Credit Serv. Corp. v. Barker

• Court: United States State Supreme Judicial Court of Massachusetts
• Writing for the Court: LUMMUS
• Citation: 33 N.E.2d 293,308 Mass. 476
• Parties: CREDIT SERVICE CORPORATION v. BARKER et al.
• Decision Date: 31 March 1941

308 Mass. 476
33 N.E.2d 293

CREDIT SERVICE CORPORATION
v.
BARKER et al.

Supreme Judicial Court of Massachusetts, Worcester.

March 31, 1941.

Exceptions from Superior Court, Worcester County; Hammond, Judge.

Action by the Credit Service Corporation against Walter H. Barker and another on a note indorsed by named defendant. Judgment for named defendant, and plaintiff brings exceptions.

Exceptions overruled.

[33 N.E.2d 293]

Argued before FIELD, C. J., and LUMMUS, QUA, COX, and RONAN, JJ.

H. Seder and R. S. Smith, both of Worcester, for plaintiff.

F. P. McKeon, of Worcester, for defendant.

LUMMUS, Justice.

Rosena M. McEvoy owed the defendant Barker, a contractor, for building a theatre in Leominster. He desired to be paid even at the risk of a contingent future liability. Late in 1928 or early in 1929 they went to the Leominster National Bank, where she borrowed $16,915 on her note payable to that bank, which he indorsed. She paid the proceeds of the note to him. The note which is the basis of the present action is one given in renewal of that note, dated February 20, 1930, by which she promised to pay to the order of that bank $16,915 with interest, on demand. He indorsed that note ‘waiving right of demand and notice.’ In 1932 the bank went into receivership, and in April, 1937, the note was sold at auction by the receiver to the plaintiff as part of the ‘remaining assets' of the receivership, and was indorsed in blank by the receiver ‘without warranty or recourse of any kind or nature whatsoever.’ This sale was confirmed by the Comptroller of the Currency

[33 N.E.2d 294]

and by the District Court of the United States, and early in June the note was delivered to the plaintiff. This action was brought on June 22, 1937, against the maker and the indorser. The maker defaulted, but the indorser set up the statute of limitations. Having acquired the note so long after its issue, the plaintiff does not contend that it is a holder in due course. G.L.(Ter.Ed.) c. 107, § 76.

Barker, the defendant indorser, never paid anything personally on account of the note during the period of more than seven years between the time of its execution and delivery and the time when this action was begun. Unless certain part payments removed the bar, this action was apparently barred by the statute of limitations. G.L.(Ter.Ed.) c. 260, § 2. By § 13, ‘No acknowledgment or promise shall be evidence of a new or continuing contract whereby to take an action of contract out of the operation of this chapter or to deprive a party of the benefit thereof, unless such acknowledgment or promise has been made by, or is contained in, a writing signed by the party chargeable thereby.’ By § 14, ‘The preceding section shall not alter or impair the effect of a payment of principal or interest made by any person; but no endorsement or memorandum of any such payment, written or made upon a promissory note, bill of exchange or other writing by or on behalf of the party to whom such payment has been or purports to have been made, shall be sufficient proof of the payment to take the case out of the provisions of this chapter.’ The theory by which part payment removes the bar of the statute of limitations is that ‘the payment is an acknowledgment of the existence of the indebtedness, and raises an implied promise at that time to pay the balance.’ Day v. Mayo, 154 Mass. 472, 474, 28 N.E. 898, and cases cited; Gillingham v. Brown, 178 Mass. 417, 422, 60 N.E. 122,55 L.R.A. 320, et seq.; Kennedy v. Drake, 225 Mass. 303, 308, 114 N.E. 310;Turner v. Buttrick, 272 Mass. 261, 264, 265, 172 N.E. 246;Markiewicz v. Toton, 292 Mass. 434, 436, 198 N.E. 659;Nutter v. Mroczka, 303 Mass. 343, 347, 21 N.E.2d 979;Emerson v. Deming, 304 Mass. 478, 483, 23 N.E.2d 1016;Lariviere v. Lariviere, 304 Mass. 627, 629, 24 N.E.2d 659.

‘In order that part payment of a debt shall lead to the inference that it is at the time an acknowledgment of the debt which revives the original promise of payment, it is not necessary that such payment should be made by the debtor personally. It is sufficient that it be made by his direction and authority, and it takes effect from the time it is thus made.’ In this Commonwealth it has even been held that the authorized application to the debt of the proceeds of collateral security furnished by the debtor to the creditor, revives the right of action. Buffinton v. Chase, 152 Mass. 534, 537, 538, 25 N.E. 977, 978,10 L.R.A. 123;Vermont-People's National Bank v. Parker, 269 Mass. 387, 391, 169 N.E. 154; Note, 25 A.L.R. 58. Compare Campbell v. Baldwin, 130 Mass. 199;Richardson v. Thomas, 13 Gray 381,74 Am.Dec....