Stratford Credit Corp.. v. Berman., 8866.

• Decision Date: 23 October 1947
• Docket Number: No. 8866.,8866.
• Citation: 54 A.2d 404
• Parties: STRATFORD CREDIT CORPORATION v. BERMAN.
• Court: Rhode Island Supreme Court

54 A.2d 404

STRATFORD CREDIT CORPORATION

v.BERMAN.

No. 8866.

Supreme Court of Rhode Island.

July 30, 1947.

Reargument Denied Oct. 23, 1947.

See 55 A.2d 162.

Exceptions from Superior Court, Newport County; Mortimer A. Sullivan, Judge.

Action of the case in assumpsit on a note by the Stratford Credit Corporation against Sema Berman. Decision for plaintiff, and defendant brings exceptions.

Exceptions overruled, and case remitted for entry of judgment on the decision.

Francis J. O'Brien, of Providence, for plaintiff.

John C. Burke, of Newport, for defendant.

CAPOTOSTO, Justice.

This action of the case in assumpsit on a promissory note was tried before a justice of the superior court sitting without a jury. The case is before us on defendant's exceptions to a decision for the plaintiff in the sum of $1,457.

It appears in evidence that on April 16, 1945 the Tilo Roofing Company, Inc., hereinafter referred to as Tilo, entered into a written contract, which included the note in question, with the defendant to do certain work for $1,200 on a building owned by her and located on Edward street in the city of Newport, Rhode Island.

The note was for $1,200 and was undated. The contract and the note were on the same printed form, the note immediately following the main body of the contract. However, the two instruments were separable through minute perforations in the paper. The signature to the note served also as the signature to the contract. The contract provided that the sum of $1,200 was to be paid ‘5 days after date of completion’ of the work by Tilo, and it further authorized Tilo ‘to detach, date and otherwise complete the attached note’, so as to conform with the terms of payment.

On April 16, 1945, the defendant also gave a signed financial statement to Tilo, setting forth, among other things, her yearly income from two buildings that she owned in Newport, one of which was the building mentioned in the contract. This statement, which is on a printed form entitled ‘Credit Statement-Application’ and is addressed ‘To Stratford Credit Corp.’, states at its very beginning that the information was furnished ‘for the purpose of inducing you to grant credit under the terms of Title I of the National Housing Act [12 U.S.C.A. § 1701 et seq.].’

Tilo completed the work on December 31, 1945, and on that day it transferred the note, together with the contract, to the plaintiff, receiving in return for such transfer the sum of $1,176. The plaintiff then dated the note as of that date and immediately notified the defendant in writing that her note was due January 6, 1946. The defendant paid no attention to this demand and, on January 10, 1946, she transferred to her daughter, Beatrice B. Bozosky, all the real estate mentioned in the financial statement. Sometime later the plaintiff brought the present action.

The defendant filed the following five pleas in this action: the general issue; the plaintiff was not a holder in due course; she did not sign the note; the note was not a negotiable instrument; and her signature to the note was obtained by fraud, deception and misrepresentation. The determination of the controlling questions in this case, namely, whether the note was obtained from the defendant through fraud and whether the plaintiff was a holder in due course, depend almost entirely upon a fair consideration of the conflicting and irreconcilable testimony of the defendant and of John J. Sullivan, Jr., Tilo's agent. They were the only witnesses who testified concerning the original transaction.

The substance of defendant's testimony was that, other than writing her name, she could neither read nor write; that Tilo's agent told her that the paper which he filled in was a contract, never mentioning a note in connection therewith; and that, acting under that belief, she signed the paper. When questioned about the financial statement, she admitted her signature with some hesitation and explained that she did not remember signing it or knowing its contents. The only reason she gave for transferring the property soon after the note became due was that her daughter ‘had the mortgage.’ Throughout her testimony she attempted to establish that Tilo's work was defective.

Sullivan, Tilo's agent, testified that he did not know that the defendant could not read or write; that, following his usual custom, he read the contract to the defendant and explained to her that it included a promissory note; and that she signed the contract and note with full knowledge of what she was doing. He further testified that the defendant gave him all the information in the financial statement, which she knowingly signed at his request.

In his decision the trial justice pointed out that this was an action on a negotiable instrument and not on a contract; and that, if Tilo's work was defective, as the defendant claimed, she had a remedy in an action against Tilo on the contract. After reviewing the evidence in general terms, he held...