First Nat. Bank of Boston v. Mathey
| Decision Date | 10 January 1941 |
| Citation | 308 Mass. 108,31 N.E.2d 25 |
| Parties | THE FIRST NATIONAL BANK OF BOSTON v. NICHOLAS W. MATHEY. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
October 11, 1940.
Present: FIELD, C.
J., DONAHUE, DOLAN COX, & RONAN, JJ.
Pleading, Civil Answer. Evidence, Extrinsic affecting writing. Contract Parties, For benefit of third person. Bills and Notes Collateral, Interest, Consideration. Practice, Civil, Requests, rulings and instructions.
A demurrer to a part of an answer to a declaration upon a promissory note properly was sustained because of indefiniteness in that the answer set up breach of a condition of "delivery of said note" in failure to sell certain collateral over two years before the date of the note.
That the plaintiff in an action upon a collateral promissory note broke an alleged promise, subject to which the collateral was pledged, in refusing to sell the collateral at certain times on the defendant's requests could not be set up in defence where the note provided that the holder should "have no duty as to the collection or protection of collateral . . . beyond the safe custody thereof."
The maker of a collateral promissory note was not entitled to enforce for his own benefit a contract made by an assignee of the note with the assignor.
At the trial of an action upon a promissory note providing for the payment of interest but stating no rate, it was proper to refuse to give the jury instructions as to a rate implied in law where both parties contended that there was an express agreement as to a rate but differed as to what the agreement was and the evidence as to the rate was conflicting.
Failure of the holder of a promissory note to perform a promise to return a prior note for which it was given could not be found to have constituted a partial failure of consideration and a "pro tanto defence" to an action on the new note where, due to assent by the holder to an allocation of payments to the principal and interest of the new note and not to the old, no damage could have resulted to the maker.
On findings by an auditor, not to be final and not inconsistent among themselves nor contradicted by other evidence, no error appeared in an instruction to a jury, in an action upon a promissory note, that they could find that there was consideration for the note if it was given in payment of a prior overdue note for the same principal amount, which bore no interest before it became due, or if the plaintiff in substance agreed to a readjustment of interest due on the prior note.
CONTRACT. Writ in the Superior Court dated August 29, 1935.
Demurrers to a part of the answer and to a declaration in set-off were sustained by Williams, J. The trial on the merits was before Brogna, J., and a verdict was returned for the plaintiff in the sum of $53,586.42. In this court, the case was submitted on briefs.
J. M. Fogarty & T.
H. Driscoll, Jr., for the defendant.
S. H. Babcock & W.
Malcolm, for the plaintiff.
The plaintiff in this action of contract sought to recover on the first count of its declaration a balance amounting to $57,077.42, alleged to be due upon a promissory note made by the defendant under the date of September 15, 1932, and payable to the plaintiff; and in the second count to recover the aforesaid balance upon an account annexed. The case was referred to an auditor, and thereafter was tried upon the report and other evidence before a jury which returned a verdict for the plaintiff upon the first count and for the defendant upon the second count. The defendant excepted to the denial of certain requests for instructions and to portions of the charge.
The defendant filed an answer which contained a general denial, a claim of payment, and a recital that the note was given without consideration "or in any event that the consideration therefor has failed." The answer also set up as additional matters of defence that the note was given in lieu of a prior note upon the express agreement that the plaintiff would keep itself informed of the fluctuations of the value of the collateral pledged with the note, and would be prepared to sell this collateral at such times and upon such conditions as would pay the note; that it would sell the collateral upon the request of the defendant; that "in violation of the express condition of the delivery of said note as aforesaid the plaintiff on or about June 11, 1930 and at divers times thereafter" refused to sell the collateral at the request of the defendant; and that the defendant has thereby been damaged. The plaintiff demurred to this portion of the answer setting up these additional matters of defence. The defendant appealed from an order sustaining the demurrer.
