Union Market Nat. Bank of Watertown v. Nonantum Inv. Co.

• Decision Date: 06 July 1935
• Citation: 291 Mass. 439,197 N.E. 57
• Parties: UNION MARKET NAT. BANK OF WATERTOWN v. NONANTUM INV. CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

291 Mass. 439

197 N.E. 57

UNION MARKET NAT. BANK OF WATERTOWN v. NONANTUM INV. CO. et al.

Supreme Judicial Court of Massachusetts, Middlesex.

July 6, 1935

Action of contract in the superior court by the Union Market National Bank of Watertown against the Nonantum Investment Company and another. The trial judge found for the plaintiff in the sum of $7,875, and defendants appeal.

Decree in accordance with opinion.

Appeal from Superior Court, Middlesex County Fosdick, Judge.

A. C Walton, of Boston, and J. Finelli, of Newton, for appellants.

D Burstein, of Boston (V. C. Brink, of Boston, of counsel), for appellee.

DONAHUE, Justice.

The plaintiff bank held a note of the defendant investment company and, as collateral security therefor, certain notes and mortgages which had been assigned to the Bank by instruments purporting to be signed by the investment company by its treasurer. The bank having notified the investment company that it proposed to foreclose and sell the collateral, the company filed a bill in equity in the Superior Court alleging that the assignments of the notes and mortgages had been executed without authority from the company and praying that the sale of the collateral be enjoined, the instruments of assignment cancelled and the securities held as collateral surrendered. There afterwards while that suit was pending an arrangement was made whereby the bank assigned and delivered to the investment company the notes and mortgages which it had been holding as security and the company delivered to the bank a written agreement hereinafter described, and a bond signed by it and by the defendant surety company conditioned on the performance by the investment company of its covenants in the written agreement. When, at a later time, the investment company's bill in equity was reached for trial no one appeared representing it and the court ordered that a decree be entered dismissing the bill without prejudice. No appeal was taken. The investment company, however, filed a petition for leave to file a bill of review, which petition after hearing was denied. Later the company filed another bill in equity against the bank the contents of which do not appear in the record. After three demurrers to this bill and to amendments thereof had been sustained, a motion of the company was allowed amending the suit into an action at law and that action is now pending. The declaration therein alleges a conversion of the securities which the bank had held as collateral and had delivered to the investment company when the written agreement and the bond were executed and delivered.

The declaration in the present suit alleges a breach of the bond given to secure the performance by the investment company of the covenants of its written agreement. It was tried on a case stated before a judge of the Superior Court who found for the plaintiff and assessed damages in the penal sum of the bond with interest from the date of the breach, at which time as the judge found, there was due the bank under the written agreement an amount larger than the penal sum of the bond. He ordered that execution issue for the amount of damages assessed and for costs. Both defendants appealed.

The determination of the question whether there was a breach of the bond depends upon the construction to be given to the language of the bond and the language of the agreement to which the bond refers and relates. The bond recites the filing of the bill of complaint by the investment company and its execution of the agreement in order ‘ to secure possession of the said notes and mortgages pending the final determination of said case.’ The condition of the bond was that the investment company ‘ shall duly and punctually perform all its covenants and obligations of said agreement.’ The written agreement recites the filing of the bill of complaint and the desire of the investment company ‘ to secure possession of the said notes and mortgages pending the final determination of the said case by giving its bond to the said Bank.’ The only covenants which the written agreement purports to express are covenants of the investment company. It provides that the investment company, in consideration of the delivery of the collateral, ‘ covenants and agrees with the said Bank as follows: 1. That the delivery of said notes and mortgages shall be without prejudice to the rights of either party in said pending cause * * * 2. If the said * * * Investment Company does not secure in said cause a final decree of the court canceling said assignments and directing the said * * * Bank * * * to turn over to the * * * Investment Company the said * * * notes and mortgages mentioned in said bill, the said * * * Investment Company shall within thirty (30) days after final decree in said pending cause denying such relief pay to the said Bank any balance remaining unpaid’ on the note held by the bank.

The agreement and the bond must be read together (Goewey v Sanborn, 277 Mass. 168, 169, 179 N.E. 237) as a whole, without undue emphasis on any particular part (Crimmins & Peirce Co. v. Kidder Peabody Acceptance Corp., 282 Mass. 367, 375, 185 N.E. 383, 88 A.L.R. 1122), in the light of the circumstances of the parties at the time the instruments were executed and delivered (Morse...