Liberty Trust Co. v. Tilton

• Court: United States State Supreme Judicial Court of Massachusetts
• Writing for the Court: RUGG
• Citation: 217 Mass. 462,105 N.E. 605
• Parties: LIBERTY TRUST CO. v. TILTON.
• Decision Date: 20 May 1914

217 Mass. 462
105 N.E. 605

LIBERTY TRUST CO.
v.
TILTON.

Supreme Judicial Court of Massachusetts, Suffolk.

May 20, 1914.

Appeal from Municipal Court of Boston, Appellate Division.

Action by the Liberty Trust Company against Frank B. Tilton. Judgment for plaintiff in the municipal court of Boston. From an order dismissing the report to the Appellate Division, plaintiff appeals. Affirmed.

[217 Mass. 462]E. M. Shanley, of Boston, for appellant.

Albert Mehlinger, of Boston, for appellee.

RUGG, C. J.

One Perley G. Tilton signed a note to the order of the plaintiff and presented it complete in every respect except its amount, which was blank, to the defendant Frank B. Tilton, who for the accommodation of Perley G. Tilton signed it in blank on the back upon the express representation and agreement by Perley G. Tilton that the defendant's signature should not be operative[217 Mass. 463]nor be delivered unless and until one Leonard Grant also should sign on the back and that then it should be filled out for $200, and no more. Leonard Grant did not sign the instrument, the amount of $400 was filled in and the instrument, without the knowledge or authority of the defendant and in violation of the agreement between him and Perley G. Tilton, was delivered complete in form to the plaintiff, the payee, who took it for value in good faith and without knowledge of the agreement between the maker and defendant. The question is whether the defendant is liable to the plaintiff.

This point has not been decided in Massachusetts.

It is plain that prior to the enactment of the Negotiable Instruments Act the plaintiff could recover. The payee could be a bona fide holder for value without notice. Boston Steel & Iron Co. v. Steuer, 183 Mass. 140, 143, 66 N. E. 646,97 Am. St. Rep. 426, and cases cited. The signing in blank authorized the filling of the blank by the one to whom the signer delivered it, although the specific directions might not have been followed. Androscoggin Bank v. Kimball, 10 Cush. 373. This is the general common-law rule. See cases collected in Hartington Nat. Bank v. Breslin, 88 Neb. 47, 128 N. W. 659,31 L. R. A. (N. S.) 130, Ann. Cas. 1912B, 1008-1011;Vander Ploeg v. Van Zuuk, 135 Iowa, 350, 112 N. W. 807,13 L. R. A. (N. S.) 490, 492,124 Am. St. Rep. 275. But although the point now in issue has not been decided expressly in this commonwealth, in principle it is covered by Boston Steel & Iron Co. v. Steuer, 183 Mass. 140, 145, 66 N. E. 646,97 Am. St. Rep. 426. In that decision this case was put: The maker handed a check complete in every respect to her husband upon express instructions to deliver to the payee on her own account, but the check fraudulently was handed by the husband to the payee in payment of a debt due from him to the payee, and it was accepted in good faith by the payee. It was held that the payee under these circumstances was a holder in due course within R. L. c. 73, § 69. That case has been followed to the point that the payee of a negotiable instrument may be a holder in due course, in J. G. Brill Co. v. Norton & Taunton St. Ry., 189 Mass. 431, 437,75 N. E. 1090,2 L. R. A. (N. S.) 525, and Lowell v. Bickford, 201 Mass. 543, 545, 88 N. E. 1. See, also, Fillebrown v. Haywood, 190 Mass. 472-480, 77 N. E. 45. The point there decided, viz., that a payee may recover of a party whose signature was put upon the instrument in its complete form, but whose instructions as to the delivery of the instrument have not been followed, does not reach precisely the facts in the present case. The point there decided in substance was that under [217 Mass. 464]section 33 of the act, where the instrument when signed by the party sought to be charged was complete as to its form, a payee might be a holder in due course, although the delivery was contrary to the instructions.

The effect of that decision was to hold that the words ‘immediate parties' as used in section 33, viz., ‘as between immediate parties, and as regards a remote party other than a holder in due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making,...