Johnson-kettell Co. v. Longley Luncheon Co.

• Decision Date: 22 November 1910
• Citation: 207 Mass. 52,92 N.E. 1035
• Parties: JOHNSON-KETTELL CO. v. LONGLEY LUNCHEON CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

207 Mass. 52

92 N.E. 1035

JOHNSON-KETTELL CO. v. LONGLEY LUNCHEON CO.

Supreme Judicial Court of Massachusetts, Worcester.

November 22, 1910

COUNSEL

Smith & Gaskill and George H. Mirick, for plaintiff.

Warner V. Taylor, for defendant.

OPINION

LORING J.

The plaintiff corporation at the times here in question carried on the business of a wholesale grocer, and the defendant corporation kept a restaurant. The plaintiff sold groceries to the defendant from the defendant's organization on September 1, 1908, until July 3, 1909. On May 1, 1909, there was a balance due from the defendant to the plaintiff of $157.04. The treasurer of the plaintiff corporation testified that 'this amount was paid by check of defendant for $157.04 on June 1, 1909, which check was sent by defendant to pay this specific amount.'

Between May 1, 1909, and July 3, 1909, the plaintiff sold and delivered to the defendant groceries of the value of $243.56 and this action was brought to recover that sum for those goods.

It was admitted that the defendant owed the plaintiff this sum for those goods 'unless the facts hereinafter set forth constitute a defense.'

The 'facts hereinafter set forth' are these: Before September 1, 1908, one Longley had kept the restaurant afterwards kept by the defendant corporation and owed the plaintiff $233.04, for groceries sold by it to him. The defendant corporation was formed to succeed and did succeed to Longley's business and 'Longley became its treasurer.' On September 23, October 23, and October 30 1908, Longley sent to the plaintiff checks of the defendant corporation for $81.94, $107.16, and $43.94, with directions to apply them on his individual account, and they were so applied. These checks were signed in behalf of the defendant corporation by Longley as treasurer, and were payable to the plaintiff corporation. They amounted to $233.04, the sum due from Longley to the plaintiff.

The plaintiff declared on an account annexed and the defendant pleaded a general denial and payment.

At the trial before a judge sitting without a jury the above facts were agreed to by the parties or testified to by the plaintiff's treasurer. The defendant put in an account (seemingly rendered by the plaintiff in July, 1909), in which it stated all sale and payments from the beginning, that is to say, from September 1, 1908, and not merely those which it sought to recover in this action, to wit, those from May 1, 1909, to July 3, 1909. The sales set forth in this account amounted to $1,463.79, and the payments to $1,212.73, making the balance due $251.06. This account did not include the three checks here in question among the payments and did include among the sales one made on July 13th, amounting to $7.50, which was not included in the declaration. On this evidence both parties rested.

The defendant asked for 21 rulings. Of these the judge gave the second, third, fifth, eighth, ninth, fourteenth and fifteenth, modified the tenth and eleventh, and refused the first, fourth, sixth, seventh, twelfth, thirteenth, sixteenth, seventeenth, eighteenth, nineteenth, twentieth and twenty-first, and made the following finding:

'I find that the plaintiff, in receiving these checks and applying the same in payment of Charles S. Longley's individual indebtedness, acted in good faith, and that the plaintiff had no knowledge as to the conditions of affairs between said Charles S. Longley and the defendant. There was no evidence showing or tending to show that said Longley acted wrongfully in sending these checks on his own personal account unless said wrongful conduct is to be implied from the form of checks and the fact of the issuance of, and the delivery of, the same in payment of his individual indebtedness.

'The defendant claims that these checks were improperly applied in payment of said Longley's individual indebtedness, and that it is entitled, under its answer of payment, to have the amount of the same credited to it in this action in part payment for merchandise sold to it on and after the 1st day of May following the delivery of the checks.

'No evidence was offered except as herein set forth, as to the circumstances attending the drawing of these checks, or as to the financial or other relations of said Longley with the defendant, except that he was its treasurer.

'I find for the plaintiff in the sum of two hundred and forty-three dollars and fifty-six cents ($243.56) with interest from the date of the writ.'

The case is here on exceptions taken to the 'finding and rulings' and to the 'refusal to find and rule.'

By adopting the defendant's requests for rulings which he did adopt, the judge in effect ruled that under the circumstances of the present case the plaintiff would have been bound to credit all payments made from the funds of the defendant corporation to the account of the defendant, unless that corporation authorized them to be credited to the treasurer's personal account, had it not been for the question of the plaintiff's being a bona fide purchaser for value without notice of the three checks by which these payments were made. And by refusing the requests which he refused, the judge ruled in effect that if the plaintiff was a bona fide purchaser for value without notice it was not necessary to come to a decision on the corporation's consent to the money here in question being applied to pay the individual debt of the treasurer. This was followed by his finding that the plaintiff was a bona fide purchaser for value without notice of the three checks.

It would seem that the finding made by the judge was an error. The checks in the case at bar being payable directly to the plaintiff would seem to bring the case within Newburyport v. Fidelity Ins. Co., 197 Mass. 596, 84 N.E. 111, J. G Brill Co. v. Norton & Taunton St. Ry., 189 Mass. 431, 75 N.E. 1090, 2 L. R. A. (N. S.) 525, Freeman's National Bank v. Savery, 127 Mass. 75, 34 Am. Rep. 345, and National Park Bank v. German...