Nat'l Shawmut Bank of Boston v. Johnson

• Decision Date: 04 January 1945
• Citation: 317 Mass. 485,58 N.E.2d 849
• Parties: NATIONAL SHAWMUT BANK OF BOSTON v. JOHNSON.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

317 Mass. 485

58 N.E.2d 849

NATIONAL SHAWMUT BANK OF BOSTON

v.JOHNSON.

Supreme Judicial Court of Massachusetts, Plymouth.

Jan. 4, 1945.

Action of tort for deceit by the National Shawmut Bank of Boston against Elliott C. W. Johnson. From an order of the Appellate Division dismissing the report after a finding for the plaintiff, the defendant appeals.

Order reversed and case remanded to the district court.Appeal from Second District Court of Plymouth; Shea, Judge.

Before FIELD, C. J., and LUMMUS, DOLAN, RONAN, and WILKINS, JJ.

Harry Sesnovich, of Boston, for plaintiff.

H. H. Heller, of Boston, for defendant.

RONAN, Justice.

This is an action of tort for deceit by the holder of two notes payable to the United States Bond & Mortgage Corporation of Massachusetts, hereafter called the corporation, one in the principal sum of $7,900 and the other for $11,788, and made by the defendant and Sarah A. Johnson, his mother. Both notes also purported to bear the signature of the defendant's wife, Anna N. Johnson, as the third comaker, but her signature was forged by the defendant. Both notes were secured by mortgages on real estate, and the signature of Anna N. Johnson on these mortgages was also forged by the defendant. There was evidence that the notes were given for loans made by the corporation to the defendant; that at the times the loans were made and the notes taken, the corporation knew that the defendant was the owner of the premises included in the mortgages; that it relied upon the genuineness of the signatures on all the instruments; and that it would not have accepted the notes if it had known that the signatures of the defendant's wife had been forged. It also appeared from the evidence that the plaintiff was the holder in due course of both notes, and that it has been paid by an insurance company $18,388 for the loss sustained on account of taking the forged notes. The defendant filed a petition in bankruptcy in 1935 in which he scheduled these notes. He received a discharge in bankruptcy in 1936. The vice-president of the plaintiff testified that it had placed a value of $24,000 upon the notes when they were received by it and that the defendant or his mother had made some payments on the notes. The judge found for the plaintiff in the sum of $24,500, and the defendant's appeal from an order of the Appellate Division dismissing the report brings the case here.

The first contention of the defendant is that the loan receipt given by the plaintiff to the insurance company is an assignment of this cause of action to the company, and that there was error in granting three requests of the plaintiff and denying twelve requests of the defendant touching this branch of the case. The plaintiff carried a policy of forgery insurance, and after the discovery of the forgeries it made claim under the policy and was paid $18,388 by the insurance company. It gave the company a loan receipt acknowledging the receipt of the money ‘as a loan and repayable only to the extent of any net recovery’ that the plaintiff might obtain on account of the loss that it had sustained by the forgeries, and as security for the payment of the loan the plaintiff pledged the recovery to the company and agreed to commence and prosecute, at the expense and under the control of the company, an action against the one liable for the forgeries. It is doubtless the law of this Commonwealth that a right to litigate a fraud perpetrated upon a person is not assignable at law or in equity, and that the prosecution by the alleged assignee of an action or suit on account of the fraud would be contrary to public policy. United Zinc Cos. v. Harwood, 216 Mass. 474, 103 N.E. 1037, Ann.Cas.1915B, 948;American Woolen Co. v. Old Colony Trust Co., 263 Mass. 321, 160 N.E. 816;Baker v. Allen, 292 Mass. 169, 197 N.E. 521. The loan receipt, a copy of which is included in the record, shows clearly the nature of the arrangements between the plaintiff and the company. There is nothing inconsistent with it in the testimony of the plaintiff's vice-president that the plaintiff was paid $18,388 by the insurance company. It is undisputed that the sum was paid in accordance with the provisions of the loan receipt. It has been decided that such a receipt does not constitute an assignment of the claim, and we see no reason not to follow such decisions here. Luckenbach v. W. J. McCahan Sugar Refining Co., 248 U.S. 139, 39 S.Ct. 53, 63 L.Ed. 170, 1 A.L.R. 1522;First National Bank of Ottawa v. Lloyd's of London, 7 Cir., 116 F.2d 221, 132 A.L.R. 599.

