283 Mass. 283 | Mass. | 1933
This is an action of contract commenced by writ dated October 6, 1930. The action is brought for the benefit of the Massachusetts Bonding and Insurance Company to recover the proceeds of a check for $24,000 of the plaintiff corporation alleged to have been improperly used by one of its officers for the purpose of paying an individual indebtedness to the defendants. It is alleged that the defendants were not bona fide purchasers of the check. The declaration alleges in count 2 “that the defendants owe it the sum of $24,000 and interest for money had and received by defendants to the use of the plaintiff.” In their answer the defendants “admit that they received from the plaintiff a check for $24,000, but they deny each and every other allegation in the plaintiff’s writ and declaration contained.” They further answer “that they delivered to the plaintiff certain securities, the purchase price and then market value of which was $24,000; that the plaintiff thereafter either retained or sold said securities for its own account, wherefore the plaintiff cannot recover herein.” No claim of set-off or recoupment is made.
The case was referred to an auditor who filed his report on February 12, 1932, “and found for the plaintiff in the sum of $12,800, together with interest thereon from March 11, 1930.” Thereafter, the case was tried before a judge of the Superior Court, sitting without a jury, on the auditor’s
The trial judge upon all the evidence, including the auditor’s report as modified by the foregoing rulings, and the inferences of fact reasonably to be drawn therefrom, finds the basic and subsidiary facts found by the auditor to be true. The facts found by the auditor are in substance as
Various other officers, agents and employees of the plaintiff had trading accounts with said corporation. The accounts of the officers, agents and employees were kept on cards in the same way that accounts of outside customers were kept and were available for inspection by the officers of the corporation. All the officers knew that all the other officers had such trading accounts. Each of the officers was accustomed to give orders for the purchase and sale by the plaintiff of securities for his individual account and to sign the plaintiff’s corporate checks for such purchases. There was no rule or regulation of the plaintiff corporation forbidding its officers or employees from buying or selling any security for his own account through the plaintiff corporation until after the transaction in suit. (This paragraph is a summary of matter which was struck out of the auditor’s report by the judge upon motion of the plaintiff, and is a matter subject to the defendants’ exceptions.)
About the first of October, 1929, Macurda was personally indebted to the defendants because of operations conducted with them through the medium of his trading account in their office, in approximately $80,000. For this indebted
Macurda caused a special account to be opened on a ledger card of Childs, Jeffries & Co., Incorporated, headed “C. L. Macurda, Special,” to accommodate this one transaction. On his instructions this account was charged with the check for $24,000, and credited with the eight hundred shares of Chain & General Equities common as collateral. The only reason advanced by Macurda for carrying this transaction outside his regular account was that he intended to obtain a bank loan on the securities. He did not tell any of the other officers, directors or stockholders of the plaintiff corporation about this transaction and none of them had knowledge of it until December 5, 1929, when it first came to the knowledge of the other officers and directors of the plaintiff. The following day Childs and Jeffries consulted with their attorney. Macurda was called to the conference and told by the attorney that he had no right to issue the check for $24,000. On the same day a special directors’ meeting was held and Macurda was compelled to resign as treasurer, clerk and director. At this meeting the authority of the president, vice-president and treasurer as to signing of notes, drafts, bills or checks conferred on them on August 31, 1925, was rescinded “without in any way invalidating any signature heretofore made thereunder” and a new vote was passed requiring two signatures upon corporate paper.
On October 28, 1929, Childs, Jeffries & Co., Incorporated, borrowed $30,000 from The New England Trust Company. It was the duty of one McVey, an employee of the plaintiff directly under Macurda’s supervision, to deliver to banks collateral for loans made with them. Macurda asked McVey if the eight hundred shares of Chain & General common was collateral they could borrow on or use as a loan, and in consequence of this conversation McVey included this stock in the collateral sent to The New England Trust Company to secure the loan of $30,000 on October
Subject to the exception of the defendants the findings contained in this paragraph were struck from the auditor’s report: Starting in April or May, 1929, monthly audits or reports were prepared by the employees of the plaintiff corporation, which contained a list of all the accounts of the officers and the balance of each account. These audits were furnished to the officers two or three weeks after the first of the month. On September 12, 1929, Macurda wrote the defendants as follows: “Please take down 1,000 shares of United Founders Corporation at 72% from Messrs. Childs, Jeffries & Co. in the amount of $72,125, charging the account of Frank M. Pierce and C. Lawrence Macurda, joint account.” On September 25, 1929, two similar letters were sent by Macurda to the defendants differing only in amount and kind of stock, and account charged. Pursuant to these instructions the defendants in each case issued and delivered to the plaintiff checks, and received from the plaintiff the securities mentioned in the letters of Macurda. The auditor found that none of these three transactions nor the one of October 4, 1929, hereinbefore mentioned, had been questioned, complained of or objected to in any way or at any time by the plaintiff prior to the transaction of October 24, 1929, or up to the date of the writ in this suit. He specifically found as to these transactions that they were within the scope of Macurda’s express or implied authority and that it is therefore unnecessary to determine whether any other officer of the plaintiff had notice of them.
