Cosmopolitan Trust Co. v. Leonard Watch Co.

• Citation: 249 Mass. 14,143 N.E. 827
• Parties: COSMOPOLITAN TRUST CO. v. LEONARD WATCH CO.
• Decision Date: 19 May 1924
• Court: United States State Supreme Judicial Court of Massachusetts

249 Mass. 14

143 N.E. 827

COSMOPOLITAN TRUST CO.

v.LEONARD WATCH CO.

Supreme Judicial Court of Massachusetts, Suffolk.

May 19, 1924.

Exceptions from Superior Court, Suffolk County; Cox, Judge.

Action on contract by the Cosmopolitan Trust Company against the Leonard Watch Company to recover on a promissory note, in which defendant filed declaration in set-off. Verdict was directed for plaintiff, and defendant brings exceptions. Exceptions sustained.S. M. Child, of Boston, for plaintiff.

L. A. Mayberry and W. F. Levis, both of Boston, for defendant.

CROSBY, J.

This is an action to recover on a note for $15,000, dated February 16, 1920, signed by the defendant by its president, and payable on demand to the order of the plaintiff at the plaintiff bank. The note was given for a loan made to the defendant by the plaintiff from funds of its commercial department. At the close of the evidence the trial judge directed the jury to return a verdict for the plaintiff on the original note, and for the defendant in set-off. To the direction of the court in each instance the defendant excepted. It also excepted to the admission of certain evidence offered at the trial.

On September 25, 1920, the commissioner of banks took possession of the property and business of the plaintiff trust company under St. 1910, c. 399, as amended (now G. L. c. 167, §§ 22, 36), and is prosecuting this action in the name of the plaintiff. The plaintiff contends that the note belonged originally to the commercial department, but afterwards, on February 28, 1920, was assigned to the savings department. This is denied by the defendant, which contends that it is entitled to set off from its deposit in the commercial department a sum equal to the amount due on the note in payment thereof.

[1] One O'Brien, called by the plaintiff, who was an employee of the bank for several years before it was closed, testified respecting certain entries, upon the books of the bank and upon a certain envelope, which tended to show that the note in question was transferred to the savings department on February 28, and that certain items of interest had been paid thereon. This evidence was admitted subject to the exception of the defendant. It is plain that it was admissible for the purpose of showing that the note had been transferred to the savings department, which was a material issue in the case. O'Brien testified that he had charge of the savings department and purchased the note from the commercial department, but that he did not know what was given for it, although he stated that value was so given, and that he would say that money was given. The jury could have disbelieved this testimony but independently of it the judge was warranted in assuming that the note had been transferred and assigned to the savings department, from the evidence as shown by the books of the bank and the documentary evidence contained upon the envelope, both of which had been rightly admitted in evidence. It appeared from the counter books and the entries on the envelope that the note was accurately described and bore the number 2872, which was its correct number, and the interest entries thereon and the counter books tallied accurately. While O'Brien testifiedthat he did not have any directions to purchase the note from the commercial department, there was evidence that the executive committee of the savings department afterwards approved this loan.

It further appeared that a notice was sent by the commercial department calling for the payment of interest on the note on September 1, and that the amount had been charged to the defendant's account. The defendant's president, Whitney, testified that notices calling for interest were received on April 1, July 1, and September 1, and came from the commercial department; the first of these was stamped ‘Paid’ by the commercial department; the second, which also gave notice of an increase in the interest rate, was stamped ‘Paid, Savings Dept.’; and the third was similarly stamped. On October 2 a demand for interest was received marked as coming from the savings department. Whitney testified that on September 3 he considered paying the note and gave instructions to his bookkeeper to charge the amount thereof to the defendant's account in the commercial department, when there were sufficient funds in its deposit. The bookkeeper testified that she made a deposit on September 4 which made the balance (it being insufficient before that time) enough to pay the note. One Hall, an employee of the defendant, testified that he took the notice received September 1, bearing Whitney's memorandum ‘Charge to account,’ to the bank; that he went to the collection window on the commercial side and told a clerk there to charge the note and interest to the defendant's account; that he was sent to a window of the savings department where he made the same request, left the memorandum, and was told, ‘All right.’ Whitney testified that he did not notice that the interest notices were stamped paid; that his usual practice was to charge notes falling due to the account and not draw checks for them. There was evidence tending to show that none of the defendant's officers or agents knew that the note had not been deducted from the commercial account until October 6, 1920, after the bank had been closed.

