant would assert that the
On December 1, 1896, the plaintiff agreed with the Laconia Car Company to sell and transfer all the claims of the plaintiff against that company to one Stone upon payment, on or before January 1, 1897, of twenty-five cents on the dollar.
The note in suit fell due on December 10, 1896, and on that day the defendant wrote the plaintiff a letter, received on the next day, in which the defendant stated that the note was given for accommodation only ; that he felt he should pay only enough to make good the collateral note of $1,500; that he was informed by Cunningham, Banks, and Company that they had paid the plaintiff $375 bn the $1,500 note, also $246.88 on the car company note of $987.53, and that there was a further payment of $246.88 from the car company itself upon the same note of $987.53, making a total of $868.76 received by the plaintiff upon the collateral note of $1,500, and leaving a balance due the plaintiff of $631.24, which the defendant offered to pay. On December 16, 1896, the present action was begun.
On December 26, 1896, the Mayberry note of $600, given to the plaintiff by Drake on August 25, 1896, as collateral security for the payment of his own overdue note for the same amount, on which was the indorsement of the firm, came due and was paid to the plaintiff, and both the Drake and Mayberry notes were given up to Drake. U pan that occasion both Drake and Cunningham asserted that the sum of $150 had been paid by the firm on the Drake note in the payment of $1,138.24, on November 27, 1896 ; but the plaintiff’s treasurer then said' that he had applied or was going to apply that $150 on the $1,500 Cunningham, Banks, and Company note which the plaintiff then held. The plaintiff has ever since retained the full sum of $600 paid by Mayberry, and has not offered to account with. Drake for any part of it.
The Bailey note of $565.17 fell due on October 29, 1896, and was dishonored. Afterward the maker went into insolvency,
On January 1, 1897, the plaintiff received $216.71 as twenty-five per cent of the car company note of $850 and accrued interest, and assigned that note to Stone. Nothing was paid on the car company note of $987.53 until February 4,1897, when the plaintiff received a thirty per cent dividend on that note, and a further dividend of five per cent on the $850 car company note which it had previously assigned to Stone, these two payments amounting to the sum of $343.02, and it again assigned to Stone all its claims against the car company. These payments were received and these assignments to Stone were made after the plaintiff had knowledge that the defendant contended that the note in suit was an accommodation note, and were without the defendant’s knowledge or assent. The car company was in insolvency in some New Hampshire court, and it was not shown whether the proceedings in insolvency had been terminated, what amounts had been paid to their other creditors, or what were its assets. At the time of the various settlements, no way was known to the plaintiff of realizing more than it did realize, and in making the settlements the plaintiff acted in good faith.
The facts above recited are drawn from an auditor’s report. That report, with the testimony of a member of the firm of Cunningham, Banks, and Company that the note of the Laconia Car Company for $987.53 was riot an accommodation note, but for value, and that Hunting had on March 7, 1898, delivered to the witness a sealed release of the firm and of its members from all liability upon all notes or their indorsements of which Hunting was assignee under the plaintiff’s assignment of November 27, 1896, was all the evidence in the court below.
Upon that evidence the defendant asked the court to rule that the plaintiff was not entitled to recover; that the plaintiff did not own the note to which the note in suit was collateral, and so could not maintain an action on the note in suit; that the defendant was entitled to have the sum of $375 put of the sum of $1,138.24 paid on November 27, 1896, applied in reduction of the $1,500 note in determining the amount for which the plaintiff could enforce the note in suit, and was also entitled to have
The plaintiff asked the court to rule that it was entitled to recover the full amount of the note in suit with interest; that the note was founded upon sufficient consideration, and that there had been no failure of consideration; that the plaintiff had not released the defendant’s cosurety, but had merely assigned the car company note of $987.53, and that the other notes held by the plaintiff were independent transactions, which had no relation to the liability of the defendant in this case, and that the release from Hunting of March 7,1898, was incompetent and immaterial.
The court ruled that the Hunting release was immaterial, found that the note in suit was an accommodation note, that that fact was not known to the plaintiff until December 11,1896, and was then made known to the plaintiff; that the note in suit was held by the plaintiff as collateral to all the indebtedness of Cunningham, Banks, and Company to the plaintiff; that the instrument of November 27,1896, did not release the defendant, except to the extent that the payment of $1,138.24 reduced the indebtedness due from Cunningham, Banks, and Company to the plaintiff on that day, and that after December 11, 1896, the defendant was entitled to the rights of a surety; and that as against him the plaintiff had failed to show that it should not be charged with the whole amount of the $987.53 note.
After a formal finding for the plaintiff in the sum of $394, which included interest from the date of the writ, both parties excepting, at the request of their counsel the case was reported for the determination of this court.
It is conceded that the plaintiff became the pledgee of the note in suit for value and before its maturity, and without knowledge that it was, as between the maker and the payee, given for the accommodation of the latter. The plaintiff can recover the full amount of the note and interest, if it was not an accommodation note, or if, before notice that it was an accommodation
The contention that the note was not an accommodation note is disposed of by the contrary finding or ruling in the court below. Upon the evidence that when the note was given the accounts of previous dealings between the maker of the note and the payee were closed, that there were no subsequent transactions between them, that this note was asked for by the payee and given by the maker because the payee was short of money and asked for help of the maker to the amount of the note, that it was to be taken care of by the payee if the maker should not have bought goods enough before its maturity to cover its amount, and that there was no agreement that the maker should purchase goods of the payee, and that none were so bought, it was open to the court below to find that the note in suit was an accommodation note, and that finding must stand.
