303 Mass. 101 | Mass. | 1939
One Gamari and his wife had a joint deposit in the defendant bank, amounting to $935.99, represented by the usual savings bank book. He and his wife owed the defendant bank $3,800 upon a joint and several note dated September 4, 1908, payable on demand to the defendant at its banking house, and secured by a mortgage of real estate. The note was due immediately, without actual
In this action to recover the amount of the deposit, the defendant relied in defence of the action on the set-off made as has been stated. The judge, sitting without jury, found for the plaintiff. The defendant filed a declaration in set-off, alleging that the plaintiff’s assignor owed it the balance of the note amounting to 13,800. G. L. (Ter. Ed.) c. 232, § 11. The judge found for the plaintiff upon the defendant’s declaration in set-off. The defendant excepted to the refusal of six requested rulings.
An assignee of an ordinary non-negotiable chose in action takes it subject to any existing right of set-off that the debtor may have. Goldman v. Noxon Chemical Products Co. 274 Mass. 526, 529. Federal Reserve Bank of Boston v.
Questions of set-off have often arisen between a commercial bank and a depositor. “It is well settled that funds on general deposit in a bank are the absolute property of the bank, that the relation between the parties is that of debtor and creditor, and that the bank is entitled to apply the balance of the account due the depositor to the satisfaction of a debt due the bank from the depositor.” Laighton v. Brookline Trust Co. 225 Mass. 458, 459, 460. National Mahaiwe Bank v. Peck, 127 Mass. 298. Prudential Realty Co. v. Commissioner of Banks, 241 Mass. 277, 279. Howard v. Barnstable County National Bank of Hyannis, 291 Mass. 131, 138. Harding v. Broadway National Bank of Chelsea, 294 Mass. 13, 18. (See also Francis & Badger Motor Co., petitioner, 297 Mass. 366.) Studley v. Boylston National Bank, 229 U. S. 523. Conversely, the depositor ordinarily has a right to set off his deposit against his debt to the bank. Rossi Bros. Inc. v. Commissioner of Banks, 283 Mass. 114. Commissioner of Banks v. T. C. Lee & Co. Inc. 291 Mass. 191. Friedman v. Commissioner of Banks, 291 Mass. 108. But where either the deposit or the debt due the bank has taken the form of a negotiable instrument and has passed into the hands of a holder in due course, set-off can no longer be allowed. Federal Reserve Bank of Boston v. Gray-United Stores Inc. 290 Mass. 77. Gordon v. Fifth Avenue Bank of Pittsburgh, 308 Penn. St. 323. One purpose of negotiability is to enable one to take an instrument in due course without concerning himself with the state of the accounts between the original parties. Federal Reserve Bank of Boston v. Gray-United Stores Inc. 290 Mass. 77, 79.
Assuming that the rules as to set-off of deposits in commercial banks apply to the present case, where as in this case the existence of security for the debt of the depositor to the bank appears, the burden is upon the bank to prove its right to set-off, and as an incident of that burden to show that the security was inadequate. Compare Commissioner of Banks v. T. C. Lee & Co. Inc. 291 Mass. 191, 196, 197. In the present case that burden was not sustained.
G. L. (Ter. Ed.) c. 107, § 110, if applicable to a savings bank, does not authorize a bank to pay for the account of the maker a note payable at the bank, by means of a set-off made in violation of the doctrine of Furber v. Dane, 203 Mass. 108, 117. See Brown v. First National Bank of Boston, 216 Mass. 298, 301, 302; Nineteenth Ward Bank v. First National Bank of South Weymouth, 184 Mass. 49, 51. The defendant has shown no right of set-off, and its requested rulings are immaterial.
Exceptions overruled.