[5][6] Upon the question whether the judge erred in directing a verdict for the plaintiff, it is necessary to consider whether there was sufficient evidence of a transfer of the note to the savings department independent of the testimony of O'Brien. As the note bore no indorsement, in the hands of the transferee it would be regarded as an assignment. Barker v. Barth, 192 Ill. 460, 471, 61 N. E. 388. A valid assignment may be made by any words or acts which fairly indicate an intention to make the assignee the owner of a claim. Williston, Contracts, vol. 1, § 424; Southern Mutual Life Insurance Ass'n v. Durdin, 132 Ga. 495, 64 S. E. 264,131 Am. St. Rep. 210;Christmas v. Russell, 14 Wall. 69, 84, 20 L. Ed. 762. The important thing is the act and the evidence of intent; formalities are not material. Nor is it necessary that there should be any consideration where the question arises between the assignee and the debtor. Cummings v. Morris, 25 N. Y. 625;Stone v. Frost, 61 N. Y. 614;Chase v. Dodge, 111 Wis. 70, 86 N. W. 548;Wardner, Bushnell & Glessner Co. v. Jack, 82 Iowa, 435, 439, 48 N. W. 729. That no consideration is required to constitute a valid assignment is seen in cases of gifts by assignment of savings bank accounts. Sheedy v. Roach, 124 Mass. 472, 26 Am. Rep. 680;Davis v. Ney, 125 Mass. 590, 28 Am. Rep. 272;Taft v. Bowker, 132 Mass. 277. The uncertainty, apparent from O'Brien's testimony, as to what consideration was given by the savings department for the note, does not affect the validity of the assignment, as none was required. Nor did its validity depend upon giving notice to the debtor. Thayer v. Daniels, 113 Mass. 129. Apart from the testimony of O'Brien it is manifest that the note was entered in the savings department books on February 28. This is corroborated by the entries on the envelope, which include an item of $30 as interest paid February 28, and the entries of interest payments until the closing of the bank; and it is plain that the note was in possession of the savings department after the bank was closed. This uncontrolled evidence clearly shows a transfer; and while O'Brien testified that he had no direction from the officers of the bank to purchase the note, it appears that his action was afterwards approved by the executive committee of the savings department, and there is nothing to show that it was not in accordance with the intention and understanding of the commercial department.Three notices received by the defendant calling for interest payments came from the commercial department. The first, however, was dated April 1 and could not affect the transfer of the note on February 28, as evidenced by the books of the bank and the entries on the envelope, which is the time when, if there was an assignment, it was made. Moreover, the interest payment of $112.50, due April 1, was entered on the envelope which was used by the savings department to keep its notes. This is evidence that the commercial department was not acting for itself in sending the notices. Such is the fair inference notwithstanding the testimony of O'Brien that it was not the practice of the commercial department to send notices for the savings department. The trial judge was justified in deciding that as matter of law the note had been transferred and assigned.

[7][8] Upon the question of notice to the defendant of the assignment, it is plain that the assignee takes subject to all the equities and defenses available against the assignor at the date of the assignment. Cosmopolitan Trust Co. v. Rosenbush, 239 Mass. 305, 308, 131 N. E. 858, 16 A. L. R. 1484;Tremont Trust Co. v. Graham Furniture Co., 244 Mass. 134, 137, 138 N. E. 330. It follows that the savings department took as assignee subject to the defendant's rights against the commercial department at the time of the assignment. If the note had remained in the commercial department the defendant would have had a right of set-off, and if the set-off had existed at the time of the assignment, such set-off would have been valid against the savings department. But in the case at bar there is no evidence of a deposit in the commercial department at the time of the assignment made on February 28. The deposit which the defendant seeks to set off was made in the early part of September, over six months after the assignment, and the claim of set-off against the commercial department did not become effective until the bank was closed on September 25. If the defendant was entitled to notice of the transfer of the note before it could be deprived of its right of set-off, it would be a question for the jury upon...