Owen Tire Co. v. National Tire & Rubber Co.

| Mass. | Apr 13, 1923

Crosby, J.

This is a bill in equity to enforce payment of two drafts for $5,000 each, drawn by the plaintiff upon the National Tire and Rubber Company and accepted by it; and to reach and apply assets of the latter company alleged to have been transferred in fraud of creditors to the other defendant, the-National Tire & Rubber Co. The case has been before this court. (242 Mass. 375" court="Mass." date_filed="1922-07-05" href="https://app.midpage.ai/document/owen-tire-co-v-national-tire--rubber-co-6435909?utm_source=webapp" opinion_id="6435909">242 Mass. 375) and exceptions to certain findings made upon issues submitted to a jury were overruled; it is now before us on the defendants’ appeal from a final decree.

The findings of the jury upon the issues submitted to them were in effect that the drafts were accepted for the consideration-of a prior indebtedness, and not for the plaintiff’s accommodation; that no promise was made by the plaintiff not to call for payment of them; that on the respective dates of the drafts the rubber company was owing the plaintiff sums, not otherwise paid or discharged, amounting in each instance to the face of' the draft; that subsequently all the defendant company’s assets, to the value of $35,000 were transferred to the other defendant;, that this transfer was made with intent to hinder, delay and defraud creditors. These findings dispose of the defences that the drafts were accepted for the accommodation of the rubber-company, that they were without consideration, and that the plaintiff agreed that it would not call upon the defendant for payment thereof. The finding that all the assets were transferred in fraud of creditors also disposes of the contention of the-defendant National Tire & Rubber Co. to whom the assets of the rubber company were transferred. It is stipulated by the transferee that it may be decreed to be primarily liable with the-company for such sums as may be found due from the latter.

The trial judge ordered that a decree be entered in favor of' the plaintiff in accordance with the prayers of the bill, and a final decree has been entered establishing the plaintiff’s claim in the sum of $8,983.27 with interest, in all $10,060.08, and directing the defendants severally to pay the same. Any inconsistency in amount between the decree and the last two findings, of the judge is waived by the plaintiff, who has not appealed from the decree.

The record shows that the plaintiff and one Palder entered into a certain agreement, referred to as the “Hornblower agreement,” by the terms of which the latter became liable to the plaintiff for the amount due it from the defendant company. The judge's second and third findings relate to this agreement, and the defendant contends that the final decree is not in conformity with the findings. If these findings were to the effect that there was a novation whereby a substitution of the liability of Palder for that of the defendant company was effected, it would seem that the company would not be liable to the plaintiff; but the findings do not go to that extent. The company is not found to have been a party to the agreement between Palder and the plaintiff, and the recital in the second finding, “by which the defendant company was entitled to a discharge of its debt by payment by Palder in accordance with the agreement,” is not a finding that the defendant company without being a party thereto became bound thereby, or able to enforce it in its own right; (compare Curran v. O’Donnell, 236 Mass. 357" court="Mass." date_filed="1920-10-14" href="https://app.midpage.ai/document/curran-v-odonnell-6435198?utm_source=webapp" opinion_id="6435198">236 Mass. 357); nor is there anything in the third finding which relieves the defendant from liability. Owen Tire Co. v. National Tire & Rubber Co. 242 Mass. 375" court="Mass." date_filed="1922-07-05" href="https://app.midpage.ai/document/owen-tire-co-v-national-tire--rubber-co-6435909?utm_source=webapp" opinion_id="6435909">242 Mass. 375.

The first finding, inferentially to the effect that the company is to be liable to some extent upon the drafts, is inconsistent with any theory that by “ acting under the so-called Hornblower agreement” it is intended to describe a novation.

As the company is liable for the amount of the drafts in the sum found due the plaintiff after the accounting, against which liability the agreement is no defence, the plaintiff must prevail. The decree for the amount found due apparently was made after a full allowance for all payments actually made by Palder in stock or otherwise on account of the indebtedness of the company to the plaintiff. The payments made by Palder were the only legal benefit which the company can have received as a consequence of the agreement, and it follows that there is no analogy, as the defendant contends, to cases where assignees of licenses of patented articles are liable for payment of royalties, Paper Stock Disinfecting Co. v. Boston Disinfecting Co. 147 Mass. 318" court="Mass." date_filed="1888-06-22" href="https://app.midpage.ai/document/paper-stock-disinfecting-co-v-boston-disinfecting-co-6422842?utm_source=webapp" opinion_id="6422842">147 Mass. 318; where persons receive funds upon agreement to pay them over to others, Mellen v. Whipple, 1 Gray, 317; or where transferees of assets agree to pay all the transferors’ creditors, Forbes v. Thorpe, 209 Mass. 570" court="Mass." date_filed="1911-09-06" href="https://app.midpage.ai/document/forbes-v-thorpe-6431532?utm_source=webapp" opinion_id="6431532">209 Mass. 570.

Moreover, as Palder is not a party to this suit and no decree-can be made concerning him, no question of the power of the-court in equity to adjust rights under the agreement is open. If the company has a right to have the drafts paid by stock, that right is against Palder and does not affect the legal liability of the company to the plaintiff.

Decree affirmed, with costs.