Mohan v. Woburn Nat. Bank
| Decision Date | 24 February 1943 |
| Citation | 313 Mass. 306,47 N.E.2d 289 |
| Parties | MARY M. MOHAN v. WOBURN NATIONAL BANK. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
January 5, 1943.
Present: FIELD, C.
J., DONAHUE LUMMUS, DOLAN, & COX, JJ.
Bank and Banking. Bills and Notes, Indorser, Payment. Surety. Tender. Payment. Corporation, Officers and agents. Agency, Scope of authority.
Evidence of negotiations between an authorized officer of a corporation and the cashier of a commercial bank to the effect that payment of a note of the corporation to the bank should be made from funds, in excess of the amount of the note presently to be deposited by the corporation, and of a statement by such officer to the bank's teller, when such deposit was made by check after the note became due, to "be sure and grab the note out of that check," warranted a finding of a direction by the corporation to the bank thus to take payment of the note which was equivalent or analogous to a tender of payment and discharged an indorser whose funds were pledged as collateral for the note so that upon appropriation of his funds by the bank after it had failed to take payment of the note from the deposit, he was entitled to recover the amount of his funds from the bank as money had and received by it to his use.
A finding was warranted that one, who was general manager of and the sole person interested in a corporation and who directed its treasurer as to the performance of all the acts of his office, had authority to direct a bank as to the application of funds of the corporation deposited therein notwithstanding that votes of the directors filed with the bank provided for the withdrawal and deposit of funds upon instruments signed by the treasurer.
CONTRACT. Writ in the Superior Court dated May 29, 1940. The case was tried before Morton, J.
E. C. Jacobs, for the plaintiff, submitted a brief. J. E. Henchey, for the defendant.
This is an action of contract, the plaintiff alleging in her first count, in effect, that the defendant owes her $963.84 for money had and received to her use. We are not concerned with the other count. The only exception in the case is that of the plaintiff to the order of the trial judge directing the jury to find for the defendant on the first count.
The jury could have found that on July 1, 1939, the plaintiff and her husband, who was the sole person interested in Woburn Road Contractors, Inc., hereinafter referred to as the corporation, indorsed its promissory note for $2,000 payable to the defendant on July 11, 1939. Presentment, demand, notice and protest were expressly waived, and the indorsers consented, over their signatures, to the exchange or surrender of collateral security, or the extension of time of payment. The plaintiff pledged with the defendant, as security for her indorsement, her savings account that is the subject matter of this action. It was the plaintiff's understanding that the note was to be paid from funds of the corporation that it was to receive, on or about the due date of the note, from the city of Medford on account of a contract between it and the corporation. The plaintiff's husband was the general manager of the corporation, which was incorporated by him, and the officers and directors of which served at his request. Its treasurer, who was also the bookkeeper, performed all the acts of her office under his direction. On July 1, 1939, he arranged with the defendant's cashier for a loan of $2,000, telling him that he wished it to run until July 11, 1939, inasmuch as it would be paid out of the payment that the corporation would receive from the city and that was due on the tenth of the month and would have to be paid before the fifteenth. Proceeds of the note were deposited to the credit of the corporation. The note was unpaid on the eleventh, and on the thirteenth, the defendant's teller called this fact to the attention of the plaintiff's husband, who told the teller that he expected a check from the city in a day or so and that when he deposited that check the note could be paid out of the deposit. On the fifteenth, he deposited a check for $10,000 from the city to the corporation's credit, and at that time told the same teller with whom he had talked previously to "be sure and grab the note out of that check." He left the bank supposing that the note had been paid, and did not learn until about the first of August, when the bank statement of the corporation was returned, that the note had not been charged and paid. When he learned this, he went to the bank and talked with the cashier, telling him what he had told the teller and also that the defendant would have to wait until he was able to get some more money with which to pay the note.
The plaintiff was notified by the defendant about April 25, 1940, that there was an unpaid balance on the note, whereupon she talked with the cashier, saying, among other things, that she understood that her husband had told the teller to take the amount of the note from the deposit of the $10,000 check, and that she did not see how, if the defendant failed to do that, it could charge her with the amount of the note, whereupon the cashier said: "well, if you want to call the eloquent language that your husband used, to grab the note out of the deposit, then probably the bank was told to pay the note." She replied that whether the language was eloquent or not, the defendant certainly should have understood that her husband meant "for the bank to pay . . . [itself] out of the deposit which was made on the fifteenth of July." The defendant applied $963.84 of the plaintiff's savings account toward the payment of the note.
On the day that the check was deposited, a number of checks were drawn on the corporation's deposit account, but not to the extent that there was not enough to cover the note. Possibly within a day or two the check that had been deposited would not have been enough for the checks "going to be drawn" and the note. At the close of business on the following days the corporation had these balances: July 15 over $7,500, July 17 over $7,000, July 18 approximately $1,700, and July 19 $738.06. There were no withdrawals from the corporation's account after July 15 that were not made by checks signed by the treasurer and drawn under the instructions of the plaintiff's husband. The financing of the different contracts for the corporation, that is, obtaining money to operate, was undertaken by the plaintiff's husband. On July 1, 1939, he requested the defendant, through the same teller hereinbefore referred to, to charge the corporation's account with a note due on that day, and the bank, through the teller, did this, as evidenced by a charge slip.
The corporation, as maker of the note, was primarily liable on it, and the plaintiff, as indorser, was secondarily liable. G. L. (Ter. Ed.) c. 107, Sections 19, 83, 86, 89. Rossi Bros. Inc. v. Commissioner of Banks, 283 Mass. 114 , 120, and cases cited. The plaintiff, although in a strict sense merely an indorser of the note, was, in a sense, a surety. See National Mahaiwe Bank v. Peck, 127 Mass. 298 , 301; Guild v. Butler, 127 Mass. 386, 389, 390; Maglione v. Penta, 266 Mass. 413 , 416; Atlas Finance Corp. v. Trocchi, 302 Mass. 477 , 480. The plaintiff's liability as indorser arises, if at all, upon default in the payment of the note. See G. L. (Ter. Ed.) c. 107, Sections 87, 89, 90.
The relationship between the defendant and the corporation, in so far as deposits were concerned, was that of debtor and creditor Bachrach v. Commissioner of Banks, 239 Mass. 272 , 273, and cases cited, and money, when deposited to the corporation's account, became the property of the defendant. National Mahaiwe Bank v. Peck, 127 Mass. 298 , 301. We are not concerned in this case with the question of the right or obligation of a bank, such as the...
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