306 Mass. 187 | Mass. | 1940
This is an action upon a promissory note for $5,000, dated November 8, 1935, made by the defendant, payable to the order of the plaintiff at the Webster and Atlas National Bank of Boston on January 21, 1936, and indorsed in blank. A second count upon an account annexed has been waived. The defendant contends that he gave this note for the accommodation of the plaintiff and therefore is not hable to the plaintiff upon it. Leonard v. Woodward, 305 Mass. 332, 334, and cases cited. The plaintiff not only denies that the note could be found to be an accommodation note, but further contends that the evidence of an oral understanding upon which the defendant relies contradicts the express terms of this and previous notes signed by the defendant and therefore violates the paroi evidence rule.
The defendant himself testified to the following effect: The defendant had been in the "wholesale food business.” In 1934 and 1935 the plaintiff was the defendant’s largest creditor for "beef and products” purchased by the defendant. Early in 1935 the plaintiff’s president and treasurer began pressing the defendant for payment. The defendant spoke of going into bankruptcy. They told the defendant that the plaintiff was opening a building in Omaha and needed the money. The plaintiff’s treasurer said he had "borrowed up to the limit” at his own bank, but that the defendant had a credit standing at the Webster and Atlas. The plaintiff’s officers urged the defendant to give the plaintiff a note for $7,500 payable at the Webster and Atlas National Bank and promised the defendant that if he paid all he owed to the plaintiff except $5,000 the plaintiff would make him a present of that sum and would never call upon him to pay it; that if the defendant paid $2,500 to the
The former treasurer of the plaintiff testified that the plaintiff had done business with the defendant for about seventeen years, and that the defendant’s account was the plaintiff’s largest account. He corroborated the defendant’s testimony that before the making of the $7,500 note the plaintiff’s president and treasurer agreed that if the plaintiff would pay all but $5,000 they “would give him, a present of the account and call the bill square.”
In answer to a question the jury found that when the defendant signed the $7,500 note there was an agreement between the plaintiff and the defendant that when the
It does not appear in the evidence how the plaintiff became the holder of the note in suit, after having discounted it, although the defendant in his answer says that the plaintiff paid it.
By G. L. (Ter. Ed.) c. 107, § 52 (negotiable instruments law, § 29), an accommodation party is defined as “one who has signed the instrument as maker, drawer, acceptor or endorser, without receiving value therefor, and for the purpose of lending his name to some other person.” Upon the evidence hereinbefore narrated a finding would have been warranted that the defendant was an accommodation maker of the $5,000 note upon which this action is brought. The jury could have found that when that note was signed the defendant had paid down his indebtedness to $5,000 as agreed; that both the plaintiff and the defendant understood that as between them the plaintiff and not the defendant was to pay the remaining $5,000 to the bank; that the defendant signed merely to lend his name to the plaintiff in order that the plaintiff might get the advantage of the defendant’s credit at the bank; and that the defendant did not receive “value therefor.” They could find that as between these parties the note in suit was not a simple renewal of the former note with the usual implications of liability according to the tenor of the note, but that since the parties had mutually understood for some time before this note was given that, no indebtedness longer existed between them, the transaction was intended as a pure accommodation of the plaintiff. Salem Trust Co. v. Deery, 289 Mass. 431, 435, 436. Doubtless the defendant would have been liable to the bank as a holder in due course of the note in suit, G. L. (Ter. Ed.) c. 107, § 52, but it does not necessarily follow that by the substitution of the last note for the preceding one the defendant received “value therefor” so that he could not be an accommodation party as to the plaintiff, even though the due date was extended thereby. Consideration consists only of that which the contracting parties offer and accept as such. French v.
Both parties have argued at length the question whether the plaintiff’s promise to accept what the defendant owed in excess of $5,000 in full payment of his entire indebtedness was supported by sufficient consideration to render it valid and enforceable. In our view, for the reasons already stated, the defendant might have been found to come within the definition of an accommodation party as to the final note whether or not the agreement was legally enforceable.
The plaintiff’s contention that the paroi evidence rule prevents the defendant from showing that he was not to be liable to the plaintiff on the instrument sued upon cannot prevail. Evidence of accommodation introduced for the purpose of avoiding liability of the accommodating party always contradicts the instrument, but its competency is unquestionable. Corlies v. Howe, 11. Gray, 125. Levison v. Lavalle, 243 Mass. 47, 49. Great Barrington Savings Bank v. Day, 288 Mass. 181, 184. Salem Trust Co. v. Deery, 289 Mass. 431, 436. Brannan’s Negotiable Instruments Law (6th ed.) 433. There is nothing to the contrary in such
To the plaintiff’s remaining contention that its officers were not shown to have had authority to promise or to represent that it would remit part of the defendant’s debt, the answer is that by bringing this action upon the final note the plaintiff has affirmed the entire transaction of which that note was the fruit. Am. Law Inst. Restatement: Agency, § 97; see also §§ 93 and 98. New England Mutual Life Ins. Co. v. Wing, 191 Mass. 192, 194. Attorney General v. Onset Bay Grove Association, 221 Mass. 342, 348, 349. Gross v. Cohen, 236 Mass. 468. Calkins v. Wire Hardware Co. 267 Mass. 52, 68. Coral Gables, Inc. v. Granara, 285 Mass. 565, 571. Quincy Trust Co. v. Woodbury, 299 Mass. 565, 568, and cases cited.
A verdict should not have been directed for the plaintiff, and in accordance with the stipulation contained in the report there must be a new trial.
So ordered.