There is no evidence that the plaintiff took any action or made any claim with respect to the transaction in suit until February 13, 1930. On this date claim was made for $24,000 on the Massachusetts Bonding and Insurance Company on a fidelity bond. On receipt of this claim the
The judge found that the plaintiff is entitled to receive $24,000 with interest from the date when this sum was misappropriated, to wit, October 25, 1929; that there should be deducted therefrom the benefit that enured to it by the retention of the said eight hundred shares after it first learned of the unauthorized transaction on December 5, 1929, and that the measure of such benefit is the fair market value of said shares on December 5, 1929, with interest. The plaintiff filed thirty requests for rulings, the defendants sixty-four. The trial judge gave a few of these requests and denied the others. He also gave the general ruling that “upon all the evidence the plaintiff is entitled to a finding in its favor.” The case is before this court on a joint bill of exceptions filed by the plaintiff and the defendants, and the bill of exceptions contains “all the facts and all the evidence necessary for the determination of the questions of law raised by this bill of exceptions.” The principal issues in controversy are (1) Did Macurda have authority express or implied to sign the check in question? (2) If not, were the defendants put upon inquiry as to Macurda’s authority? (3) Is the plain
1. Under the vote of August 31, 1925, the “treasurer, Macurda had authority ‘for and in behalf of the corporation to sign notes, drafts, bills, or to draw checks . . but the finding of the auditor and the judge that Macurda did not have express or implied authority to use the funds of the plaintiff to pay a part of his private debt to the defendants is a finding of fact which is settled adversely to the defendants who assert the authority if there is any evidence to support it. Adams v. Hayden, 236 Mass. 454, 457. Moss v. Old Colony Trust Co. 246 Mass. 139, 143. Peabody v. Dymsza, 280 Mass. 341. The subsidiary facts found are not in conflict with the general finding. Macurda had authority to draw checks “for and in behalf of the corporation.” He had authority to buy or sell securities in the name of the plaintiff for his own trading account with the plaintiff as well as for the accounts of customers; he was authorized to buy or sell securities for the account of the plaintiff, and he would have had authority to put through for a customer of the plaintiff corporation who also had a margin account with the defendants the identical transaction which he in fact put through on his own behalf. None of these subsidiary findings is inconsistent with the findings that Macurda was not authorized to sign the check in question. The three September transactions which were struck out of the auditor’s report do not aid the defendants, they were so different (in fact the exact opposite) from the transaction in question, that they were without evidentiary value. The defendants contend that the transaction in suit constituted a purchase of the eight hundred shares of Chain & General Equities common stock by the plaintiff from the defendants and that for this purpose Macurda had actual or ostensible authority to draw the check. This contention is based upon evidence for the defendants which the auditor or judge might disbelieve that the securities in question were a part of fifteen hundred shares purchased by the defendants on the order of
2. If Macurda had neither express nor implied authority to sign the check for the purpose for which it was given and received were the defendants bona fide purchasers of the check? They made in fact no inquiries and were found by the auditor to have assumed, without inquiry, that Macurda had some sort of arrangement with the plaintiff whereby he was authorized to issue the checks of October 10 and October 25, 1929. It is well settled law that where an officer of a corporation pays his private debt with a check drawn on the account of the corporation the creditor is put on inquiry as to the authority of the officer so to do. Johnson & Kettell Co. v. Longley Luncheon Co. 207 Mass. 52, 56. Farrington v. South Boston Railroad, 150 Mass. 406. Newburyport v. Fidelity Mutual Life Ins. Co. 197 Mass. 596. It is to be noted that the market value of the eight hundred shares of stock on October 24, 1929, when the order was given the defendants was $4,000 less than the check, and on October 25, 1929, when the transaction was consummated, it was $6,400 less. Upon the facts
3. On the facts found Macurda had not been held out as authorized to conduct the transaction. The transaction of October 4, consummated October 10, 1929, was not known to any officer of the corporation or stockholder before the transaction of October 24, 1929, had occurred. See DiLorenzo v. Atlantic National Bank of Boston, 278 Mass. 321, 325. The conduct of the plaintiff in failing to give notice to the defendants of Macurda’s lack of authority until March 11, 1930, does not work an estoppel because there is no evidence that the defendants were prejudiced by the delay; and “Without showing some injury by reason of the delay, the defendant cannot use it as an estoppel against the plaintiff.” Murphy v. Metropolitan National Bank, 191 Mass. 159, 165. DiLorenzo v. Atlantic National Bank of Boston, 278 Mass. 321, 325.
4. The defendants contend that the vote of the directors of the plaintiff corporation on December 6, 1929, was an express ratification of the transaction. On that date Macurda resigned, the remaining directors accepted his resignation, and at this meeting the vote of August 31, 1925, as to signing checks was rescinded, “without in any way invalidating any signature heretofore made thereunder,” and a new vote was passed requiring two signatures upon corporate paper. The auditor found that the plaintiff never intended to ratify the act of Macurda, and the judge ruled that the vote of December 6 did not amount to a ratification. Apart from the finding of fact we think the ruling was right and that vote confirmed only the signatures made under the authority of the vote of August 31, 1925, which in terms limited the authority of the named officers to the signing of checks “for and in behalf of the corporation.” The defendants contend that the retention of the stock by
Exceptions of plaintiff and defendants overruled.