McDade v. Moynihan

• Decision Date: 21 September 1953
• Citation: 115 N.E.2d 372,330 Mass. 437,39 A.L.R.2d 1223
• Parties: , 39 A.L.R.2d 1223 McDADE v. MOYNIHAN et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 372

115 N.E.2d 372

330 Mass. 437, 39 A.L.R.2d 1223

McDADE v. MOYNIHAN et al.

Supreme Judicial Court of Massachusetts, Worcester.

Argued April 7, 1953.

Decided Sept. 21, 1953.

David A. Rose, Boston, Irving Gashin, Boston, for plaintiff.

Samuel M. Salny, Fitchburg, for defendant Moynihan.

Before QUA, C. J., and LUMMUS, WILKINS, WILLIAMS and COUNIHAN, JJ.

QUA, Chief Justice.

The bill alleges that on May 20, 1947, the plaintiff, described as of Scranton, Pennsylvania, entered into a sealed agreement with the defendant Moynihan, described as of Fitchburg, Massachusetts, and one Hilferty, also named as a defendant and described as of parts unknown, ¹ whereby Moynihan and Hilferty covenanted to buy of the plaintiff all the capital stock of the McMilton Corporation, together with certain so called 'judgment notes' of that corporation, for the total price of $35,000 and interest; that they have failed to pay instalments of the price after the initial payment of $10,000; and that they have broken another provision of the agreement whereby they warranted that the accumulated outstanding bills and expenses of the corporation should at no time exceed $2,500. The prayers are that the amount due the plaintiff under the agreement be determined; that judgment and execution issue therefor; and that certain property alleged to belong to the defendant Moynihan be reached and applied in payment thereof. Since each separate breach of contract gives rise to a separate cause of action, Williston on Contracts (Rev.Ed.) § 1292; Watson v. Berman, 302 Mass. 305, 19 N.E.2d 43, it is apparent that the plaintiff has declared upon different causes of action in this bill. The structure of the bill must be kept in mind through the following discussion.

The case is here upon appeal of the plaintiff from the denial of a motion to amend his bill and upon appeals of the plaintiff and of the defendant Moynihan from a final decree establishing a debt due from Moynihan to the plaintiff of $13,290.18 for breach of the warranty that the accumulated indebtedness of the corporation should not exceed $2,500, and providing for reaching and applying property of Moynihan in payment of that indebtedness.

The plaintiff also has a bill of exceptions directed to the denial of his motion to amend.

The agreement was executed in Pennsylvania where the McMilton Corporation carried on the business of operating a 'Howard Johnson' restaurant. In addition to the provisions for sale and purchase of the stock and notes, the agreement provided in substance that the stock itself should be assigned back to the plaintiff as security for the unpaid balance of the purchase price; that Moynihan and Hilferty should operate the restaurant through the McMilton Corporation; that they should warrant the proper maintenance of the property, the payment of the rent under the existing lease and of the fire insurance, taxes, and expenses of operation; and that accumulated outstanding bills and expenses should at no time exceed $2,500. There was a further provision in a paragraph numbered 10 of the agreement whereby Moynihan and Hilferty, in case of any default by them, authorized any attorney of any court of record of Pennsylvania or elsewhere to appear for and enter judgment against them for the full purchase price with costs and with five per cent added for collecting fees. Other provisions of the agreement do not require recital here.

At the time of the execution of the agreement the plaintiff transferred to Moynihan and Hilferty all of the outstanding stock of the corporation, and they paid the $10,000 down payment on account of the purchase price. They also, at the same time, caused new stock certificates to be issued in lieu of those which they received and delivered the new certificates indorsed in blank to the plaintiff 'as security [as the trial judge found] for the payment of the balance of the purchase price,' all substantially in accordance with the provisions of the agreement. Moynihan and Hilferty operated the restaurant, or more accurately the McMilton Corporation operated it under their control, through July 18, 1949. By that time the outstanding indebtedness of the corporation had risen beyond the $2,500 permitted by the agreement to $12,214.94. This figure with interest and some adjustments is the amount which by the final decree the defendant Moynihan is ordered to pay to the plaintiff, all for breach of his warranty that the accumulated outstanding bills and expenses of the corporation should at no time exceed $2,500. The decree contains no order for the payment of the balance of $25,000 of the purchase price of the stock and notes, although this sum remains unpaid and its recovery is the principal object of the bill.

This curious result was brought about by the denial of the plaintiff's motion to amend his bill. Whether this motion should be allowed is the most important question in the case, and we now direct our attention to it.

