Franklin Sav. Bank v. Cochrane
| Decision Date | 25 February 1903 |
| Citation | 182 Mass. 586,66 N.E. 200 |
| Parties | FRANKLIN SAV. BANK v. COCHRANE. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Hutchins & Wheeler, for plaintiff.
Moorfield Storey and Ezra R. Thayer, for defendant.
The first contention of the plaintiff in this case is that the execution of the extensions of the mortgage made by and between the plaintiff savings bank, the mortgagee, and the Cochrane Carpet Company, the grantee of the equity of redemption, did not operate to discharge the maker of the mortgage note, even though they were duly executed, and were made without his consent. The ground on which this contention is made is that by the assumption of the mortgage debt in the conveyance of the mortgaged property to it the Cochrane Carpet Company did not become liable, as between it and the plaintiff, to pay the debt, and for that reason an agreement between it and the carpet company was not an agreement giving time to the principal debtor. But, without going further, it is enough to dispose of that contention that by the first extension the carpet company did agree with the plaintiff to pay the mortgage debt, and by the second extension time was given to it, the principal debtor.
The second contention is that the evidence did not warrant a finding that the carpet company was bound by the two extensions executed in its behalf by its treasurer. We think that it did. It appeared in evidence that, although the by-laws provided that meetings of the directors should be held at least monthly, they were held only at irregular intervals, and 'there was no record of any meeting held between September 25, 1893, and February 16, 1898.' It further appeared that the treasurer attended to the actual management of the financial and fiscal affairs of the company, and to all financial matters, and that, 'with reference to making and extending notes, he made them and extended them as the necessities of the business required.' The company stopped active business in 1893, and after that the treasurer attended to all its business affairs. This evidence warranted a finding that the directors knew that the treasurer was undertaking to act for the corporation in all financial matters requiring action and acquiesced therein, and on that ground that the corporation was bound by the extension made on April 11 1892, as well as by that made March 28, 1895. Lester v. Webb, 1 Allen, 34; Holden v. Upton, 134 Mass. 177, 180; McNeil v. Chamber of Commerce, 154 Mass. 277, 285, 28 N.E. 245, 13 L. R. A. 559.
The plaintiff's last contention, and the only one seriously insisted upon at the argument, is that the defendant, having, as one of the directors, left to the treasurer the conduct of its affairs, is bound by his acts and cannot escape from the position of having consented to what the treasurer did. It was held in Polak v. Everett, 1 Q. B. Div. 669, Lambert v. Shetler, 71 Iowa, 463, 32 N.W. 424, and Edwards v. Coleman, 6 T. B. Mon. 567, that it is not enough that a surety knows of a binding agreement between the creditor and the principal debtor, amounting to a variation of the original contract. He must not only know, but must consent. In Woodcock v. Oxford & Worcester Ry. Co., 1 Drew. 521, it was held that the fact that the surety, as solicitor for the principal debtor, drew the agreement which was relied on as the variation of the original contract, was a sufficient...
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