Furthermore, if the defendant's requests on this branch of the case, many of which are framed in broad terms and in some instances are mere abstractions of law, can be understood to raise any question apart from the nature and effect of the loan receipt, then we perceive no error in the denial of them. The judge has warrantably found that the corporation relied upon the genuineness of the signatures of the comakers of the notes and paid the money to the defendant as the result of his false representation that the signatures were genuine. It is also clearly implied from the judge's other findings that the taking of the notes by the plaintiff in good faith for value before maturity and without notice of the forgery was the natural and probable consequence of the defendant's fraud. The representation that the signatures were genuine was a continuing representation which went with the notes and was intended to be so regarded by those who would thereby be induced to purchase the notes in the belief that the signatures were what they appeared to be. In People's National Bank v. Dixwell, 217 Mass. 436, 105 N.E. 435, Ann.Cas.1915D, 722, an indorsee was held entitled to recover in tort for deceit and allowed to recover against those who without authority made a note in the name of a corporation by signing as president and treasurer respectively, where the plaintiff purchased the note in reliance upon such assertion of authority by the defendants and the corporation refused pay it. It was said at pages 437, 438, of 217 Mass., at page 436 of 105 N.E., Ann.Cas.1915D, 722, in answer to a contention of the defendants that only the payee could recover for deceit, ‘But the representations are made in the document itself, which upon its face is negotiable in form. It is to be assumed that the defendants contemplated that it might pass into the hands of parties taking the same in reliance upon the statements therein contained, and that the defendants intended that in such a case the statements should stand as made to any rightful holder; or in other words that the statements are to be regarded as continuous.’ See also Nash v. Minnesota Title Ins. & Trust Co., 159 Mass. 437, 34 N.E. 625;Roberts v. Anheuser Busch Brewing Association, 211 Mass. 449, 451, 98 N.E. 95;Rome v. Gaunt, 246 Mass. 82, 140 N.E. 242;United States Gypsum Co. v. Carney, 293 Mass. 581, 587, 200 N.E. 283;Johnson-Foster Co. v. D'Amore Construction Co., 314 Mass. 416, 420, 50 N.E.2d 89, 148 A.L.R. 353.

The next contention of the defendant is that his discharge in bankruptcy bars recovery on the ground that there was no evidence that the corporation in parting with its money was induced to do so solely by reliance upon the signatures upon the notes and mortgages being genuine, and that therefore the money was not obtained by the defendant entirely ‘by false pretences or false representations.’ The Bankruptcy Act, § 17, sub. a(2), U.S.C. (1940 Ed.) Title 11, § 35(a)(2), 11 U.S.C.A. § 35, sub. a(2), provides: ‘A discharge in bankruptcy shall release a bankrupt from all his provable debts, whether allowable in full or in part, except such as * * * (2) are liabilities for obtaining money or property by false pretenses or false representations.’ It is the settled law of this Commonwealth in actions for deceit and in prosecutions for obtaining money under false pretences through false and fraudulent representations that the representations need not be the sole or predominating motive that induced the victim to part with his money or property, but that it is enough if they alone or with other causes materially influenced him to take the particular action that the wrongdoer intended he should take as a result of such representations and that otherwise he would not have taken such action. Commonwealth v. Drew, 19 Pick. 179, 183;Matthews v. Bliss, 22 Pick. 48, 53;Safford v. Grout, 120 Mass. 20, 25;Commonwealth v. Lee, 149 Mass. 179, 21 N.E. 299;Windram v. French, 151 Mass. 547, 24 N.E. 914,8 L.R.A. 750;Burns v. Dockray, 156 Mass. 135, 138, 30 N.E. 551;Light v. Jacobs, 183 Mass. 206, 210, 66 N.E. 799;Commonwealth v. Farmer, 218 Mass. 507, 106 N.E. 150;Duncan v. Doyle, 243 Mass. 177, 137 N.E. 293;Commonwealth v. Jacobson, 260 Mass. 311, 157 N.E. 583;Baskes v. Cushing, 270 Mass. 230, 233, 170 N.E. 42;McGrath v. C. T. Sherer Co., 291 Mass. 35, 58, 195 N.E. 913. The defendant was warrantably found responsible for obtaining money...