Dodge v. Bowen

Citation162 N.E. 368,264 Mass. 208
PartiesDODGE v. BOWEN.
Decision Date30 June 1928
CourtUnited States State Supreme Judicial Court of Massachusetts

OPINION TEXT STARTS HERE

Exceptions from Superior Court, Suffolk County; George A. Flynn, Judge.

Action by Lawrence P. Dodge against H. Ashley Bowen. A verdict was directed for plaintiff, and defendant brings exceptions to the order directing the verdict and to the exclusion of the evidence. Exceptions sustained.D. L. Smith, of Boston, for plaintiff.

E. J. Flynn and A. L. Baker, both of Boston, for defendant.

PIERCE, J.

This is an action of contract on a promissory note. The defendant in his amended answer set up in defense a general denial and a denial of the genuineness of all signatures and indorsements; that the note was made without consideration; that there has been a total or partial failure of consideration; that the plaintiff is not a holder in due course and is and was at all times aware that the consideration for the note had failed; that the note was obtained by fraudulent misrepresentations of material facts; that it was delivered to the payee on a condition precedent which was never performed; that the note was delivered to the payee upon the condition that until the payee delivered certain shares of stock to the defendant the latter should not be liable upon the note, and upon the further condition that the note should not be negotiated by the payee; that the payee never delivered or tendered the stock to the defendant; that any obligations imposed on the defendant by the note were waived by the plaintiff before breach by the defendant; and that the note was discharged by a notation before breach by the defendant.

At the trial the plaintiff produced and offered the note which was dated November 6, 1925, due sixty days after date, payable to the order of W. F. Perry, Treas.,' signed by H. Ashley Bowen,’ and indorsed in blank by the payee. He also offered the notary's letter of protest with the attached notice, and thereupon rested. It was undisputed that the defendant signed, executed and delivered the note sued upon. The genuineness of the indorser's signature was admitted and that the note had not been paid. The foregoing is prima facie sufficient to support the action. Beacon Trust Co. v. Barry, 260 Mass. 449, 157 N. E. 530.

After the defendant had introduced certain evidence, and had made an offer of proof which was excluded, the judge on motion of the plaintiff directed a verdict in his favor. The case comes to this court on exceptions to the order directing the verdict and to the exclusion of evidence.

The first witness called by defendant was the plaintiff. From his testimony it appeared that on November 11, 1925, the plaintiff, acting in behalf of Blake Bros. & Co. of which he was a member, took this note for $1,000 without discount from one Smith, and gave in return the firm's check for $1,000. The note was placed in the custody of the cashier. Blake Bros. & Co.'s check was made payable to W. F. Perry, Treas.,’ in whose name the note stood, in accordance with the ‘usual procedure.’ The plaintiff further testified that he knew Perry and Smith; that he believed the former was acting for the latter, and he made no inquiry as to the transaction which gave rise to the note; that it was taken as matter of accommodation for Smith who, the witness knew, had had some financial difficulties; that Blake Bros. & Co. deposited the note for collection with the State Street Trust Company; that it was sent to Lynn for collection and came back unpaid and protested; that the plaintiff then assumed ownership of and responsibility for it, and turned it over to Smith who assured him he could collect it; that he could not state definitely when he personally took the note but that there must have been some entry of it on Blake Bros. & Co.'s books.

The plaintiff identified certain ledger cards belonging to Blake Bros. & Co.'s bookkeeping system, and under an account entitled ‘E. E. Smith, Inc. pointed out as the record of the transaction a debit entry of $1,000 on November 11, 1925, described as cash W. F. Perry.’ There was no discount charged when the note was taken although at the time Smith owed Blake Bros. & Co. about $8,500. In the mind of the witness there was no distinction between Smith and Ernest E. Smith, Inc. He testified that it was not a business transaction but a friendly accommodation for Smith. The ‘E. E. Smith, Inc. account was later changed to Perry's name and a credit entry of $1,500, dated January 29, 1927, was pointed out as one which might indicate when the plaintiff became charged with the note, although he insisted he assumed responsibility personally for it within a few days after it came back protested on January 5, 1926. He testified further that he got possession of the note from the cashier of Blake Bros. & Co. a few days after January 5, 1926, turned it over to Smith to collect and later got it back from Smith and kept it in his personal desk; that when he took the note from the cashier he told the latter it was his (the plaintiff's) personal liability to the firm; that he is unable to say whether the entry of January 29, 1927, is the one indicating when he became charged with the note; that he had no knowledge of any suit brought by Smith on the note until the time of the trial in the case at bar; that he learned what the defendant's defenses to the note were when Smith returned the note to him, but that he did not learn until trial of the present case that one defense was that the note was given on condition that it should not be negotiated.

[2][3] The defendant's first exception is to the exclusion of the following question which the defendant asked the plaintiff on direct examination: ‘Do you remember whether or not you heard one of his defenses was, it was delivered to him on condition that he should receive the stock?’ If the question were designed to establish the truth of the defense mentioned therein it would be improper because hearsay. But even if the question were designed to establish the plaintiff's knowledge of a ground upon which the suit was defended it was not prejudicial to exclude it; all the evidence subsequently offered by the defendant to show that his liability on the note was conditional on his receiving stock from the payee relates to an oral agreement. The note, which is in the record, contains an unconditional promise to pay. It would violate the parol evidence rule if the defendant were permitted to show an oral agreement that the liability on the note was to be conditional. Zielmann v. Copelof, 232 Mass. 393, 396, 122 N. E. 552;Buckley v. Hacking, 258 Mass. 525, 155 N. E. 635. Since the agreement alluded to in the question excluded would not have been a defense because of the parol evidence rule, it would be immaterial whether the plaintiff had knowledge of it. This cannot be deemed to be a mere case of conditional delivery, because what the defendant describes as a ‘condition’ is revealed by his offer of proof to have been a promise by an agent of the payee to deliver the stock. The offer of proof states ‘I (the defendant) expected the stock would come through in exchange for the note.’ Such agreement as is offered to be shown does not show conditional delivery but rather an absolute delivery with conditional liability on the promise contained in the note. See G. L. c. 107, § 38; Brannan's Negotiable Instruments Law (4th Ed.) p. 135; Zielmann v. Copelof, supra, cf. Hill v. Hall, 191 Mass. 253, 265, 77 N. E. 831.

[4] The second exception relates to the exclusion of the question put by the defendant to the plaintiff, ‘Did you authorize Smith to employ an attorney for you?’ It appeared from other portions of the plaintiff's testimony that when the note was first brought to his notice he purchased it for the partnership of which he was a member; that after maturity and after demand, refusal and protest, he took the note as his personal responsibility and turned it over to Smith, who assured him he could collect it; and that the plaintiff had no intimation that Smith was going to bring suit on the note. A suit was brought by Smith on the note, in which the plaintiff's attorney in the present case was attorney for Smith. The suit was...

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