By this motion the plaintiff sought to add to that portion of his bill wherein he set forth his cause of action for the unpaid price further allegations that in pursuance of paragraph 10 of the agreement a judgment had been entered for the plaintiff against Moynihan and Hilferty in the Court of Common Pleas for the County of Lackawanna in Pennsylvania for the balance due with interest, and with five per cent added for collection. In his motion the plaintiff sought further to amend by striking out that portion of his bill in which he set up his claim for breach by Moynihan and Hilferty of their warranty that the accumulated outstanding bills and expenses should at no time exceed $2,500.

The judge who heard and denied the motion found that on November 25, 1949, which was a month after the filing of the bill in this suit, the plaintiff secured a confessed judgment, without notice to Moynihan and Hilferty, in accordance with the stipulation in the agreement. The judge suggests as reasons for denial of the motion that the plaintiff proceeded in Pennsylvania 'to avoid the provisions of section 13A of c. 231 of the General Laws,' and that in the proposed amendment 'The original cause of action has been radically changed.' Neither of these reasons, in our opinion, will stand critical examination. We deal with them successively.

General Laws (Ter.Ed.) c. 231, § 13A, to which the judge refers is a statute of this Commonwealth which provides, among other things, that 'Any stipulation in a contract, promissory note or other instrument, or in any memorandum or writing relating thereto, whereby a party thereto agrees to confess judgment in any action which may be brought thereon or authorizes or agrees to authorize another person to confess judgment as aforesaid shall be void, and any judgment by confession taken in pursuance of such a stipulation shall be set aside and annulled on motion of the defendant.' This statute fixes the law and establishes the policy of this Commonwealth with respect to judgments by confession; but it does not affect the law of Pennsylvania, and it does not empower the courts of this Commonwealth, because of our policy, to refuse full faith and credit according to the Constitution of the United States to the judgments of other States which are valid under the laws of those States. It is not uncommon for a judgment to be rendered in one State on grounds or in a manner which would be rejected in another State. The Constitution of the United States cannot in general be trimmed to suit the differing views of policy entertained in different States. Roche v. McDonald, 275 U.S. 449, 451-452 48 S.Ct. 142, 72 L.Ed. 365; Milwaukee County v. M. E. White Co., 296 U.S. 268, 276-277, 56 S.Ct. 229, 80 L.Ed. 220; Titus v. Wallick, 306 U.S. 282, 291-292, 59 S.Ct. 557, 83 L.Ed. 653. There may be exceptional instances; 'But the room left for the play of conflicting policies is a narrow one.' Broderick v. Rosner, 294 U.S. 629, 642, 55 S.Ct. 589, 592, 79 L.Ed. 1100; Williams v. State of North Carolina, 317 U.S. 287, 294-295, 63 S.Ct. 207, 87 L.Ed. 279; Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 437-440, 64 S.Ct. 208, 88 L.Ed. 149; Hughes v. Fetter, 341 U.S. 609, 71 S.Ct. 980, 95 L.Ed. 1212. It does not include a case like the present where the difference in policy is over the question whether a defendant can consent to be bound in advance of action brought or must be served with process afterwards. See Christmas v. Russell, 5 Wall. 290, 18 L.Ed. 475; Fauntleroy v. Lum, 210 U.S. 230, 28 S.Ct. 641, 52 L.Ed. 1039; Kenney v. Supreme Lodge, 252 U.S. 411, 40 S.Ct. 371, 64 L.Ed. 638; Roche v. McDonald, 275 U.S. 449, 48 S.Ct. 142, 72 L.Ed. 365. It is not disputed that the law of Pennsylvania, like that of some other States, recognizes agreements for confession of judgment and permits the entry of judgment accordingly, as was done in this instance. See Purdon's Pa.Sts.Anno. Title 12, § 739. The agreement was executed by the parties to it in Pennsylvania and was to be performed there. Paragraph 10 of the agreement was valid, and the judgment under it was valid and is entitled to full faith and credit in this Commonwealth. This conclusion is in accord with the reasoning as far as it goes in our own cases of Richards v. Barlow, 140 Mass. 218, 6 N.E. 68, and Van Norman v. Gordon, 172 Mass. 576, 53 N.E 267, 44 L.R.A. 840. And see Ferranti v. Lewis, 271 Mass. 186, 171 N.E. 232. These cases, it is true, were decided before our statute was adopted. But our present decision is firmly supported by many authorities in numerous States, some of which are collected in the footnote. ² Since jurisdiction over the defendant rests upon his own consent, these same authorities, where the question has arisen, generally agree that nonresidence of the defendant in the State of the judgment at the time of the judgment is immaterial See Restatement: Conflict of Laws, § 81. We are unable to perceive that the plaintiff did anything reprehensible...