Jerome v. Eastern Finance Corp.
| Decision Date | 06 December 1944 |
| Citation | 58 N.E.2d 122,317 Mass. 364 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | JAMES JEROME v. EASTERN FINANCE CORPORATION & another. |
September 26, 1944.
Present: FIELD, C.
J., QUA, DOLAN WILKINS, & SPALDING, J.J.
Bills and Notes Negotiability. Estoppel. Fraud.
A draft on an insurance company, signed by one designating himself as assistant superintendent of the company, payable through a certain bank
"upon acceptance" by the company, was not a negotiable instrument.
An assignee of a contract of conditional sale of an automobile, who had indorsed a draft, issued by an insurer for an amount admittedly due under a policy of collision insurance and payable to the vendee and such assignee subject to certain formalities prescribed for the benefit of the insurer, where such indorsement was below a provision acknowledging receipt of the amount stated in the draft in full settlement and discharge of the claim under the policy, and who had left the draft, so indorsed, in the possession of the vendee although because he doubted the vendee's integrity, he had asked the insurer not to pay it, was not entitled to rely on noncompliance with the formalities prescribed in the draft and was estopped to contend that such amount, admittedly due should not be paid to one who had received the draft from the vendee, bearing the vendee's indorsement also, and had paid the vendee money therefore relying on the indorsements.
BILL IN EQUITY, by amendment from an action at law begun by writ in the Superior Court dated May 5, 1943.
The case was heard by Donnelly, J. The defendant Eastern Finance Corporation did not set up a counterclaim in its answer.
A reproduction of the draft described in the opinion appears on page 366.
Although both defendants appealed from the decree entered in the Superior Court, only the appeal of Eastern Finance Corporation was argued in this court.
C. W. Proctor, for the defendant Eastern Finance Corporation. W. J. Griffin, for the plaintiff.
This is a suit in equity to reach and apply in satisfaction of a debt of the defendant Dame the sum of $603.50 in the hands of the defendant Colonial Fire Under-writers Branch of the National Fire Insurance Company of Hartford (hereinafter called Colonial) which was admittedly due under an automobile collision policy issued to the defendant Dame. The defendant Eastern Finance Corporation (hereinafter called Eastern) contended that this sum should not be paid to the plaintiff. There is in issue the effect of a draft for $603.50 on Colonial which Eastern had indorsed and delivered to Dame, who then indorsed and delivered it to the plaintiff in return for cash. The judge made a voluntary "finding of fact and order for decree." A final decree was entered ordering Colonial to pay the sum to the plaintiff. Eastern and Colonial appealed, and the case is here without a report of testimony.
It is open to the defendants to argue that the specific findings of the judge necessarily preclude his general conclusion. Birnbaum v. Pamoukis, 301 Mass. 559 , 562. Harlow Realty Co. v. Whiting, 308 Mass. 220 , 223-224. Wilkins v. Berkeley Realty Corp. 311 Mass. 148 , 151. Searls v. Standard Accident Ins. Co. 316 Mass. 606 , 607, 610. Compare Druker v. Druker, 308 Mass. 229, 230.
These findings were: On February 25, 1943, Dame purchased an automobile from the Simons Sales Company of South Norwalk, Connecticut, and as part of the consideration executed a note for $1,271.85 and a conditional sale contract, which for value were immediately assigned to Eastern by the Simons Sales Company. As part of the transaction Dame procured from Colonial "a $50 deductible collision policy," payable to Eastern and Dame as their interests might appear. On February 28 the automobile was damaged in a collision to the extent of $653.50, of which $603.50 was due under the policy. Under date of March 22, 1943, Colonial made out a draft, payable through a Hartford bank, on acceptance by Colonial, to the order of Eastern and Dame for $603.50, reciting on its face "which payment is to be accepted, as evidenced by the proper endorsement hereon, in full settlement, final satisfaction and discharge of all claims and demands for loss
(ILLUSTRATION) or damage by Collision on February 28, 1943 under Auto policy 24506/131501 issued at Norwalk, Conn. and said Certificate is hereby canceled and surrendered." Stamped on the face was "Draft will not be paid unless certificate attached hereto." The certificate referred to was one given Dame as evidence of the fact that the automobile was insured under a blanket policy issued by Colonial to Eastern. At no time was it attached to the draft. The space for acceptance by Colonial was left blank. On March 23 Eastern received the draft by mail from Colonial, and on that day Dame went to Eastern's office at Hartford. The treasurer of Eastern, one Mintz, indorsed below a provision reading, "In endorsing this draft I/We hereby acknowledge receipt of the amount hereof, in full settlement, final satisfaction and discharge of all claims and demands against the Colonial Fire Underwriters Branch of the National Fire Insurance Company of Hartford, for loss and damage of the date and under the policy indicated on the face hereof." Dame left with Eastern a new collision policy of the Pacific Fire Insurance Company (hereinafter called Pacific), which he had been told he must procure in accordance with his agreement with Eastern. Mintz turned over the indorsed draft to Dame on the understanding that Dame would use it to pay a bill for repairing the automobile to one Fleming in Worcester. Later on March 23, after Dame had left, Eastern not only learned that Pacific was to cancel its policy, but also acquired other information about Dame which raised doubt as to whether the draft would be used to pay the repair bill. Mintz at once asked Colonial not to pay the draft, and notified Fleming not to turn the automobile over to Dame unless Mintz was present. On March 25 Mintz met Dame at Fleming's garage, and informed him he would have to get a new policy to replace the one on which a five-day notice of cancellation had been given by Pacific on March 24. Mintz paid Fleming $653.50, and drove the automobile to Hartford. Thereupon, Dame, knowing that the automobile was to be repossessed by Eastern and that the draft would not be accepted when presented, went to the plaintiff, and represented that it was a valid claim which would be paid upon presentation, indorsed the draft, and got $603.50 from the plaintiff in exchange for it. The judge "found" that by reason of restrictions as to payment the draft was not a negotiable instrument; that it was not a chose in action upon which recovery could be had without acceptance by Colonial; that it never became a complete and operative contract; and for these reasons ruled that the plaintiff could not recover "by virtue of the draft." He found that Colonial admitted holding $603.50 which was due under the policy, and concluded: ...
To continue reading
Request your trial