Quincy Trust Co. v. Woodbury

• Decision Date: 01 March 1938
• Citation: 299 Mass. 565,13 N.E.2d 377
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: QUINCY TRUST COMPANY v. ELMER M. WOODBURY & another.

299 Mass. 565

13 N.E.2d 377

QUINCY TRUST COMPANY v. ELMER M. WOODBURY & another.

Supreme Judicial Court of Massachusetts, Norfolk.

March 1, 1938

November 4, 1937.

Present: FIELD DONAHUE, LUMMUS, QUA, & DOLAN, JJ.

Bills and Notes Accommodation, Consideration, Renewal. Estoppel.

It was a defence to the indorser of a renewal note that it and the original note were indorsed for the accommodation of the payee-holder without consideration.

Evidence that an indorsement of a promissory note payable to a bank was obtained by its officers as "a personal favor" and "to make that note look good in the eyes of the bank examiners," warranted a finding that the indorsement was for the accommodation of the bank.

In an action by the payee of a promissory note against an indorser, evidence that the plaintiff's agent had obtained the indorsement without consideration for the plaintiff's accommodation was admissible without proof of the agent's authority to do so.

In an action by a trust company against an indorser of a note, the defendant was not estopped to set up the defence, that his indorsement was without consideration and for the accommodation of the plaintiff, by the fact that it had been obtained to make the note "look good in the eyes of the bank examiners," if there was nothing to show that the note affected the plaintiff's creditors.

CONTRACT. Writ in the District Court of East Norfolk dated October 23, 1936.

Upon removal to the Superior Court, the action was tried before O'Connell, J. There was a verdict for the defendants. The plaintiff alleged exceptions.

J. B. Goding, for the plaintiff. G. L. Harden, for the defendants.

LUMMUS, J. The defendants, husband and wife, are sued upon their indorsements of a renewal note for $14,027.58, given on May 18, 1932, and payable July 18, 1932, to the order of the plaintiff. The maker was a corporation called C. B. Yule & Sons, Inc., engaged in the garage business, and owned and operated by the father and brothers of the female defendant.

After the introduction of the note, the plaintiff rested. Evidence for the defendants showed that their signatures to the original note, dated December 15, 1930, of which the note sued on was the last of a series of renewals, were obtained under the following circumstances. The president of the plaintiff told the female defendant, who kept the books for the garage corporation, that the plaintiff held a miscellaneous collection of defaulted notes and overdrafts of the garage corporation, that the transactions would not be approved by the bank examiners, and that he wished a new note covering the entire indebtedness, about $14,000. Such a note was sent to the president of the plaintiff, but he sent it back for the indorsements of the owners of the corporation. These were obtained. The president of the plaintiff then told the female defendant that he wanted two new names as indorsers, because "this is going before the bank examiners, and I would like to have two new names on that note, because the garage business is bad. . . . I would like to have Elmer and you [the defendants] sign it." To her objections he answered that some of the earlier notes were "balloon notes" which were against good banking practice, that he would like to get them out of the bank files because the bank examiners would not look favorably upon them, that he had done her favors in the past, that he was asking a favor from her now, and that he would never call upon either defendant to pay the note. Her husband, when told of the proposal objected to signing, and later the treasurer of the plaintiff talked with both defendants. He told them that "It is going to do . . . [the president] a personal favor, and it will do the bank directors a personal favor if you will please sign this note," and assured them that "the bank will never call upon you to pay it" and that "it is purely and simply to make that note look good in the eyes of the bank examiners." The defendants then indorsed the note. G. L. (Ter. Ed.) c. 107, Section 87. There was no evidence of any new consideration for their indorsements on the successive renewal notes; they merely indorsed the renewal notes when brought to them.

The judge denied, subject to the exception of the plaintiff, a motion for a directed verdict for the plaintiff. ^[*] The jury returned a verdict for the defendants.

A contemporaneous oral agreement that a promissory note given for consideration shall not actually create the obligation that its words express, is of no effect. Wolff v. Perkins, 254 Mass. 10 , 13. Buckley v. Hacking, 258 Mass. 525 . Dodge v. Bowen, 264 Mass. 208 , 213. Starks v O'Hara, 266 Mass. 310 , 314. Reardon v. Murdock, 292 Mass. 362 , 364. But in the present case the defendants received no consideration. Even if the earlier notes were extinguished by the note of December 15, 1930, there is no evidence that such extinguishment was the consideration for the indorsements. The delivery of a note "may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument." G. L. (Ter. Ed.) c. 107, Section 38. "Absence . . . of consideration is matter of defence as...