There was no distinct finding of the court below upon the plaintiff’s contention that, although at first merely a pledgee of the note in suit, it became the absolute purchaser and owner of the note when, on November 27, 1896, before receiving notice that the note in suit was given for the accommodation of Cunningham, Banks, and Company, it settled with that firm' for the sum of $1,188.24, retaining its demands upon the maker of this note. But a finding against that contention is necessarily involved in the findings that the defendant, after December 11, 1896, was entitled to the rights of a surety, and that the plaintiff should recover less than the amount of the note in suit. We think that the court was justified in finding that the plaintiff had not changed its original status of pledgee to that of an absolute purchaser or owner. While on November 27,1896, the plaintiff debited the note of August 11, 1896, as paid, and entered the note in suit, which it had theretofore held as collateral, as a time loan, these entries did not require a finding that it had thus become the absolute owner of the note in suit. In determining that question the court below could consider the evidence as to the terms of the pledge, as to how the sum of $1,138.24 paid by the pledgor in settlement had been arrived at, and the
The plaintiff’s rights are therefore to be settled upon the basis that it is a pledgee of the note in suit, and that, after the notice of December 11,1896, that the note was an accommodation note, the defendant had the rights of a surety. Guild v. Butler, 127 Mass. 386, and cases cited.
At the argument before us, the plaintiff contended that, if the defendant had the rights of a surety, his rights were to be meas
For convenience we, for the present, disregard all questions of interest, although they may have to be dealt with hereafter in determining the amount of the judgment to be entered.
When the pledge was made, the whole indebtedness of the pledgor to the plaintiff seems to have consisted of the amount of the note of August 11,1896, for $1,500. The Drake note of May 20, 1896, was at some time discounted for the pledgor by the plaintiff; but this is not shown to have been done before August 11,1896. It was owned by the plaintiff at the time of its maturity and dishonor, on August 23, 1896, and we assume in favor of the plaintiff that the pledgor’s conditional liability, as indorser of this and the other notes indorsed by him, was fixed by due demand and notice of dishonor. We therefore add the amount of the Drake note, or $600, and next the amount of the Bailey note of $565.17, and finally that of the Laconia Car Company note of $850, all of which were acquired by the plaintiff
The payments actually received by the plaintiff, which the defendant as surety has the right to have taken into an account in determining the sum for which judgment shall be entered against him on the note in suit, were the sum of $1,138.24 paid on November 27, 1896, by the pledgor; $600 paid by Mayberry on the Drake note, December 28, 1896; the further sum of $216.71, paid on January 1, 1897, on the Laconia Car Company note of $850; the sum of $343.02, paid on February 9,1897, on the two Laconia Car Company notes, and finally the sum of $217.20 paid on July 16, 1897, on the Bailey note,—■ all of which actual payments amount to the sum of $2,515.17. The deduction of these actual payments leaves a balance of $1,000, or the amount of the note in suit. But a still further deduction must be made because of the plaintiff’s dealing with the Laconia Car Company note of $987.53, after notice on December 11, 1896, that the note in suit was an accommodation note. As the plaintiff held that note also as collateral, and it was not an accommodation note, the defendant was entitled to its benefit, and the plaintiff by voluntarily surrendering it without the defendant’s consent would exonerate the latter to the amount so surrendered. Guild v. Butler, 127 Mass. 386. Thayer v. Finnegan, 134 Mass. 62. Fitchburg Savings Bank v. Torrey, 134 Mass. 239. Wilson v. Bryant, 134 Mass. 291, 297. Union Insti
The plaintiff contends that, in dealing with the note for $987.53, an allowance of twenty-five per cent should be made because of the payment of $1,138.24 in the settlement of November 27, 1896. But in that settlement the plaintiff reserved its rights to the note, it made no appropriation of any part of the $1,138.24 to the part payment of the note, and it continuously thereafter treated the note as a demand for its full face value, and of which it had the exclusive ownership. The plaintiff’s reservation of its rights against all other parties, except Cunningham, Banks, and Company, was legal and effective. Sohier v. Loring, 6 Cush. 537. Hutchins v. Nichols, 10 Cush. 299. Potter v. Green, 6 Allen, 442. We see no reason why it could not enforce the note for $987.53 against the maker for its full amount, without any deduction on account of the payment of ■the $1,138.24. If there was no objection to the finding of the plaintiff’s damages except the omission to credit the amounts of $4.21 and $4.27 above mentioned, we should order judgment upon the finding, because these omissions come from the method in which the court below dealt with the question of interest, and to which method neither party objected. But the omission to credit the second payment of $42.50 made upon the car company $850 note must, in any event, be corrected. For that purpose the finding must be set aside. If the. parties agree upon the amount for which judgment should be entered for the plaintiff in accordance with the rules which we have stated, judgment should be entered for that amount. Otherwise, the case should be sent to an assessor to determine the amount due under the Massachusetts rule in case of partial payments, or that amount should be otherwise determined in the court below.
Finding set aside. Proceedings to he taken in the Superior Court to determine the amount for which the plaintiff shall have judgment.