Nat'l Shawmut Bank of Boston v. Fitzpatrick

• Decision Date: 28 May 1926
• Citation: 152 N.E. 328,256 Mass. 125
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: NATIONAL SHAWMUT BANK OF BOSTON v. FITZPATRICK et al. BOSTON SAFE DEPOSIT & TRUST CO. v. SAME.

256 Mass. 125

152 N.E. 328

NATIONAL SHAWMUT BANK OF BOSTON

v.FITZPATRICK et al.

BOSTON SAFE DEPOSIT & TRUST CO.

v.SAME.

Supreme Judicial Court of Massachusetts, Suffolk.

May 28, 1926.

Case Reserved from Supreme Judicial Court, Suffolk County; Pierce, Judge.

Suit by the National Shawmut Bank of Boston against James H. Fitzpatrick and others, and suit by the Boston Safe Deposit & Trust Company against the same defendants. On reservation. Decree in accordance with opinion.

A. A. Gillette, of Boston, for National Shawmut Bank.

C. M. Rogerson, of Boston, for Boston Safe Deposit & Trust Co.

F. J. Carney, of Boston, for J. H. Fitzpatrick.

F. R. Mullin, of Boston, for trustees in bankruptcy of James H. Fitzpatrick.

J. B. Studley, of Boston, for Ann F. F. Dearth.

BRALEY, J.

[1] The defendant, James H. Fitzpatrick, a stockbroker, doing business as ‘James H. Fitzpatrick and Company,’ had a continuous loan account with the plaintiff bank from January 1, 1914, to March 22, 1920, in the course of which he gave to the bank, September 13, 1916, his promissory note now in suit payable on demand for $50,000. This note was one of a series, and the bank upon its ‘execution and delivery did not pay or credit any new money but surrendered to James H. Fitzpatrick and canceled by stamping thereon ‘paid’ twelve outstanding demand notes of James H. Fitzpatrick and Company' amounting to a face value of $50,000. It was secured by collateral which having been applied left a balance as the master finds of $21,853.92 on which interest should be computed at the rate of six per cent. per annum from September 1, 1922, when the last payment of interest was made. It is found that since the first suit was begun James H. Fitzpatrick has been adjudicated a bankrupt, and the respondents Atherton H. Hunt, Francis R. Mullin, and Mark M. Horblit have been appointed his trustees. The bank is entitled to an interlocutory decree against James H. Fitzpatrick for the amount, but the question, whether a special judgment shall be entered under G. L. c. 235, § 24, is not before us on the record. Rosenthal v. Nove, 175 Mass. 559, 56 N. E. 884,78 Am. St. Rep. 512;Stratton v. Hernon, 154 Mass. 310, 28 N. E. 269. The bill also alleges that Francis X. Fitzpatrick, father of James, otherwise known as Frank Fitzpatrick, gave certain guaranties to secure the payment of the notes dated respectively December 29, 1915, December 22, 1916, and January 17, 1919, copies of which are made part of the bill. The grantor however died testate March 4, 1921. A contest arose over the admission of his will to probate, and the defendants James H. Fitzpatrick and the Boston Safe Deposit & Trust Company, were appointed special administrators. But the parties in interest having entered into an agreement of compromise which was approved by the court of probate, the will as compromised was allowed January 12, 1922, and James H. Fitzpatrick and the Boston Safe Deposit & Trust Company were appointed and duly qualified as executors. While the guaranties recite that each was under seal, no seal was affixed. The guaranty of December 29, 1915, was a promise to pay in accordance with the tenor of all the loans made to James H. Fitzpatrick for 1915 and 1916, and the guaranty of December 22, 1916, was to secure payment according to their tenor of all loans made during 1916 and 1917. But, the debts of the principal to the bank having been paid with the exception of the note in suit, and in each instance the note being payable upon demand, the causes of action on each guaranty accrued more than six years before June 12, 1923, the date of the writ with the original bill annexed, or January 3, 1924, when the substitute bill was filed. G. L. c. 214, § 1. The general statute of limitations, which began to run on December 29, 1915, and on December 22, 1916, prevents recovery on each of these guaranties, G. L. c. 260, § 2; Fenno v. Gay, 146 Mass. 118, 15 N. E. 87;Fletcher v. Sturtevant, 235 Mass. 249, 126 N. E. 428; G. L. c. 107, § 29.

The guaranty of January 17, 1919, for the years 1918 and 1919, was delivered to the bank on or about that date. But no loans having been made during these years no liability ever arose on this guaranty and it was not an acknowledgment of liability under the previous guaranties which would stay the running of the statute. Krebs v. Olmstead, 137 Mass. 504;Devine v. Murphy, 168 Mass. 249, 46 N. E. 1066;G. L. c. 260, § 13.

While the executors gave notice of their appointment and duly filed the required affidavit, it is unnecessary in view of what we have said to consider whether G. L. c. 197, § 9, relating to the limitation of time within which an action can be maintained against them, or whether on the allegations of the bill this court under section 10, notwithstanding the statute, should decree relief in equity where a creditor who has not prosecuted his claim within the time prescribed is not chargeable with culpable neglect.

The plaintiff nevertheless primarily relies on its rights as an alleged beneficiary under the trust created by the compromise. It is provided in the fourth clause of the will as compromised:

‘I hereby nominate and appoint the Boston Safe Deposit & Trust Company of Boston sole trustee under this will, and give, devise and bequeath to it the property that is hereinafter referred to as ‘to be held in trust’ for the following purposes: To hold, invest and reinvest, and keep the trust fund invested, in personal property or real estate, or both; to change investments from time to time, to sell at public auction or private sale, either for reinvestment or distribution, without applying to any court for the purpose, and upon such terms as my trustee may deem expedient, any property, real or personal, which may at any time form part or whole of said trust fund, and no purchaser from the trustee shall be held to see to the application of the purchase money; to lease real estate for a long or short term, to execute and deliver all instruments under seal or otherwise necessary, proper, or convenient for the carrying out of any of the powers herein given to said trustee; to receive reasonable compensation for services as trustee hereunder; to pay expenses of making and changing investments,including broker's commissions and charges, and insurance premiums, and the cost of repairs, and other expenses of maintaining real estate, and any other debts and expenses of any kind for which the estae of the said Francis X. Fitzpatrick is or may become liable, out of the principal or income, as my trustee may see fit in each case; to treat the whole or any part of the proceeds of the sale on any land as principal, although the same may have been wholly or in part unproductive, and irrespective of the length of time during which or the reasons for which it may have been held. Every power and discretion herein given to said Boston Safe Deposit & Trust Company is hereby conferred upon the trustee or trustees hereunder for the time being. My trustee is, however, requested in case of any substantial change in investment to consult and advise with my said son, James H. Fitzpatrick. I make this request without intending to limit or cut down the discretionary powers in this paragraph conferred upon my said trustee.'

Manifestly the estate to be held in trust consisted of the property remaining after the debts have been ascertained and paid by the executors. It was not intended that a trust should be created for the benefit of the plaintiff or other creditors of the testator, none of whom were parties to the compromise. The terms of the power ‘to pay expenses of making and changing investments including broker's commissions and charges, and insurance premiums and the cost of repairs, and other expenses of maintaining real estate, and any other debts and expenses of any kind for which the estate of the said Francis X. Fitzpatrick is or may become liable out of the principal or income as my trustee may see fit in each case,’ refer only to the...