Morley v. Univ. of Detroit, 148.

• Decision Date: 16 May 1933
• Docket Number: No. 148.,148.
• Citation: 248 N.W. 570,263 Mich. 126
• Parties: MORLEY v. UNIVERSITY OF DETROIT.
• Court: Michigan Supreme Court

263 Mich. 126

248 N.W. 570

MORLEY

v.UNIVERSITY OF DETROIT.

No. 148.

Supreme Court of Michigan.

May 16, 1933.

Appeal from Circuit Court, Wayne County; Theodore J. Richter, Judge.

Action by George W. Morley against the University of Detroit. From the judgment, plaintiff appeals.

Affirmed.

Argued before the Entire Bench.

Don M. Harlan, of Detroit, for appellant.

Monaghan, Crowley, Reilley & Kellogg, of Detroit (Edward T. Kelley, of Detroit, of counsel), for appellee.

McDONALD, Chief Justice.

This is a suit upon three $1,000 bonds and four $25 interest coupons. The bonds are numbered M. 204, M. 210, and M. 250. They are of a series issued by the University of Detroit secured by a trust mortgage to the Fidelity Trust Company, as trustee, and payable at the trustee's office in the city of Detroit.

The defendant admits liability on the bond M. 250 but, in respect to the remaining bonds and interest coupons, claims payment and discharge by reason of having deposited sufficient money for that purpose with the trustee before the maturity date; and by reason of the failure of the plaintiff to make presentment for payment of the bonds and coupons to the trustee at maturity and before it failed and went into receivership.

A motion was made by the plaintiff for the entry of a judgment in his favor on the pleadings. On the hearing the issue was whether the deposit made by the defendant with the trustee constituted payment and discharge of the bonds and interest. The circuit judge entered judgment for the plaintiff in the sum of $1,019 on bond M. 250, but denied his right to recover on the remaining bonds and the interest coupons. The plaintiff has appealed.

The fact that at the time of maturity the maker had deposited sufficient money with the trustee to retire the bonds and pay the interest and that payment would have been made to the plaintiff if the had not delayed presentment does not defeat his right of recovery. The bonds are negotiable. By the terms of the Negotiable Instruments Law, section 9319, C. L. 1929, presentment is not necessary to charge the person primarily liable on the instrument.

The plaintiff as holder of the bonds and coupons not being obliged to present them when due at the place designated for payment, decision must rest on the question of agency. Whose agent was the Fidelity Trust Company? If it was plaintiff's agent in collecting payments, there can be no recovery.

It has been held that the fact that a note or bond is made payable at a designated bank does not of itself make the bank agent of the holder. Trowbridge v. Ross, 105 Mich. 600, 63 N. W. 534;Bloomer v. Dau, 122 Mich. 522, 81 N. W. 331.

In receiving the money for the payment of the note, the bank is agent of the maker. So, when the maker of a note or bond payable at a designated bank deposits money with the bank sufficient to pay it and the bank fails after maturity and before presentment by the holder, the loss falls on the maker. Adams v. Hackensack Improvement Commission, 44 N. J. Law, 638, 43 Am. Rep. 406.

These cases would be controlling of the issue here but for the fact that the bonds in question are trust mortgage bonds payable through the agency of a trustee. In a large bond issue such as this it would be impossible for the mortgagor to deal directly with its many bondholders. That is the business of a trustee. These bonds on their face informed the holders that they were dealing with the maker through a trustee appointed for their benefit. It is generally known...