This demurrer was properly sustained. In the first place, if we assume that these additional matters are parts of a single claim in the nature of recoupment, it is difficult to interpret them as applying to the instant note which was not given until September 15, 1932, in face of an allegation that the plaintiff, in violation of an express condition upon which this note was delivered to it, failed on or about June 11, 1930, and thereafter, to sell the collateral. If the note was given in pursuance of an agreement made on June 11, 1930, then that fact should have been alleged clearly and precisely. G. L. (Ter. Ed.) c. 231, Section 28. Slocum v. Riley, 145 Mass. 370 . Lane v. Holcomb, 182 Mass. 360 . Lewis v. Russell, 304 Mass. 41. We can make no such intendment in favor of the defendant. Eldredge v. Mutual Life Ins. Co. 217 Mass. 444 . Hayden v. Perfection Cooler Co. 227 Mass. 589 . Fleming v. Dane, 298 Mass. 216 .
It is not certain whether the defendant purported to set up a breach of the conditions upon which the note was delivered, which occurred subsequently to its delivery, or whether a breach of said conditions resulted from a violation of an agreement by the plaintiff to sell the collateral, alleged to have occurred on June 11, 1930, and thereafter. A plaintiff ought not to be required to be prepared to meet such indefinite, vague and not altogether consistent allegations. Skolnick v. Greenburg, 230 Mass. 359, 361. Davis v. H. S. & M. W. Snyder, Inc. 252 Mass. 29 , 35. Grandchamp v. Costello, 289 Mass. 506 , 507. Comerford v. Meier, 302 Mass. 398, 404.
In the next place, these additional matters set up in the answer, even if they could in some way be held to apply to the note, did not set up any matters that would constitute a defence. The note gave the plaintiff general authority to sell the collateral at public or private sale, without advertisement or notice, and to become purchasers at the sale. "The holder hereof shall have no duty as to the collection or protection of collateral . . . beyond the safe custody thereof." The plaintiff was not required by the terms of the note to sell the collateral and the defendant would have no right to complain if it continued to hold the collateral. Badlam v. Tucker, 1 Pick. 389. Benj. N. Moore & Sons Co. v. Manufacturers
National Bank, 261 Mass. 328 . Culver v. Wilkinson, 145 U.S. 205.
These additional matters were inconsistent with the provisions of the note. They could not be shown in evidence and furnished no defence to a suit on the note. Lea v. Robeson, 12 Gray, 280. McCusker v. Geiger, 195 Mass. 46. Marsch v. Southern New England Railroad, 230 Mass. 483 . Zielmann v. Copelof, 232 Mass. 393 . Boston Consolidated Gas Co. v. Folsom, 237 Mass. 565. Pelonsky v. Wattendorf, 255 Mass. 558 . Buckley v. Hacking, 258 Mass. 525.
The defendant also filed a declaration in set-off alleging that the plaintiff became the holder and owner of the note declared on by an assignment from another bank; that by the terms of the assignment the plaintiff "undertook to assume and pay" the liabilities of this other bank; and that on or about June 12, 1930, the defendant directed and ordered this other bank to sell the collateral then held as security for said note and directed the payment of said note out of the proceeds of such sale, wherefore the plaintiff now owes the defendant the excess resulting from the sale amounting to $33,100 according to an account annexed. The defendant appealed from an order sustaining the plaintiff's demurrer.
This declaration in set-off does not allege that the plaintiff's assignor was under any obligation to sell the collateral at the request of the defendant nor is it directly alleged that any sale was made. Here again we have difficulty in understanding how the collateral could on June 12, 1930, be "held as security for said note" which was given to the plaintiff on September 15, 1932. If it was intended to allege that the collateral was in fact sold by the plaintiff's assignor then the plaintiff, by accepting the defendant's note on September 15, 1932, did not become responsible for the sale of the collateral or liable to account therefor to the defendant. But the declaration in set-off alleges that the plaintiff, by the terms of the assignment by which the notes of the defendant were transferred to the plaintiff, assumed the obligations of its assignor including the claim of the defendant on account of the failure of the plaintiff's assignor to sell the collateral. The defendant was not a party to the assignment and the plaintiff made no promise to the defendant to assume any liability owed to him by the plaintiff's assignor. The case is settled in principle by Clare v. Hatch, 180 Mass. 194 , and comes within the established rule in this Commonwealth that one who is not a party to a contract and from whom no consideration issues has no rights under the contract even if it was intended to be for his benefit. The rule is subject to equally well established exceptions, but the defendant does not bring himself...
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