308 Mass. 108 | Mass. | 1941
The plaintiff in this action of contract sought to recover on the first count of its declaration a balance amounting to $57,077.42, alleged to be due upon a promissory note made by the defendant under the date of September 15, 1932, and payable to the plaintiff; and in the second count to recover the aforesaid balance upon an account annexed. The case was referred to an auditor, and thereafter was tried upon the report and other evidence before a jury which returned a verdict for the plaintiff upon the first count and for the defendant upon the second count. The defendant excepted to the denial of certain requests for instructions and to portions of the charge.
The defendant filed an answer which contained a general denial, a claim of payment, and a recital that the note was given without consideration “or in any event that the consideration therefor has failed.” The answer also set up as additional matters of defence that the note was given in lieu of a prior note upon the express agreement that the plaintiff would keep itself informed of the fluctuations of the value of the collateral pledged with the note, and would be prepared to sell this collateral at such times and upon such conditions as would pay the note; that it would sell the collateral upon the request of the defendant; that “in violation of the express condition of the delivery of said note as aforesaid the plaintiff on or about June 11, 1930, and at divers times thereafter ” refused to sell the collateral at the request of the defendant; and that the defendant has thereby been damaged. The plaintiff demurred to this portion of the answer setting up these additional matters of defence. The defendant appealed from an order sustaining the demurrer.
This demurrer was properly sustained. In the first place,
It is not certain whether the defendant purported to set up a breach of the conditions upon which the note was delivered, which occurred subsequently to its delivery, or whether a breach of said conditions resulted from a violation of an agreement by the plaintiff to sell the collateral, alleged to have occurred on June 11, 1930, and thereafter. A plaintiff ought not to be required to be prepared to meet such indefinite, vague and not altogether consistent allegations. Skolnick v. Greenburg, 230 Mass. 359, 361. Davis v. H. S. & M. W. Snyder, Inc. 252 Mass. 29, 35. Grandchamp v. Costello, 289 Mass. 506, 507. Comerford v. Meier, 302 Mass. 398, 404.
In the next place, these additional matters set up in the answer, even if they could in some way be held to apply to the note, did not set up any matters that would constitute a defence. The note gave the plaintiff general authority to sell the collateral at public or private sale, without advertisement or notice, and to become purchasers at the sale. “The holder hereof shall have no duty as to the collection or protection of collateral . . . beyond the safe custody thereof.” The plaintiff was not required by the terms of the note to sell the collateral and the defendant would have no right to complain if it continued to hold the collateral. Badlam v. Tucker, 1 Pick. 389. Benj. N. Moore & Sons Co. v. Manu
These additional matters were inconsistent with the provisions of the note. They could not be shown in evidence and furnished no defence to a suit on the note. Lea v. Robeson, 12 Gray, 280. McCusker v. Geiger, 195 Mass. 46. Marsch v. Southern New England Railroad, 230 Mass. 483. Zielmann v. Copelof, 232 Mass. 393. Boston Consolidated Gas Co. v. Folsom, 237 Mass. 565. Pelonsky v. Watten0dorf, 255 Mass. 558. Buckley v. Hacking, 258 Mass. 525.
The defendant also filed a declaration in set-off alleging that the plaintiff became the holder and owner of the note declared on by an assignment from another bank; that by the terms of the assignment the plaintiff “undertook to assume and pay” the liabilities of this other bank; and that on or about June 12, 1930, the defendant directed and ordered this other bank to sell the collateral then held as security for said note and directed the payment of said note out of the proceeds of such sale, wherefore the plaintiff now owes the defendant the excess resulting from the sale amounting to $33,100 according to an account annexed. The defendant appealed from an order sustaining the plaintiff’s demurrer.
This declaration in set-off does not allege that the plaintiff’s assignor was under any obligation to sell the collateral at the request of the defendant nor is it directly alleged that any sale was made. Here again we have difficulty in understanding how the collateral could on June 12, 1930, be “held as security for said note” which was given to the plaintiff on September 15, 1932. If it was intended to allege that the collateral was in fact sold by the plaintiff’s assignor, then the plaintiff, by accepting the defendant’s note on September 15, 1932, did not become responsible for the sales of the collateral or liable to account therefor to the defendant. But the declaration in set-off alleges that the plaintiff, by the terms of the assignment by which the notes of the defendant were transferred to the plaintiff, assumed the obligations of its assignor including the claim of the defendant on account of the failure
We now pass to the exceptions taken during the trial. The Atlantic National Bank on May 3, 1932, held three promissory notes: two were made by the defendant and the third by his bookkeeper. All were secured by collateral, which, on that date, were indorsed and delivered to the plaintiff which assumed certain obligations of the Atlantic National Bank. None of these notes was then overdue. None contained a provision for the payment of interest. They were not paid at maturity and, after a series of conferences between certain officers of the plaintiff and Mr. Teele, counsel for the defendant, the defendant under date of September 15, 1932, gave the plaintiff' his three notes payable to it in the same amounts as the three old notes. One of these new notes was for $64,500 and is the note upon which the present suit is based. This note provided for the payment of interest but no rate was stated.
