Meehan v. North Adams Sav. Bank

• Decision Date: 16 February 1939
• Citation: Meehan v. North Adams Sav. Bank, 302 Mass. 357, 19 N.E.2d 299 (Mass. 1939)
• Parties: P. J. MEEHAN v. NORTH ADAMS SAVINGS BANK.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

302 Mass. 357

19 N.E.2d 299

P. J. MEEHAN v. NORTH ADAMS SAVINGS BANK.

Supreme Judicial Court of Massachusetts, Berkshire.

February 16, 1939

September 21, 1937.

Present: FIELD, C.

J., DONAHUELUMMUS, & QUA, JJ.

Equity Pleading and Practice, Master: report of evidence, drawing of inferences report, objections to report, exceptions to report; Order for decree; Decree.Letter.Evidence, Letter.Notice.Pledge.

An interlocutory decree in a suit in equity in the Superior Court was technically irregular in the following particulars: (a) conclusions of fact contrary to those found by a master were drawn from summaries of evidence made by him under Rule 90 of the Superior Court(1932), instead of an exception to the report on the question involved being sustained;

(b)) an order for a final decree was included in the interlocutory decree; (c) the decree purported to pass upon "objections," instead of upon exceptions which resulted therefrom; (d) a blanket statement was made sustaining "objections [exceptions] not inconsistent with the foregoing findings and rulings"; (e) no part of the master's report was confirmed although some exceptions were not sustained.

Questions as to the admission or exclusion of evidence by a master do not come before this court without the filing under Rule 90 of the Superior

Court(1932) of specific objections relating thereto: a report of such questions by the master with, appended thereto, an omnibus objection to his rulings on evidence "as referred to" by him is not sufficient.

Evidence that a copy of a letter was found in the files of the writer, that the practice and regulations in the writer's business were that after a letter had been signed the original was sent to his mailing department to be mailed and the copy was filed, and that the copy would not appear in the files unless the original had been duly mailed, warranted a finding that the original had been duly mailed and received by the addressee although he denied having received it.

The mere fact, that a bank, with whom a loan was being negotiated, received from a brokerage firm by whom the borrower was employed a letter stating that it was sending certain shares of stock with a draft for the amount of the loan attached "for the account of" a named person "under advice to him," did not warrant a finding by a master that the bank was thereby put upon notice that the stock sent, which was in the form of "street" certificates, was the "absolute" property of the person named in the letter and not of the borrower, and that the borrower was acting as agent for that person; nor render the bank liable to that person for later releasing the certificates to the borrower.

Where, upon appeals in a suit in equity from an interlocutory decree sustaining several exceptions to a master's report and from a final decree dismissing the bill, the final decree was affirmed by this court by dealing with one exception only, the other exceptions became immaterial and were not considered, and the interlocutory decree was ordered modified by overruling them.

BILL IN EQUITY filed in the Superior Court on May 21, 1935.The suit was heard on a master's report by Burns, J., by whose order there were entered an interlocutory decree as to the report and a final decree dismissing the bill.The plaintiff appealed from both decrees.

J. N. Alberti (P.

J. Ashe & J.

L. Burns with him,) for the plaintiff.

W. A. O'Hearn, for the defendant.

LUMMUS, J.The facts appear in the report of a master.The plaintiff was a clergyman in Greenfield.He was friendly with one Coyne, a young man in his parish, and trusted him.Coyne was a "customers' man" for Goodbody & Co., a stock brokerage house in New York with a branch office at North Adams in charge of one Dudley.The plaintiff closed out his account with another brokerage house, and through Coyne opened a margin account with Goodbody & Co. on September 27, 1927.He did all his business with Goodbody & Co. through Coyne.At the close of business on October 28, 1929Goodbody & Co. held for the plaintiff securities of the market value of $69,225, against which the plaintiff owed them $46,411.19, leaving an equity in the account worth $22,813.81.The account was short $536.19 of the margin required by Goodbody & Co., but apparently that caused no anxiety.

