Boston Towboat Co. v. Medford Nat. Bank

• Decision Date: 06 January 1919
• Citation: 121 N.E. 491,232 Mass. 38
• Parties: BOSTON TOWBOAT CO. v. MEDFORD NAT. BANK et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

232 Mass. 38

121 N.E. 491

BOSTON TOWBOAT CO.

v.MEDFORD NAT. BANK et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Jan. 6, 1919.

On Report and Reservation from Supreme Judicial Court, Suffolk County.

Suit by the Boston Towboat Company against the Medford National Bank and others, and petition by Charles F. Adams and others, trustees of the Massachusetts Gas Companies, owners of all the stock of the Towboat Company, for appointment of receiver for it. On report and reservation by a single justice of the Supreme Judicial Court for determination of the full court, respondents in the suit appealing from decree allowing motion to substitute the receiver of the Towboat Company as plaintiff. Bill dismissed.

See, also, 228 Mass, 484, 117 N. E. 928.

Gaston, Snow & Saltonstall, of Boston (Thos. Hunt, of Boston, of counsel), for plaintiffs.

Eaton & McKnight and Jas. E. McConnell, all of Boston, for respondent.

DE COURCY, J.

In May, 1902, the Medford National Bank held two promissory notes which purported to be signed by Susan M. Stuart, and also thirty-one shares of the stock of the Boston Towboat Company, standing in her name, as collateral security for the payment of the notes, accompanied by a blank transfer and power of attorney. In compliance with an order purporting to be signed by Mrs. Stuart the bank sent the certificates of stock to its brokers to be sold: and they in turn sent them to Henshaw & Co., whose business it was to sell unlisted stocks at auction. Later the certificates for the thirty-one shares, and the transfer and power of attorney with the names of the purchasers inserted, were presented to the plaintiff, the Boston Towboat Company, were cancelled, and new certificates were issued in the names of the purchasers. Afterwards it was discovered that the signatures of Susan M. Stuart to the notes, the transfer and the order were forged; and she brought a bill in equity against the Towboat Company. A decree was entered in her favor for $6,000, which was paid in April, 1915. See Pratt v. Taunton Copper Co., 123 Mass. 110, 25 Am. Rep. 37. The Medford National Bank had been notified to defend that suit. The Medford Trust Company in 1908 succeeded to the business of the bank, taking over its assets and assuming its liabilities.

The first of these proceedings is a suit brought by the Towboat Company to compel the bank and the trust company to refund the money it paid in satisfaction of Mrs. Stuart's execution, and the expenses incurred in defending her suit. It came before the full court in October, 1917; but the reservation was discharged for the reason that the Boston Towboat Company had been dissolved by St. 1913, c. 277, and no decree could be entered in favor of or against it. Boston Towboat Co. v. Medford National Bank et al., 228 Mass. 484, 117 N. E. 928.

Subsequently a petition was brought by the trustees of the Massachusetts Gas Companies, owners of all the stock of the Towboat Company, saking for the appointment of a receiver for the latter company under St. 1903, c. 437, § 53, as amended by St. 1905, c. 156. The petition was allowed: later a motion by the banks to vacate the decree was denied; and the receiver was substituted for the Towboat Company as plaintiff in the original suit. Both proceedings are now before us for consideration.

Assuming, but not deciding, that the receiver has succeeded to all the rights of the Boston Towboat Company to enforce in his own name the alleged liability incurred by the Medford National Bank; that Henshaw & Co. were acting as agents of the bank in having the stock transferred to the purchasers; and that all preliminary questions are established in his favor, nevertheless we are of opinion that the statute of limitations has barred his right of recovery. When a purchaser of stock presents to the corporation a transfer of shares accompanied by the certificate, and demands a new certificate in exchange, he impliedly represents that the transfer is valid. Even though the forged transfer and power of attorney purporting to be signed by Susan M. Stuart were presented in good faith, the Towboat Company which issued new certificates upon the faith of them had a right of action on the implied warranty. Boston & Albany R. R. v Richardson, 135 Mass. 473. That warranty was made in 1902, and the breach of it was discovered the same year, when Mrs. Stuart brought her suit against the Towboat Company for a new certificate. Accordingly the plaintiff's right of action was barred when the present suit was brought in April, 1915, unless the statute of limitations commenced to run, not at the time of the breach of warranty, or even when the breach was discovered, but at the time when the Towboat Company sustained damages in consequence thereof by the payment of the Stuart execution.

Admittedly the general rule in cases of breach of contract is, that the statute begins...