Stebbins v. North Adams Trust Co.

• Citation: 136 N.E. 880,243 Mass. 69
• Parties: STEBBINS v. NORTH ADAMS TRUST CO.
• Decision Date: 08 November 1922
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

243 Mass. 69

136 N.E. 880

STEBBINS

v.NORTH ADAMS TRUST CO.

Supreme Judicial Court of Massachusetts, Berkshire.

Nov. 8, 1922.

Exceptions from Superior Court, Berkshire County; Frederick W. Fosdick, Judge.

Action by Josiah B. Stebbins against the North Adams Trust Company for conversion of a savings bank book. Directed verdict for plaintiff for an insufficient amount, and both parties bring exceptions. Defendant's exceptions overruled, plaintiff's exceptions sustained, and judgment entered for plaintiff.

Defendant claimed that the savings bank book was lawfully held by it as collateral security for the payment of a loan. It was conceded that defendant had not collected the amount of the deposit, but still held the book, and had not redelivered it to plaintiff. The court submitted to the jury questions, in response to which the jury found that defendant had converted the bank book to its own use, that the value of the bank book purely as pieces of paper bound into a book with interest from the time of the conversion, was 15 cents, and that the value of the deposit, with interest from the time of conversion, was $1,662.97. The court then directed a verdict for plaintiff for 15 cents, and plaintiff excepted. Defendant excepted to the denial of its motion for the direction of a verdict and to the refusal of all but the seventh of the following requested rulings:

(1) That on the evidence the plaintiff cannot recover.

(2) If the plaintiff pledged his bank book, as security for the payment of the original debt, and the original note which he indorsed, the renewal of such note, or even the substitution of another note therefor, in the absence of an agreement that such renewal or other note should be in payment of such original debt and note, there is no presumption that the giving of such renewal or other note was in payment of the original debt or note, so as to discharge the pledge of such bank book.

(3) To recover in this action, the plaintiff must show by a fair preponderance of the evidence, that the debt for the payment of which the bank book was pledged, has been paid.

(4) If the plaintiff pledged his bank book as security for the payment of the original debt and note, the taking by the defendant of a renewal note does not discharge such pledge.

(5) The giving of a renewal note, without the indorsement of the plaintiff, but signed by all of the other parties to the note originally given, does not operate as a payment of the debt for the payment of which the bank book was pledged, nor discharge the pledge of said bank book, in the absence of an agreement to that effect, and the burden of proving that it was the intention to pay the original debt is on the plaintiff.

(6) If the plaintiff indorsed several renewal notes, his bank book remaining as security for the original debt, but finally refused to longer indorse such renewal notes, which were thereafter given by the other promisors on said original note, and renewals thereof, without the indorsement of the plaintiff thereon, who upon his refusal to indorse or thereafter demanded of the defendant his bank book, the pledge of said bank book still remained in full force, undischarged by such refusal to indorse and such demand, and the giving of such renewal note without plaintiff's indorsement and his demand for the bank book of the defendant did not discharge the pledging of said bank book, nor give the plaintiff a right to recover herein.

(7) Plaintiff in any event can only recover the nominal value of the book; the same being only evidence of debt.

Hugh P. Drysdale and John L. Burns, both of North Adams, for plaintiff.

John E. Magenis and Mark E. Couch, both of North Adams, for defendant.

JENNEY, J.

On April 24, 1913, the H. C. Wood Company, Inc., borrowed $1,500 from the North Adams Trust Company and gave its note for that amount payable in two months. The note was indorsed by the plaintiff and two others who were officers of the Wood Company; that corporation deposited with the trust company a bank book showing a deposit of over $1,000 in the Hoosac Savings Bank in the name of and belonging to the plaintiff, as collateral security for the payment of the note, and an order on that bank signed by him directing the payment to the trust company of the amount stated. There was other collateral in which the plaintiff was not interested. On the maturity of this note, the Wood Company gave a renewal note for two months for the same amount, which was also indorsed by the plaintiff and secured by the same collateral. Thereafter new notes, secured by the same collateral and bearing the same indorsements, were given from time to time every two months up to and including February 24, 1918, in like form as the original. During all this time the Wood Company had a banking account with the trust company. On the maturity of each note and the receipt of a renewal note, that company was charged with the amount of the one maturing and given credit for that of the renewal less a charge for discount. From time to time statements of account were rendered by the trust company to the Wood Company and the notes which had been renewed were returned to the latter company with other vouchers relating to the account, and the returned notes have since been destroyed by the Wood Company. The same course has been followed as to matured notes given after February 24, 1918.

