Boston Steel & Iron Co. v. Steuer

• Decision Date: 11 March 1903
• Citation: 183 Mass. 140,66 N.E. 646
• Parties: BOSTON STEEL & IRON CO. v. STEUER.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

183 Mass. 140

66 N.E. 646

BOSTON STEEL & IRON CO. v. STEUER.

Supreme Judicial Court of Massachusetts, Suffolk.

March 11, 1903

COUNSEL

John K. Berry and Eugene C. Upton, for plaintiff.

Elisha Greenhood, for defendant.

OPINION

LORING J.

The only question in issue between the parties in this case was the right of the defendant to be credited with two sums, of $200 and $400, respectively, under the following circumstances: On December 31, 1898, the defendant's husband owed the plaintiff $1,781.30, for ironwork furnished by it to him in the construction of a house, No. 819 Beacon street. On being pressed for payment, the defendant's husband, on January 21, 1899, delivered to the plaintiff the defendant's check for $200, payable to the plaintiff. It is stated in the bill of exceptions that on February 2, 1899, 'he paid the plaintiff the further sum of $400 in a check made by said Jennie D. Steuer.' But it appears from the auditor's report, which was before the court and is referred to in the bill of exceptions, that the plaintiff's manager's name was Newcomb, and that his story was that the check for $400 'was brought to him at his office on Devonshire street by Mr. Steuer in response to further demands for money, and that it was made out in blank and filled up by himself, Mr. Steuer being unwilling that it should be made for more than $200, while Mr. Newcomb insisted that it should be for the larger amount, and so made it, with Mr. Steuer's consent, and applied it to his debt.' The defendant's story was 'that she gave the check to Mr. Newcomb at her house.'

In addition to the iron furnished the defendant's husband for 819 Beacon street, the defendant's husband had ordered two iron columns and a base plate from the plaintiff for another house, No. 811 Beacon street, which the plaintiff supposed was Steuer's until he told the plaintiff's manager on March 10th that it belonged to his wife. These two columns and base plate were delivered on December 22, 1898 and at the rate charged in the bill of items were worth $150.35. From December to March there were negotiations between the defendant's husband and the plaintiff for a contract by which all the ironwork for 811 Beacon street should be furnished by the plaintiff for a fixed sum payments on account to be made as each floor was finished; and on or about March 1, 1899, the plaintiff's manager submitted to the defendant a written contract to this effect. On March 10th this was returned by the defendant's husband with the statement already referred to, that 811 Beacon street belonged to his wife, and the contract should be made with her. No written contract was ever made between the plaintiff and the defendant, but the plaintiff went forward and delivered the ironwork for two of the six stories of the house, part being delivered before March 10th and part after that date. The last was delivered on March 18th, when the plaintiff stopped because it had not been paid for what it had done. Thereupon this action was brought to recover the reasonable value for the materials furnished and work done.

At the trial the defendant contended 'that the amount of said payments should be credited to her in this action, on the ground that they were payments required by the plaintiff to be made in advance on account of her said building numbered 811 Beacon street, and that the checks were given to her said husband, as her agent, to make such payments,' and 'offered evidence of her instructions to her husband as to the use and application of said checks, not made in the presence of the plaintiff or anyone representing him, and claimed that the same should be admitted in evidence. The court declined to admit the same, and the defendant duly excepted to the exclusion.' The other exceptions taken at the trial have been waived, and the question raised by this exception is the only matter now before us.

The plaintiff has argued that it did not appear but that these instructions were given in a private conversation between husband and wife. But on a fair construction of the bill of exceptions we do not think that the evidence can be taken to have been excluded on that ground. It is stated there that the 'defendant offered evidence of her instructions to her husband, not made in the presence of the plaintiff or anyone representing him.' This must be taken to be a statement of the ground of the objection, and the ruling must be taken to be a ruling that competent evidence was offered and was excluded because not made in the presence of the plaintiff or of some one representing it.