The plaintiff contended that the three new notes were taken in payment of the principal due on the three old notes; that the defendant owed interest on the old notes from the dates of their maturity and that it was agreed when the new notes were given that interest upon them
The auditor found that the “old notes were not written with interest”; that the plaintiff accepted the new notes of September 15, 1932, as payment in full of the principal of the old notes; and that the defendant never promised to pay interest on the old notes after the principal was paid. In reference to the interest to be charged on the new notes, he found that while these notes provided for interest they did not state the rate; that the rate of six per cent per annum was therefore implied by law, but that it was understood between the parties that the plaintiff would accept interest on these notes at the rate of four per cent per annum unless the defendant was otherwise notified by the plaintiff; and that the plaintiff notified the defendant that it would charge interest at the rate of six per cent per annum from March 1, 1934. He found that the plaintiff was entitled to interest at the rate of four per cent per annum from September 15, 1932, to March 1, 1934, and at the rate of six per cent per annum thereafter. The auditor also found that when the new notes were given to the plaintiff the old notes were not returned. But the new notes were delivered to the plaintiff without any condition and at no time was it stipulated that the new notes would become effective only upon the return of the old notes. Nothing was said about a return of the old notes until a year after the new notes were given, when Emery (an officer of the plaintiff bank) told Mr. Teele, who inquired about them, that they were held by the plaintiff as that was the only evidence the plaintiff had of interest from their due dates to September 15, 1932. The old note of $64,500 was tendered to counsel for the defendant during the trial and refused. The auditor found upon all the evidence that there was no agreement between the parties that any of
The defendant excepted to the denial of his seventh, eighth and ninth requests which, in substance, called for instructions that if no rate of interest was mentioned in the note the law presumed that the parties impliedly agreed to pay the legal rate unless there was an actual agreement as to the rate to be paid; that if the rate was fixed at four per cent, then “no implication of law subsequently arises which warrants” the jury charging the defendant with interest at the rate of six per cent for any part of the period during which the note remained unpaid up to the date of the writ or up to the time of demand. The tenth and eleventh requests were to the effect that if the plaintiff was entitled to recover, then upon all the evidence it could not recover interest at a rate in excess of four per cent from the date of demand or from the date of the delivery of the note up to the date of the writ.
At the trial the plaintiff introduced the auditor’s report and rested. The defendant did not testify but introduced the evidence of Emery, an officer of the plaintiff, and of his attorney, Mr. Teele, together with certain correspondence.
The judge denied the first request that, if there was an agreement upon the delivery of the note to return the prior note for $64,500 and the plaintiff refused to deliver this note, then such failure constituted a partial failure of consideration and is a good “pro tanto defense” to the action on the note. If we assume in favor of the defendant that there was evidence that the plaintiff was not a holder in due course and that the answer specifically sets up a partial failure of consideration, G. L. (Ter. Ed.) c. 107, § 51; c. 231, § 28; Wentworth v. Dows, 117 Mass. 14; Indiana Flooring Co. v. Rudnick, 236 Mass. 90; Jones v. Revere Preserving Co. 247 Mass.
The principal exception to the charge is that the judge instructed the jury that they could find that there was consideration for the note if it was given in payment for the prior note for $64,500 held by the plaintiff, or if the plaintiff agreed to charge interest on the note in suit at the rate of four per cent instead of six per cent per annum. The defendant concedes that the charge was correct if the jury found that the note was given in payment of the prior note, but contends that the reduction of interest from six per cent to four per cent was not valid consideration. Even if we assume that the plaintiff could not recover interest on the prior note from its maturity until September 15, 1932, because the note did not bear interest, and that the plaintiff could recover damages at the rate of six per cent for the delay in paying this note, Davis v. Harrington, 160 Mass. 278, the plaintiff could agree to reduce its damages from six per cent to four per cent per annum, and agree to accept interest on the new note at four per cent per annum instead of six per cent, as long as the interest was paid when due. There was evidence that both parties believed that the plaintiff was entitled to interest on the old note and that the new note was not given in payment of the principal and interest but, according to the auditor, was given by the defendant and received by the plaintiff in payment of the principal due on the old note. This
The exception to the instruction that the facts reported by the auditor “which stand uncontradicted, become final”
The orders sustaining both demurrers must be affirmed. The trial was free from error and the exceptions must be overruled.
So ordered.