Schleifer v. Worcester North Sav. Inst

• Decision Date: 08 June 1940
• Citation: 27 N.E.2d 992,306 Mass. 226
• Parties: SCHLEIFER v. WORCESTER NORTH SAV. INST.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

306 Mass. 226

27 N.E.2d 992

SCHLEIFER

v.WORCESTER NORTH SAV. INST.

Supreme Judicial Court of Massachusetts, Suffolk.

June 8, 1940.

Exceptions from Superior Court, Suffolk County; Beaudrau, Judge.

Action by Louis Schleifer against the Worcester North Savings Institution. The judge directed a verdict for defendant upon the plaintiff's opening on his count in tort for deceit, and plaintiff brings exceptions.

Exceptions sustained.

H. Singer, of Boston, for plaintiff.

D. J. Lyne and W. A. Ryan, both of Boston, for defendant.

QUA, Justice.

After the plaintiff waived a count in contract, the judge directed a verdict for the defendant upon the plaintiff's opening on his count in tort for deceit. The question is whether the opening stated a cause of action under the latter count.

The substance of the opening, so far as it is necessary to state it for the purpose of this decision, is this: In March, 1933, General Luggage Corporation owned a large mill building in Fitchburg which was in a run down condition and practically vacant, and upon which the defendant held a mortgage for $90,000. The luggage corporation, acting through one Williams, had interested the plaintiff in a proposition that the plaintiff should take a twenty-one year lease upon the building, repair it, and make it a success. The plaintiff desired to know the attitude of the bank as mortgagee. The plaintiff and Williams then called upon one Brown, who was president of the bank, and who had been informed of the pending negotiations. Brown said it would be a splendid thing for the building if the plaintiff would take a lease. He told the plaintiff and Williams that he was very sure that the bank would extend the mortgage for ten years and increase it by $25,000, so that arrears of taxes and interest could be paid, that he would give a ‘definite, final and formal answer’ after a meeting of the ‘directors or trustees' to be held that afternoon, and that he would take the matter up with the trustees and with the ‘board.’ Later in the day Brown told the plaintiff and Williams that the ‘directors' had voted to extend and to increase the mortgage as set forth above. Brown also told the plaintiff that the plaintiff might consider the taxes and interest paid, and that Brown would advance the $25,000 as soon as the lease was signed, and told Williams in the presence of the plaintiff that Williams might give the plaintiff a letter stating that the interest and taxes were paid. In fact the bank had not voted to extend or to increase the mortgage. The defendant throughout intended not to extend and not to increase the mortgage, and foreclosed it a few weeks afterwards, so that the plaintiff, who had entered into a lease and paid a deposit of about $12,500 and ‘some twenty-five hundred dollars more’ in reliance upon Brown's statements, lost these sums and the moneys expended by him in the meantime in making repairs. Brown was acting for the bank throughout and made the misrepresentations within the scope of his authority.

This opening states directly or by reasonable inference all necessary elements of a cause of action for deceit. If true, it shows that the defendant's president as the defendant's agent made, as of his own knowledge, a material representation of fact which could be understood to mean that the proper officers had voted to extend and to increase the mortgage. It shows that the president knew that the plaintiff desired this information as a basis of possible action on his part and therefore by inference that the defendant's president intended that the plaintiff should act upon it; that the representation was false; and that the plaintiff did act in justifiable reliance upon it and suffered loss in consequence. Am.Law Inst. Restatement: Torts, ss 525, 526, 531, 537, 538, 546. Chatham Furnace Co. v. Moffatt, 147 Mass. 403, 18 N.E. 168,9 Am.St.Rep. 727;Nash v. Minnesota Title Ins. & Trust Co., 163 Mass. 574, 40 N.E. 1039,28 L.R.A. 753, 47 Am.St.Rep. 489;Bates v. Cashman, 230 Mass. 167, 119 N.E. 663;Alpine v. Friend Bros., Inc., 244 Mass. 164, 167, 138 N.E. 553;Harris v. Delco Products, Inc., Mass. 25 N.E.2d 740. The opening, if true, would support the further claim that the defendant, through its authorized representative, made false and fraudulent representations of fact as to its own intention in the matter, upon which representations the plaintiff justifiably relied to his damage. Am.Law Inst. Restatement: Torts, ss 530 and comments, 544. Dow v. Sanborn, 3 Allen 181;McCusker v. Geiger, 195 Mass. 46, 54, 80 N.E. 648;Commonwealth v. Althause, 207 Mass. 32, 47, 48, 93 N.E. 202, 31 L.R.A.,N.S., 999; Comstock v. Livingston, 210 Mass. 581, 583, 584, 97 N.E. 106;Donovan v. Clifford, 225 Mass. 435, 114 N.E. 681;Ciarlo v. Ciarlo, 244 Mass. 453, 456, 139 N.E. 344;Feldman v. Witmark, 254 Mass. 480, 150 N.E. 329;Levey v. Higginson, 266 Mass. 381, 385, 165 N.E. 492.

The defendant contends that its president had no authority to grant or extend loans and therefore no authority to represent that a loan had been made or would be granted or extended, and that the plaintiff could not justifiably rely upon such representations by him. The defendant cites provisions of the statutes which require written applications for loans to be approved by the board of investment. G.L. (Ter.Ed.) c. 168, § 16, 54, First, as amended. But the plaintiff in his opening offered to show that the president of the defendant did have authority to make the representations which he is alleged to have made. It would seem that someone in a savings bank might have authority to inform interested persons as to the granting and extension of loans and to discuss such matters with them. We cannot set up a rule of law that such authority may not be delegated to the president or habitually exercised by him with the consent of the bank. Lonergan v. Highland Trust Co., 287 Mass. 550, 555-559, 192 N.E. 34;Federal National Bank of Boston v. O'Connell, Mass., 26 N.E.2d 539, 672. See Commonwealth v. Reading Savings Bank, 133 Mass. 16, 19, 43 Am.Rep. 495; Holden v. Upton, 134 Mass. 177, 179;Jewett v. West Somerville Co-operative Bank, 173 Mass. 54, 52 N.E. 1085,73 Am.St.Rep. 259;Slattery v. North End Savings Bank, 175 Mass. 380, 381, 56 N.E. 606;Newburyport Institution for Savings v. Brookline, 220 Mass. 300, 306, 107 N.E. 939. Nor can we say as matter of law that the plaintiff was not justified in relying upon the president's statements. He could reasonably believe that the statutory requirements had been complied with. United States Gypsum Co. v. Carney, 293 Mass. 581, 586, 200 N.E. 283; Am.Law Inst. Restatement: Torts, ss 537, 540. Doubtless the statutes to which the defendant refers do shield a savings bank against contractual obligations not incurred in accordance with them, Gilson v. Cambridge Savings Bank, 180 Mass. 444, 62 N.E. 728;Jones v. B. F. Butler Co-operative Bank, 254 Mass. 82, 149 N.E. 657, but in the absence of appropriate language we are not authorized to extend their operation so as to exempt...