On the next day, October 29, 1929, a crash in the stock market took place.Coyne told the plaintiff that the securities in his account would be sold out unless $10,000 should be deposited as additional margin with Goodbody & Co.But Coyne told the plaintiff that because of Coyne's relations with an officer of the defendant bank Coyne could borrow the needed $10,000, and even more, from that bank for the plaintiff, upon collateral security consisting of two thousand shares of stock in the Kelvinator Corporation held in the margin account.The Kelvinator Corporation is incorporated in Michigan, which has adopted the uniform stock transfer act, and consequently the transfer in Massachusetts of stock of that corporation is governed by our uniform stock transfer act.Edgerly v. First National Bank of Boston, 292 Mass. 181 , 184-185.It was arranged that Coyne would borrow from the defendant bank $15,000 for the plaintiff upon the security of the two thousand shares of Kelvinator stock, and pay the $15,000 to Goodbody & Co. in reduction of the amount due them upon the margin account.

Accordingly, at the suggestion of Coyne, the plaintiff instructed Coyne to forward the certificates for the two thousand shares of Kelvinator stock from Goodbody & Co. to the defendant bank.An order was entered on the books of Goodbody & Co. to this effect, in these words, "Ship2000 KLV Act. P. J.Meehan to the North Adams Savings Bank, draft attached, J. C. D."The initials were apparently those of Dudley.The Kelvinator stock was not registered in the plaintiff's name, but was represented by "street certificates," issued in the name of some former owner and indorsed by him in blank, with no name filled in as that of the transferee, with the result that the certificates were transferable by mere delivery.G.L. (Ter. Ed.)c. 155, Section 27 (a).Upon receipt from its North Adams branch of the order to ship the stock to the defendant, the New York office of Goodbody & Co., on October 31, 1929, sent the certificates through its New York bank to the North Adams National Bank with a draft of Goodbody & Co. upon the defendant for $15,003.80 attached.On the same day, October 31, 1929, Goodbody & Co. wrote the defendant a letter which the defendant received (so the master found), saying that they were sending two thousand shares of Kelvinator stock with draft for $15,003.80 attached, "for the account of P. J. Meehan, Esq., 133 Main Street, Greenfield, Mass., under advice to him."This was the first mention of the plaintiff's name to the defendant.On the same day Goodbody & Co. wrote to the plaintiff, saying "This is to advise you that we are forwarding to the North Adams Savings Bank, North Adams, Mass., with draft attached, two-thousand shares Kelvinator Corporation, in the amount of $15,003.80 for your account."On November 2, 1929, the defendant paid the draft (thus making the loan to Coyne) at the North Adams National Bank, received the certificates from that bank, and held them as collateral for its loan to Coyne.Up to this point, therefore, the plaintiff received all the benefit from the $15,003.80 borrowed by Coyne from the defendant, for the plaintiff's debt to Goodbody & Co. was reduced by that amount.

Notice of the coming due of instalments of interest was given by the defendant to Coyne.From time to time the plaintiff paid interest on the loan by giving to Coyne his own check payable to the defendant, whereupon Coyne gave it to the defendant.In this way the interest was paid to October 30, 1933.The plaintiff in the same way paid about $9,500 on the principal.But on December 13, 1934, the plaintiff made a written demand upon the defendant for the return of the two thousand shares of Kelvinator stock, stating that he was prepared to pay the debt against which it was held.This was the first written communication between the parties.The plaintiff has never received the stock or learned the amount of the debt.The balance of debt due on August 3, 1934, was $5,437.50.

What happened to the Kelvinator stock held by the defendant as security?As early as November 12, 1929, the defendant gave back to Coyne three hundred shares as unnecessary to its security.The other seventeen hundred shares were from time to time surrendered by the defendant to Coyne.Many of them were sold by Coyne through Goodbody & Co., but the defendant received none of the proceeds.The plaintiff knew nothing about the withdrawal of the shares or the disposition of them, and authorized neither.

"On the basis of the foregoing facts, the evidence and the inferences reasonably flowing therefrom," and "from the conflicting state of the oral evidence given by Mr. McCraw Mr. Whitaker [officers of the defendant] and Leo Coyne, and from examination of the written evidence submitted as exhibits in this case, and from observations made at the actual taking of testimony, the master [says that he] is unable to escape the inferences and therefore finds as facts that at the time that Leo Coyne arranged with the defendant for a loan of $15,003.80 the defendant, through its officers, knew that Leo Coyne was acting for and in behalf of the plaintiff and that the plaintiff was the absolute owner of . . . 2000 shares of Kelvinator subject only to the lien of Goodbody & Co. on it, and that the aforesaid loan of $15,003.80 was carried in the name of Leo Coyne for his convenience with the knowledge and approval of one of the...