249 Mass. 14 | Mass. | 1924
This is an action to recover on a note for $15,000, dated February 16, 1920, signed by the defendant by its president, and payable on demand to the order of the plaintiff at the plaintiff bank. The note was given for a loan made to the defendant by the plaintiff from funds of its commercial department. At the close of the evidence, the trial judge directed the jury to return a verdict for the plaintiff on the original note, and for the defendant in set-
On September 25, 1920, the commissioner of banks took possession of the property and business of the plaintiff trust company under St. 1910, c. 399, as amended, now G. L. c. 167, §§ 22, 36, and is prosecuting this action in the name of the plaintiff. The plaintiff contends that the note belonged originally to the commercial department, but afterwards, on February 28, 1920, was assigned to the savings department. This is denied by the defendant, which contends that it is entitled to set-off from its deposit in the commercial department a sum equal to the amount due on the note in payment thereof.
One O’Brien, called by the plaintiff, who was an employee of the bank for several years before it was closed, testified respecting certain entries, upon the books of the bank and upon a certain envelope, which tended to show that the note in question was transferred to the savings department on February 28, and that certain items of interest had been paid thereon. This evidence was admitted subject to the exception of the defendant. It is plain that it was admissible for the purpose of showing that the note had been transferred to the savings department, which was a material issue in the case. O’Brien testified that he had charge of the savings department and purchased the note from the commercial department, but that he did not know what was given for it; although he stated that value was so given, and that he would say that money was given. The jury could have disbelieved this testimony but, independently of it, the judge was warranted in assuming that the note had been transferred and assigned to the savings department, from the evidence as shown by the books of the bank and the documentary evidence contained upon the envelope, both of which had been rightly admitted in evidence. It appeared from the counter books and the entries on the envelope that the note was accurately described and bore the number 2872, which was its correct number, and the interest entries thereon and the counter books tallied accurately. While O’Brien testi
It further appeared that a notice was sent by the commercial department calling for the payment of interest on the note on September 1, and that the amount had been charged to the defendant’s account. The defendant’s president, Whitney, testified that notices calling for interest were received on April 1, July 1, and September 1, and came from the commercial department; the first of these was stamped paid by the commercial department; the second, which also gave notice of an increase in the interest rate, was stamped “ Paid, Savings Dept.; ” and the third was similarly stamped. About October 2 a demand for interest was received marked as coming from the savings department. Whitney testified that on September 3 he considered paying the note and gave instructions to his bookkeeper to charge the amount thereof to the defendant’s account in the commercial department, when there were sufficient funds in its deposit. The bookkeeper testified that she made a deposit on September 4 which made the balance (it being insufficient before that time) enough to pay the note. One Hall, an employee of the defendant, testified that he took the notice received September 1, bearing Whitney’s memorandum, “ charge to account,” to the bank; that he went to the collection window on the commercial side and told a clerk there to charge the note and interest to the defendant’s account; that he was sent to a window of the savings department where he made the same request, left the memorandum, and was told “ All right.” Whitney testified that he did not notice that the interest notices were stamped paid; that his usual practice was to charge notes falling due to the account and not draw checks for them. There was evidence tending to show that none of the defendant’s officers or agents knew that the note had not been deducted from the commercial account until October 6, 1920, after the bank had been closed.
Upon the question, whether the judge erred in directing
Upon the question of notice to the defendant of the assignment, it is plain that the assignee takes subject to all the equities and defences available against the assignor at the date of 'the assignment. Cosmopolitan Trust Co. v. Rosenbush, 239 Mass. 305, 308. Tremont Trust Co. v. C. H. Graham Furniture Co. 244 Mass. 134, 137. It follows that the savings department took as assignee subject to the defendant’s rights against the commercial department at the time of the assignment. If the note had remained in the commercial department, the defendant would have had a right of set-off, and if the set-off had existed at the time of the assignment, such set-off would have been valid against the savings department. But in the case at bar there is no evidence of a deposit in the commercial department at the time of the assignment made on February 28. The deposit which the defendant seeks to set off was made in the early part of September, over six months after the assignment, and the claim of set-off against the commercial department did not become effective until the bank was closed on September 25. If the defendant was entitled to notice of the transfer of the note before it could be deprived of its right of set-off, it would be a question for the jury upon the evidence whether the circumstances were such that the defendant was charged with notice of the assignment.
