Forastiere v. Springfield Inst. for Sav.
| Decision Date | 25 April 1939 |
| Citation | 20 N.E.2d 950,303 Mass. 101 |
| Parties | FORASTIERE v. SPRINGFIELD INST. FOR SAVINGS. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Exceptions from Superior Court, Hampden County; Wm. A. Burns, Judge.
Action by Frank M. Forastiere against the Springfield Institution for Savings to recover the amount of a deposit in defendant bank, which filed a declaration in set-off of the balance due on plaintiff's note to the bank. Judgment for plaintiff, and defendant brings exceptions.
Exceptions overruled. N. M. Harvey, J. H. Mulcare, and Vincent P. Pessolano, all of Springfield, for plaintiff.
J. Howard Jones, John H. Mitchell, and John B. Nason, all of Springfield, for defendant.
One Gamari and his wife had a joint deposit in the defendant bank, amounting to $935.99, represented by the usual savings bank book. He and his wife owed the defendant bank $3,800 upon a joint and several note dated September 4, 1908, payable on demand to the defendant at its banking house, and secured by a mortgage of real estate. The note was due immediately, without actual demand. Farmers' National Bank of Annapolis v. Venner, 192 Mass. 531, 534, 535, 78 N.E. 540,7 Ann.Cas. 690;Goodfellow v. Farnham, 239 Mass. 590, 591, 132 N.E. 363. His wife died, leaving him the sole owner of the deposit, and individually liable upon the note. New Haven & Northampton Co. v. Hayden, 119 Mass. 361, 365. G.L. (Ter.Ed.) c. 197, § 8. He owed the plaintiff, an undertaker, for a casket and funeral services. On October 3, 1934, Gamari delivered to the plaintiff the savings bank book, with an order for the payment to the plaintiff of all money on account of the book, and an assignment under seal of the same to the plaintiff, ‘in payment of the plaintiff's claim.’ On October 4, 1934, the plaintiff presented the book, the order and the assignment to the defendant for payment. A teller stamped the order paid, but after consultation with the treasurer, the stamp was cancelled, and the treasurer told the plaintiff that ‘We have no open account in the name of Gamari.’ Until that time, Gamari was not in arrears in the payment of interest, no demand for payment had been made upon him, and nothing had been done towards setting off the deposit against the note. Later on the same day the defendant prepared and mailed to Gamari a letter stating that on that day it had set off the deposit against the note. The mortgage has since been foreclosed; but it did not appear how fully the note was secured by the mortgage, or whether enough was realized to discharge the note.
In this action to recover the amount of the deposit, the defendant relied in defence of the action on the set-off made as has been stated. The judge, sitting without jury, found for plaintiff. The defendant filed a declaration in set-off, alleging that the plaintiff's assignor owed it the balance of the note amounting to $3,800. G.L.(Ter.Ed.) c. 232, § 11. The judge found for the plaintiff upon the defendant's declaration in set-off. The defendant excepted to the refusal of six requested rulings.
An assignee of an ordinary non-negotiable chose in action takes it subject to any existing right of set-off that the debtor may have. Goldman v. Noxon Chemical Products Co., 274 Mass. 526, 529, 175 N.E. 67; Federal Reserve Bank of Boston v. Gray-United Stores, Inc., 290 Mass. 77, 79, 194 N.E. 709;Spaulding v. Backus, 122 Mass. 553, 555,23 Am.Rep. 391. Am.Law Inst.Restatement: Contracts, § 167. This is plainly implied in G.L. (Ter.Ed.) c. 232, § 4. Likewise in G.L.(Ter.Ed.) c. 231, § 5, it is provided: ‘The assignee of a non-negotiable legal chose in action which has been assigned in writing may maintain an action thereon in his own name, but subject to all defences and rights of counterclaim, recoupment or set-off to which the defendant would have been entitled had the action been brought in the name of the assignor.’
Questions of set-off have ofterarisen between a commercial bank and a depositor. ‘It is well settled that funds on general deposit in a bank are the absolute property of the bank, that the relation between the parties is that of debtor and creditor, and that the bank is entitled to apply the balance of the account due the depositor to the satisfaction of a debt due the bank from the depositor.’ Laighton v. Brookline Trust Co., 225 Mass. 458, 459, 460, 114 N.E. 671, 672, L.R.A.1917C, 129;National Mahaiwe Bank v. Peck, 127 Mass. 298, 34 Am.Rep. 368;Prudential Realty Co. v. Commissioner of Banks, 241 Mass. 277, 279, 135 N.E. 221, 25 A.L.R. 935;Howard v. Barnstable County National Bank of Hyannis, 291 Mass. 131, 138, 197 N.E. 40;Harding v. Broadway National Bank of Chelsea, Mass., 200 N.E. 386. See, also, Francis & Badger Motor Co., Petitioner, Mass., 8 N.E.2d 797;Studley v. Boylston National Bank of Boston, 229 U.S. 523, 33 S.Ct. 806, 57 L.Ed. 1313. Conversely, the depositor ordinarily has a right to set off his deposit against his debt to the bank. Rossi Bros., Inc. v. Commissioner of Banks, 283 Mass. 114, 186 N.E. 234;Commissioner of Banks v. T. C. Lee & Co., Inc., 291 Mass. 191, 197 N.E. 88;Friedman v. Commissioner of Banks, 291 Mass. 108, 196 N.E. 264. But where either the deposit or the debt due the bank has taken the form of a negotiable instrument and has passed into the hands of a holder in due course, set-off can no longer be allowed. Federal Reserve Bank of Boston v. Gray-United Stores, Inc., 290 Mass. 77, 194 N.E. 709;Gordon v. Fifth Avenue Bank of Pittsburgh, 308 Pa. 323, 162 A. 825. One purpose of negotiability is to enable one to take an instrument in due course without concerning himself with the state of the accounts between the original parties. Federal Reserve Bank of Boston v. Gray-United Stores, Inc., 290 Mass. 77, 79, 194 N.E. 709.
The right of a bank to set off a deposit ‘may be changed or eliminated by a contract between bank and customer.’ Boston-Continental National Bank v. Hub Fruit Co., 285 Mass. 187, 190, 189 N.E. 89, 91;Harding v. Broadway National Bank of Chelsea, Mass., 200 N.E. 386. It has been held that where the debt from the depositor to the bank is a secured one, a contract is implied that the bank may resort to a set-off of a deposit only for any balance of the debt beyond the value of the security. Furber v. Dane, 203 Mass. 108, 117, 89 N.E. 227;Prudential Realty Co. v. Commissioner of Banks, 241 Mass. 277, 279, 135 N.E. 221, 25 A.L.R. 935. That is the settled law of this Commonwealth, even though it may seem inconsistent with the principle that a secured creditor may ordinarily pursue all his remedies until he receives...
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