De Cordova v. Weeks
| Decision Date | 22 June 1923 |
| Citation | 246 Mass. 100,140 N.E. 269 |
| Parties | DE CORDOVA v. WEEKS et al. BISSELL et al. v. DE CORDOVA et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Report from Supreme Judicial Court, Suffolk County.
Suit by Julian Dana De Cordova against Edgar Weeks and others, with cross-bill by Frederic A. Bissell and others against Julian Dana De Cordova and others. Reported by a single justice on the pleadings and stipulations, and on the evidence, rulings, and findings for determination of the full court. Decree as stated in the opinion.
The bill and cross-bill involved the liabilities of the plaintiff, De Cordova, on a note executed by plaintiff to certain of the defendants and an accompanying agreement, whereby he assigned all his interest in an estate and certain life insurance policies. The bill asked that the amount due be ascertained and determined, and that upon payment the life insurance policies be surrendered, and that the amount of plaintiff's interest in a trust fund be ascertained and determined and paid over to him. The cross-bill asked that the note and assignment be declared valid, that the amount due thereunder be established, and that the defendant trustees be required to make payment out of the trust estate. At the hearing the controverted questions were whether interest should be compounded quarterly, or only at the maturity of the note, and whether the alleged failure by De Cordova to furnish additional insurance upon request entitled the holders of the note and agreement to charge interest at the rate of 36 per cent. The single justice ruled that interest was to be compounded at the maturity of the note, and thereafter to run at the rate of 18 per cent. He excluded the application for the loan offered by defendants, and a letter written by one of the defendants to De Cordova's attorney during the negotiations for the loan.
E. Irving Smith, of Boston, H. F. Reed, of Wellesley, and A. E. Seagrave, of Fall River, for De Cordova.
A. K. Cohen and M. E. Bernkopf, both of Boston, for Bissell and Blunt.
J. E. Crowley and J. E. O'Connell, both of Boston, for Card.
Wm. R. Buckminster, of Boston, for trustees.
White & Barnes, of Boston, for Trayes.
The beneficiaries for life under the will of Thomas Dana having died, and his grandson, the plaintiff, Julian Dana De Cordova, having survived and attained the age of 21 years, the defendants Weeks and Wellington, the trustees were required by its provisions to ‘pay over and distribute’ to him ‘the remainder of the principal estate,’ which amounts ‘to upwards of $500,000.’ But De Cordova having assigned his interest in the fund as collateral security for certain claims due or which might become due from him to the defendants Bissell, Blunt, and Butler, hereafter designated as the lenders, the original bill is brought for an accounting to determine the indebtedness, and when it has been ascertained and deducted, that the remainder may be paid over to him, the note surrendered and the assignment discharged. The material facts are not in dispute. The plaintiff, by profession a lawyer, but not then engaged in practice, borrowed of the lenders $40,000, for which he gave his promissory note of the following tenor:
‘$40,000.
Boston, September 10, 1913.
‘For value received I, Julian Dana De Cordova, promise to pay to Bissell & Blunt and Howard F. Butler, or order, the sum of forty thousand dollars ($40,000) in three (3) years from this date, with interest quarterly at the rate of eighteen (18) per centum per annum during said term, and for such further time as said principal sum or any part thereof shall remain unpaid, all interest unpaid at maturity to be added to and become a part of the principal and bear interest as herein provided for.’
The bill was filed December 26, 1922, and on February 5, 1923, by agreement of parties, the trustees paid to the lenders $170,000 on account, which is the first and only payment made on the note. But it is contended by them that notwithstanding this payment there is still due an abproximate balance of more than $500,000 which the plaintiff obligated himself to pay by the terms of the note, and of the assignment to which we shall later refer. The ascertainment and adjustment of the indebtedness under the contentions of the parties, as shown by the record, depend upon the rate of interest which is to be charged on the note, and under the stipulations in the assignment.
The first question is whether interest on the note should be compounded quarterly on all sums then due, or whether it should be compounded only at the date fixed for payment of the principal. It must be decided on the terms of the note, and evidence of the application and negotiationsfor the loan was excluded rightly. De Friest v. Bradley, 192 Mass. 346, 352, 78 N. E. 467;Butterick Publishing Co. v. Fisher, 203 Mass. 122, 132, 133, 89 N. E. 189,133 Am. St. Rep. 283. It is settled by our own decisions that the interest should not be computed by making quarterly rests. Shaw v. Norfolk County Railroad, 16 Gray, 407, 416;Hodgkins v. Pride, 141 Mass. 162, 164, 5 N. E. 502;Tisbury v. Vineyard Haven Water Co., 193 Mass. 196, 198, 79 N. E. 256. While payable quarterly ‘during said term,’ the interest is also payable ‘for such further time as said principal sum or any part thereof shall remain unpaid, all interest unpaid at maturity to be added to and become a part of the principal and bear interest as herein provided for.’ The words ‘at maturity’ fix the determinable future time when the principal which is to include all accrued interest is thereafter to bear interest at the rate specified. It follows that the single justice correctly ruled that, on the face of the note, interest was to be compounded only at maturity.
The plaintiff also in compliance with the provisions of the assignment transferred three policies of insurance on his life ‘in the aggregate of $100,000’ as ‘additional security for the payment of any and all sums which may be due on said * * * note.’ It was further stipulated that he should pay the premiums as they became due, and if he defaulted the lenders were directed to make the payments for which they were to be reimbursed ‘together with interest thereon...
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