Buckley v. Buckley

• Decision Date: 05 June 1957
• Citation: 144 Conn. 403,133 A.2d 604
• Court: Connecticut Supreme Court
• Parties: Margot W. BUCKLEY v. Paul BUCKLEY. Supreme Court of Errors of Connecticut

Page 604

133 A.2d 604

144 Conn. 403

Margot W. BUCKLEY v. Paul BUCKLEY.

Supreme Court of Errors of Connecticut.

June 5, 1957.

Samuel Reich, Bridgeport, for appellant (defendant).

Arthur Levy, Jr., Bridgeport, with whom, on the brief, was Samuel E. Friedman, Bridgeport, for appellee (plaintiff).

Before O'SULLIVAN, C. J., and BALDWIN, WYNNE, DALY, and KING, JJ.

KING, Associate Justice.

The defendant and the plaintiff, at the time of the transactions forming the subject matter of this action, were husband and wife, although they have since been divorced. The complaint was in three counts. The defendant filed a counterclaim. The plaintiff recovered on each count of the complaint and the defendant on the counterclaim. This appeal attacks the judgment on only the first and second counts of the complaint. The cross appeal of the plaintiff has been withdrawn.

After a partial trial, the complaint was amended by filing a substituted first count, and to this an amended answer was filed. Recovery was sought of the balance of an original indebtedness of $270,000, claimed to amount, exclusive of interest, to $195,000. On this count the plaintiff had judgment of $249,299, and the defendant claims error only in the computation of interest.

The defendant does not attack any of the subordinate facts in the finding applicable to the first count. Those essential to an understanding of the question involved follow: In the latter part of 1950 and the early part of 1951, the defendant was an officer and stockholder of Link Radio Company, hereinafter referred to as Link Radio, which was then in need of funds. During this period he discussed with the plaintiff the advisability of her selling 35,000 shares of stock which she owned in Barium Steel Corporation, hereinafter referred to as Barium Steel, and lending him the proceeds of the sale so that he could use $100,000 to pay a debt owed by him to Modern Industrial Bank and loan $170,000 to Link Radio. No agreement had been reached, nor had the plaintiff authorized any sale, when she discovered, on January 20, 1951, that the defendant had ordered the sale of the entire 35,000 shares of her Barium Steel stock. The next day the parties met with Maurice Feldman, the defendant's attorney. He told the plaintiff that if she did not execute powers of attorney necessary for the transfer of the stock by delivery, the defendant would be in very serious trouble. The plaintiff signed the powers of attorney necessary to permit the defendant to make a good delivery of the stock, and he received $270,000 from its sale.

At the plaintiff's insistence, Feldman prepared, and the defendant executed, an agreement which the plaintiff accepted. Dated January 21, 1951, it provided that the $270,000 was to be repaid to the plaintiff within two years with interest at 4 per cent and that the defendant, as security, would pledge, by depositing with a copy of the agreement in a joint safe deposit box at the Marine Midland Trust Company in New York City, (1) 35,000 shares of stock of Federal Machine and Welder Company, indorsed in blank, and (2) a note of Link Radio in the amount of $170,000, payable to the order of the defendant two years from date, to be by him indorsed in blank. The plaintiff was not represented by counsel at the time the agreement was executed and did not show it to Irwin Miness, her attorney, for about a month. At Miness' insistence a letter, dated May 17, 1951, was signed by both parties and sent to the Marine Midland bank. Its basic effect was threefold. In the first place, the maturity of the loan was changed from January 21, 1953, so as to provide for repayment in two instalments, the first, of $75,000, by March 15, 1952, and the balance, of $195,000 by January 21, 1953. Secondly, the Marine Midland bank was constituted an escrow agent as to the Federal Machine and Welder stock. Thirdly, the defendant agreed that he would deliver to the escrow agent, within 180 days from May 17, 1951, the promissory note of Link Radio, dated January 22, 1951, and that if he failed to do so, the escrow agent would, upon written demand by the plaintiff, deliver to her the Federal Machine and Welder stock. On June 19, 1951, the defendant sent the plaintiff a letter confirming the original agreement as modified by the letter of May 17, 1951.

The defendant failed to deposit the Link Radio note, and upon proper demand the stock was delivered by the Marine Midland bank to the plaintiff on November 15, 1951. This appeal does not call in question the holding of the court that the stock was in effect a pledge and that the plaintiff, after its receipt, owed the defendant the duties of a pledgee. The plaintiff received, to be applied on the loan, payments aggregating $6,100 between May, 1951, and August, 1952. The $75,000 instalment due March 15, 1952, was not paid until August 14, 1952. This action was not brought until after January 21, 1953, the date when the final instalment became due. The court concluded that the loan became in default on November 15, 1951, the terminal date of the period of 180 days within which the defendant was to deliver the Link Radio note, and that the plaintiff was entitled to recover interest from that date on the unpaid indebtedness, at 6 per cent.

The defendant claims that the provision as to the Link Radio note was solely a security provision and that the failure to deliver the note, while a breach of the agreement in so far as it dealt with security, was not a default in the loan itself. Upon this the defendant bases his fundamental claim that no default occurred in the loan until March 15, 1952, the due date of the first instalment of $75,000; that this default was cured by the acceptance of the belated payment of $75,000 in August; and that thereafter no default occurred until the due date of the final instalment of $195,000 on January 21, 1953.

The first count of the complaint, as amended, alleged that the failure to deposit the Link Radio note constituted a default as of November 15, 1951; that the $75,000 payment on August 14, 1952, was a credit to be applied on the loan; and that the defendant 'still owes the plaintiff * * * $195,000 * * * plus interest on the principal amount from January 21, 1951.' Nowhere are there any allegations appropriate to, or which give any hint of, a claim that the loan would prior to the date of final maturity, bear interest at any rate above that stated in the agreement or that damages are sought for any breach of contract other than the failure to pay the debt, with interest. For this reason no damages should have been allowed for the breach of the agreement to deposit the Link Radio note and the breach of the agreement to pay the first instalment of $75,000 on March 15, 1952, even though under proper pleadings at least nominal damages would have been recoverable for each. Excelsior Needle Co. v. Smith, 61 Conn. 56, 65, 23 A 693. It follows that interest under the first count should have been computed at the stated rate of 4 per cent on the unpaid balance of the debt up to the date of final maturity,...