291 Mass. 439 | Mass. | 1935
The plaintiff bank held a note of the defendant investment company and, as collateral security therefor, certain notes and mortgages which had been assigned to the bank by instruments purporting to be signed by the investment company by its treasurer. The bank
The declaration in the present action alleges a breach of the bond given to secure the performance by the investment company of the covenants in its written agreement. It was tried on a case stated before a judge of the Superior Court who found for the plaintiff and assessed damages in the penal sum of the bond with interest from the date of the breach, at which time, as the judge found, there was due the bank under the written agreement an amount larger than the penal sum of the bond. He ordered that execution issue
The determination of the question whether there was a breach of the bond depends upon the construction to be given to the language of the bond and the language of the agreement to which the bond refers and relates. The bond recites the filing of the bill of complaint by the investment company and its execution of the agreement in order “to secure possession of the said notes and mortgages pending the final determination of said case.” The condition of the bond was that the investment company “shall duly and punctually perform all its covenants and obligations of said agreement.” The written agreement recites the filing of the bill of complaint and the desire of the investment company “to secure possession of the said notes and mortgages pending the final determination of the said case by giving its bond to the said Bank.” The only covenants which the written agreement purports to express are covenants of the investment company. It provides that the investment company, in consideration of the delivery of the collateral, “covenants and agrees with the said Bank as follows: 1. That the delivery of said, notes and mortgages shall be without prejudice to the rights of either party in said pending cause .... 2. If the said . . . Investment Company does not secure in said cause a final decree of the court cancelling said assignments and directing the said . . . Bank ... to turn over to the . . . Investment Company the said . . . notes and mortgages mentioned in said bill, the said . . . Investment Company shall within thirty (30) days after final decree in said pending cause denying such relief pay to the said Bank any balance remaining unpaid” on the note held by the bank.
The agreement and the bond must be read together (Goewey v. Sanborn, 277 Mass. 168, 169) as a whole, without undue emphasis on any particular part (Crimmins & Peirce Co. v. Kidder Peabody Acceptance Corp. 282 Mass. 367, 375), in the light of the circumstances of the parties at the time the instruments were executed and delivered (Morse v. Boston, 260 Mass. 255, 262) and the object sought
In construing the instruments the situation of the parties at the time of their execution must be given weight. The bank had notified the company of its purpose to sell the collateral which it held as security for the note. Thereupon the company had brought a bill in equity seeking the cancellation of the assignments of the securities to the bank as collateral and their return to the company. The only question presented by the bill was whether the collateral had been assigned and delivered to the bank by one acting with authority from the company. There is nothing in the record tending to indicate that any other or further litigation was contemplated. The bill which the company had brought afforded full opportunity for the final determination of the only issue between the company and the bank. The bank sought no change in the situation; it apparently was content to continue to hold the collateral and await the termination of the pending proceeding. At the instance and for the benefit of the investment company a different arrangement was made. The company proposed that, in advance of the termination of the pending proceeding, the bank should surrender to it the notes and mortgages which constituted the subject matter of that suit. In the statement of agreed facts it is recited that “This the Bank agreed to do provided that other security was substituted to be held by the Bank pending the determination of said suit. In accordance with the foregoing arrangement the bond and agreement . . . were executed.” The arrangement made was in essence a substitution of security. It was consummated by the exchange of the written agreement and bond, for written assignments of the collateral held by the bank and the delivery of the collateral itself to the company. It is manifest that the object sought to be accomplished by the arrangement was merely the substitution of one security for another, leaving the settlement of the issue between the parties to rest upon the outcome of the bill in equity then pending. After as well as before the new arrangement was made, the company
We think that the result is no different under the terms of the written agreement which with the bond constituted the substituted security. It is there provided that the investment company would pay the balance due the bank on its note if the company did “not secure in said cause a final decree of the court” cancelling the assignments of the original collateral to the bank and directing the bank to turn over the collateral. In view of the object sought to be accomplished by the written agreement and the circumstances attendant on its execution, we think that the instrument must be construed as manifesting the intent of the parties that upon a termination of the pending proceedings under the bill in equity by a decree which did not grant to the company the relief which it sought, the substituted security of the written agreement and the bond should become available to the bank. The agreement sets the time within which the investment company, if it did not secure a final decree in its favor,, should pay the balance due on its note, as “within thirty (30) days after final decree in said pending cause denying such relief.” Any'decree dismissing a bill in equity in effect denies the plaintiff the relief sought in that particular proceeding. In view of the affirmative undertaking of the investment company in the agreement to secure a decree granting relief and the manifest object of the parties, we do not think that the words fixing the time within which payment must be made can be construed as negativing the construction herein given to the agreement as a whole.
We cannot agree with the defendants' contention that the instruments should be construed as manifesting the intention of the parties that liability on the bond should exist only upon the final determination of the cause of action of
The damages sustained by the plaintiff exceeded the penal sum of the bond. The judge therefore rightly ruled that the plaintiff was entitled to recover the penal sum of the bond with interest thereon from the time of the default. Bank of Brighton v. Smith, 12 Allen, 243, 253, and cases cited; Brown v. London & Lancashire Indemnity Co. 249 Mass. 511, 516. Judgment is to be entered for the plaintiff in the penal sum of the bond with interest from the time of the default, and execution is to issue for that sum with costs.
So ordered.