In Cosmopolitan Trust Co. v. Rosenbush, supra, it was held that, where a note had been transferred from the commercial to the savings department, while “ the savings department held the note as assignee with the same authority and subject to the same obligations to its depositors as it would have held any commercial paper which it had purchased without indorsement . . . [still] As assignee the savings department took the note subject to all equities and defences existing between the commercial department and the defendants.” It would seem therefore that the ordinary rules of assignment apply in the case at bar, including those relating to notice. G. L. c. 232, §§ 1, 4. Notwithstanding the general rule relating to assignments, yet in cases like the one at bar, where to allow a set-off will diminish the assets of the savings department, which it is the policy of the law to protect, the general rule respecting assignments is to be limited, and only to those will equities and defences existing at the time of the assignment be sustained. That principle is fully recognized in Cosmopolitan Trust Co. v. Rosenbush, supra. See also Bailey v. Commissioner of Banks, 244 Mass. 499, 501; Commissioner of Banks, petitioner, in re Prudential Trust Co. 240 Mass. 478, 483.
The defendant was a depositor in the commercial department and is presumed to know the policy of the law in favor of savings department assets. Where, as here, the loss must fall on one of two innocent persons, either on the commercial depositor whose note was transferred, or on the savings department depositors who will lose by the depletion of the assets of that department if the defendant’s set-off is allowed, it is the policy of the law that the loss must fall on the former. When, as in the present case and in the Rosenbush case, there is a conflict between the savings de
It is the contention of the defendant that, if there was evidence warranting a finding that the note had been transferred by assignment to the savings department, the latter was negligent in not presenting it for payment before the bank was closed; and that to the extent the defendant was thereby damaged it is released from liability. The ground for this contention is that, the note, being payable at a bank where the maker had an account, is governed by the same law as applies to a check by virtue of G. L. c. 107, § 110; and like a check must be presented within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay. G. L. c. 107, § 209. The defendant contends that the savings department was negligent in failing to present the note, having been instructed to do so after September 7, and in having neglected to carry out that instruction before the bank was closed on September 25. G. L. c. 107, § 110, reads: “ Where the instrument is made payable at a bank it is equivalent to an order to the bank to pay the same for the account of the principal debtor thereon.” We are unable to agree with this contention. The maker of a promissory note is primarily liable, while the drawer of a check is liable only in case the instrument is dishonored. G. L. c. 107, § 93, applies to the maker of a note but not to the drawer of a check. No duty rests upon the holder of a promissory note to present it for payment to charge the maker, presentment not being necessary to charge him as he is primarily liable. Binghampton Pharmacy v. First National Bank, 131 Tenn. 711; 2 A. L. R. 1377. In the case last cited; this precise question was decided: in referring to § 87 of the negotiable instruments act which is identical with G. L. c. 107, § 110, the court said, at page 717: “ Presentment for payment is not necessary to charge the maker of a note.
The case of Baldwin’s Bank of Penn Yan v. Smith, 215 N. Y. 76, contains some reasoning in conflict with this conclusion, but as it is stated in the opinion that it is unnecessary to decide the question, it cannot be considered as an authority opposed to the decision we have reached. The statement in Nineteenth Ward Bank v. First National Bank of South Weymouth, 184 Mass. 49, at page 52, that “ The note itself was equivalent to a check,” means simply that it was unnecessary to give a check in that case to obtain payment. That is a different issue from the one here considered, which is, Was prompt presentment for payment of the note necessary to avoid the discharge of the maker to the extent of loss occasioned by delay? It is therefore manifest that the defendant cannot complain that the plaintiff was negligent in failing to present the note promptly and that it is discharged thereby wholly or partially from liability. And this is true if we assume without deciding, that this demand note was subject to the same rules as those governing a time note at the date of maturity, by virtue of the request of Hall, made to the savings department early in September.
It remains to consider the defendant’s contention that the note has been paid. It appears that the defendant’s presi
If it be assumed that the savings department is treated as having the same relation to the commercial department as any holder would have with reference to this note, the question is: Was the judge justified in ruling, in effect, by directing a verdict, that the commercial department could not be found to be the agent of the savings department to collect the note? For, if the commercial department was an agent of both the maker and the savings department, the notice given as above described was equivalent to payment. Nineteenth Ward Bank v. First National Bank of South Weymouth, supra. Baldwin’s Bank of Penn Yan v. Smith,
The question, whether the commercial department was authorized by the savings department to collect the note therefore should have been submitted to the jury. Failure to do so requires the entry of
Exceptions sustained.