Standard Acceptance Corp. v. Chapin
| Decision Date | 03 December 1931 |
| Citation | 277 Mass. 278,178 N.E. 538 |
| Parties | STANDARD ACCEPTANCE CORPORATION v. CHAPIN. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Exceptions from Superior Court, Worcester County; Alonzo R. Weed, Judge.
Suit by the Standard Acceptance Corporation against Edwin T. Chapin. On exceptions to a ruling and order granting plaintiff's motion to order verdict for plaintiff.
Exceptions overruled. Judgment for plaintiff.G. H. Mason and J. A. Crotty, both of Worcester, for plaintiff.
L. E. Stockwell, of Worcester, for defendant.
The plaintiff sues upon a promissory note dated June 11, 1930, made by the defendant payable to the order of Maykel Auto Company and indorsed without recourse by the payee to the plaintiff for value. At the trial the judge denied a motion to direct a verdict for the plaintiff; the jury found for the defendant, and answered ‘Yes' to the question: ‘Did the plaintiff at the time of the negotiation of the note in suit have knowledge of such facts that its action in taking the note amounted to bad faith?’ Under leave reserved, pursuant to G. L. c. 231, § 120, the judge subsequently granted the plaintiff's motion to order a verdict for the plaintiff. The case is before us upon the defendant's exceptions to this ruling and order.
The only matter argued is whether there was evidence sufficient to justify finding that the plaintiff had knowledge of such facts that its action in taking the note amounted to bad faith. No contention is made that it had actual knowledge of infirmity or defect in the title of its indorser; and it is not disputed that there was no error in the ruling and order if the plaintiff was a holder of the note in due course.
There was evidence as follows: The defendant, an architect, signed the note and an agreement of conditional sale with the Maykel Auto Company to accommodate his brother who was a salesman for that company and who represented that he wished to purchase the automobile described in the agreement but could not buy in his own name because the seller refused to accept a salesman's note. The defendant had no intention of purchasing for himself or of taking delivery. He did not know that the note was to be discounted with the plaintiff. The brother represented, and the sales manager of the Maykel Auto Company, in writing, agreed, that no liability on note and agreement should attach to the defendant. No delivery of the automobile was made. In fact the machine described in the agreement had been sold and delivered to another customer several months before June 11, 1930. The agreement signed by the defendant contained the statements: ‘The purchaser hereby acknowledges receipt of said motor vehicle’; and, in italics and heavy print just below the place for signature: ‘Purchaser sign here if motor vehicle is actually in your possession, but do not sign here unless you have actually received motor vehicle, since by doing so you might place yourself in position of being party to a fraud.’ The plaintiff, when note and agreement were delivered to it and when it paid the amount of the discount to the Maykel Auto Company, did not know that no car had been delivered to the defendant. It did not check to see if cars were delivered in such transactions as such a practice ‘would be a physical impossibility.’
The plaintiff specialized in financing the notes and leases of automobile dealers. It had an office in Worcester where the Maykel Auto Company was a large dealer. Prior [277 Mass. 281]to 1930 it had refused to finance notes and leases of the Maykel Company because it had heard that other finance corporations had had troubles in dealings with it and that it had been irregular in its transactions. The plaintiff had heard, in 1929, that the Maykel Company had sold and delivered cars and later had obtained money from finance corporations on leases of the same cars executed by its salesmen. In January, 1930, it begun to do business with the Maykel Company. Its treasurer told the assistant treasurer and general manager of the Maykel Company: From January to June, 1930, it discounted about forty-five conditional sale contracts and notes and up to June 13, 1930, found only one matter to be...
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...568, 282 S.W. 1033, 1037(4); Bank of Hale v. Linneman, Mo.App., 235 S.W. 178, 181(3).7 See particularly Standard Acceptance Corporation v. Chapin, 277 Mass. 278, 178 N.E. 538; Setzer & Russell v. Deal, 135 N.C. 428, 47 S.E. 466; Despres, Bridges & Noel v. Hough Drug Co., 123 Miss. 598, 86 S......
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...modify the rule 3 laid down in Phillips v. Eldridge, supra. City Bank, however, places some reliance upon Standard Acceptance Corp. v. Chapin, 277 Mass. 278, 279, 281, 178 N.E.538, and the Gramatan National Bank case, 326 Mass. 367, 371, 94 N.E.2d 771, 773, in each of which a verdict was en......
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...Mass. 588, 590-591, 163 N.E. 172). Compare, however, cases where negotiable instruments were involved like Standard Acceptance Corp. v. Chapin, 277 Mass. 278, 282, 178 N.E. 538. Compare also Commercial Credit Co. v. M. McDonough Co., 238 Mass. 73, 78-79, 130 N.E. 179; Gramatan National Bank......
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