Before the maturity of the note dated on the day last named, the plaintiff refused to indorse any other renewal notes, and that coming due on April 24, 1918, and those coming due at intervals of two months thereafter until the time of the commencement of this action were not indorsed by him. These notes purported to pledge the plaintiff's bank book as collateral for their payment.

There was no evidence that the plaintiff upon his refusal to give further indorsement demanded his bank book or order or notified the trust company that he forbade their further use as collateral until August, 1918, when a renewal note was outstanding to which the plaintiff was not a party and which on its face included a pledge of the bank book as security for its payment. At that time the plaintiff went to the bank and asked for his book. On February 25, 1920, demand for the bank book was made in his behalf and the present action for its conversion was instituted on July 16, 1920. The demands for the book were refused and it is still in the possession of the trust company. There was no evidence of any express agreement between the Wood Company and the trust company or between the latter company and the plaintiff that the several notes were to be accepted as payment or discharge of the original indebtedness, or that they were to be held as security for the original debt, although the person who was treasurer of the Wood Company at the time the first renewal note was given testified that it was the ‘intention’ of that company ‘to give it as evidence of the original debt and its renewal,’ and although the treasurer at that time of the trust company testified that it was the ‘intention’ of the trust company ‘to carry on the loan, to carry on the original debt.’ This witness on cross-examination testified that when a new note was given the old note was returned to the Wood Company because ‘it was their property; it was no use to us. It didn't belong to the trust company at all after it was paid; not after it was taken up.’ The person who has been treasurer of the trust company since January 1, 1919, testified that it was the intention of the trust company in receiving these notes to ‘extend the original obligation.’

At the close of the evidence the defendant excepted to the denial of its motion for a directed verdict in its favor. The other exceptions relate to the refusal of requests for instructions. The plaintiff's liability as indorser on the original note and upon the renewed notes to which he was a party is not involved. See Huse v. Alexander, 2 Metc. 157.

If we assume that the trust company was authorized to hold the bank book until the maturity of the note falling due after the plaintiff's first demand for its return, we think that the facts justified a finding by the jury that its use as security for any note or notes thereafter given was without the assent of the plaintiff and that its retention after the second demand was without right unless authorized because it continued to be security for the indebtedness evidenced by the original note, or by the unmatured renewal note held at the time of the first demand.

The long established presumption here existing is that the giving of a negotiable note is a discharge and extinguishment of prior indebtedness between the parties on which it is founded. While that presumption is rebutted where it appears that thereby the security held for the original debt will be released, nevertheless it is ordinarily a question of fact whether such a result follows. Curtis v. Hubbard, 9 Metc. 322;Pomroy v. Rice, 16 Pick. 22;Fowler v. Bush, 21 Pick. 230;Taft v. Boyd, 13 Allen, 84;Parham Sewing Machine Co. v. Brock, 113 Mass. 194;Woods v. Woods, 127 Mass. 141, 149;Dodge v. Emerson, 131 Mass. 467;Cotton v. Atlas National Bank, 145 Mass. 43, 12 N. E. 850;O'Conner v. Hurley, 147 Mass. 145, 16 N. E. 764;Spooner v. Roberts, 180 Mass. 191, 62 N. E. 4;American Malting Co. v. Souther Brewing Co., 194 Mass. 89, 80 N. E. 526;Cary Brick Co. v. Wheeler, 210 Mass. 338, 96 N. E. 800.

The presumption exists although the indebtedness claimed to have been discharged was a negotiable instrument. Adams v. Jenkins, 16 Gray, 146; Taft v. Boyd, supra; Dodge v. Emerson, supra; Cotton v. Atlas National Bank, supra; O'Conner v. Hurley, supra; Stevens v. Wiley, 165 Mass. 402, 43 N. E. 177;Kendall v. Equitable Life...