The judge before whom the case was tried without a jury found 'that neither of said payments was required by the plaintiff to be made in advance on account of her said building numbered 811 Beacon street, and that neither of them was made according to any agreement for payment to be made on account of said 811 Beacon street, and that no floor in said building was completed at the time either of said payments was made by said Bernard Steuer on account of his building numbered 819 Beacon street, and were received by the plaintiff on account therefor.'

This finding makes the evidence excluded immaterial so far as the check for $200 is concerned. If this evidence had been admitted, the defendant's case on the $200 check would have been this: A check payable to the plaintiff is handed by the drawer to her husband, to be delivered by him to the plaintiff in payment of a debt to become due from the drawer of the check to the payee, and is fraudulently handed by the husband to the payee of the check in payment of a debt due from him to the payee, and is accepted by the payee in good faith in payment of that debt. In such a case the payee of the check is a bona fide purchaser of the check for value, without notice, and the drawer could not set up her husband's fraud in defense of the check, nor maintain an action for money had and received after payment of it on discovering the fraud.

The fact that the plaintiff is the payee of a negotiable security does not prevent him from becoming a bona fide purchaser of it, with all the rights incident to a purchaser for value thereof without notice. That was decided in Watson v. Russell (3 B. & S. 34), and affirmed in the Exchequer Chamber in the same case (5 B. & S. 968). To the same effect is Poirier v. Morris, 2 E. & B. 89, and Nelson v. Cowing, 6 Hill, 336, 339. Munroe v. Bordier, 8 C. B. 862, and Armstrong v. American Bank, 133 U.S. 433, 453, 10 S.Ct. 450, 33 L.Ed. 747, seem to go on this ground. Fairbanks v. Snow, 145 Mass. 153, 13 N.E. 596, 1 Am. St. Rep. 446, might have been decided on this ground, but was disposed of on common-law principles.

That payment of the pre-existing debt makes the plaintiff a purchaser for value in this commonwealth was settled law before the negotiable instruments act was enacted. Blanchard v. Stevens, 3 Cush. 162, 50 Am. Dec. 723; Stoddard v. Kimball, 6 Cush. 469. Goodwin v. Massachusetts Loan & Trust Co., 152 Mass. 189, 199, 25 N.E. 100; National Revere Bank v. Morse, 163 Mass. 383, 40 N.E. 180; Holden v. Phoenix Rattan Co., 168 Mass. 570, 47 N.E. 241.

The checks in question in the case at bar were given after the negotiable instruments act (St. 1898, c. 533; Rev. Laws, c 73) went into effect, and are governed by its provisions. The plaintiff is a holder in due course of the $200 check, within Rev. Laws, c. 73, § 69. This section is taken from section 29 of the bills of exchange act of 1882, and Watson v. Russell is cited in Chalmers, Bills of Exchange (5th Ed.) 89, as an example of a person who is a holder in due course within that section. It was stated by Lord Russell in Lewis v. Clay, 67 L. J. Q. B. 224, that a payee of a promissory note cannot be a holder in due course within section 29 of the English bill of exchange act of 1882. In Hardman v. Wheeler [1902] 1 K. B. 361, 372, it was pointed out that this statement of Lord Russell was obiter, and it was also pointed out that in that case, as in Lewis v. Clay, it was not necessary to pass on that point. The case of Watson v. Russell, 3 B. & S. 34, 5 B. & S. 968, does not seem to have been before the court in either of these cases; and in neither case does the court seem to have taken into consideration the practice of a check being procured drawn by another to be used in paying a debt due from the person procuring the check to the person to whom the debtor has had the check made payable. The practice is recognized in the case of foreign bills of exchange, and the person procuring the bill is known technically as the 'remitter' of it. See Munroe v. Bordier, 8 C. B. 862, where it was held that the payee of a foreign bill, who took it from the remitter of it for value, was a bona fide purchaser for value; and this rule was applied in Watson v. Russell, ...