West Boston Sav. Bank v. Thompson

• Decision Date: 28 June 1878
• Citation: 124 Mass. 506
• Parties: West Boston Savings Bank v. Robert M. Thompson
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

124 Mass. 506

West Boston Savings Bank v. Robert M. Thompson

Supreme Court of Massachusetts

June 28, 1878

Argued March 9, 1878 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Suffolk. Contract against the defendant as second indorser of a promissory note for $ 2500, dated July 21, 1874, signed by Abel S. Hussey, and payable to Leonard A. Jones or order in two years from date, and having on its face a memorandum that it was secured by a mortgage of real estate in Boston. On the back of the note were the following:

"Pay Robert M. Thompson or order. Leonard A. Jones."

"Robert M. Thompson."

"July 6, 1876. I hereby waive demand and notice on the within note. Leonard A. Jones."

The answer denied that the defendant indorsed the note to the plaintiff; and alleged that said Jones indorsed the note and assigned it, together with the mortgage, to the defendant as collateral security for a loan of money, by a deed of assignment dated July 24, 1874; that afterwards Jones paid to the defendant the amount of the loan, and directed him to assign the note and mortgage to John Pickering and Charles U. Mosely; that thereupon the defendant wrote his name on the back of the note and executed a deed of assignment, dated October 9, 1874, and delivered the note and deed to Jones to be delivered to Pickering and Mosely as an assignment of the note and mortgage; that the defendant did not indorse the note, either as an accommodation indorser or otherwise, and did not authorize Jones to represent that the defendant had indorsed the note; that the defendant received no consideration for indorsing the note; that afterwards Jones paid to Pickering and Mosely the amount due them, and thereupon Pickering and Mosely assigned the note and mortgage to Jones by a deed of assignment, dated November 10, 1874; that afterwards Jones assigned the note and mortgage to the plaintiff by a deed of assignment, dated November 10, 1874; that the plaintiff had notice of the foregoing facts; that the plaintiff bought the note and mortgage, not knowing that the defendant's name was written upon the back of the note, and not relying upon an indorsement of the defendant in any way as security for the payment of the note, and not giving any consideration for an indorsement of the defendant. Annexed to the answer were copies of the assignments, which were in the usual form of assignments of mortgages, each purporting to assign "the mortgage deed, the real estate thereby conveyed, and the note and claim thereby secured." In the assignment to the plaintiff, Jones was described as "the mortgagee named in, and assignee of, a certain mortgage," &c.

At the trial in the Superior Court, Putnam, J., ordered a verdict for the plaintiff; and reported the case for the consideration of this court. The report, after stating the pleadings as above, proceeded as follows:

The plaintiff produced the note, the execution of which by Hussey, the signature of the defendant on the back of the note, and the fact of due protest and notice, were admitted, and rested his case.

The defendant, in opening his case, stated the following propositions, upon which he asked the ruling of the court: "1. That if the jury found that the indorsement of the defendant was without consideration, and was circulated without right or authority from him, the burden would be on the plaintiff to show that it was a bona fide holder for value, that it took the note without notice of the defendant's equities, and in the usual course of business; and that, to rebut such claim on the part of the plaintiff, the defendant would rely upon evidence of the negligence of the bank in employing Jones as its solicitor in the transactions by which the bank gained title; and also upon the notice to the bank from the knowledge of Jones, who, it was contended, acted as solicitor for the bank in this transaction. 2. That the legal effect of the indorser taking up a note which has once been in circulation is to strike out all indorsements on the note subsequent to his; and that if the plaintiff took the note with notice that it had been in circulation, and had been taken up by Jones, who, as to the defendant, was a prior indorser on the note, it could not recover against the defendant. 3. That the burden was on the plaintiff to show that it gave value for the defendant's indorsement, and how much, and that if the jury found that the indorsement was without consideration, and was circulated without right or authority from the defendant, the plaintiff could only recover the amount actually advanced by it on the credit of such indorsement. 4. That if it was out of the usual course of business for the bank to invest its deposits in indorsements, and if the jury found that the indorsement was without consideration, and was circulated without right or authority from the defendant, the plaintiff could not recover."

The defendant, against the plaintiff's objection, put in the several assignments referred to in his answer.

Leonard A. Jones testified, against the plaintiff's objection, as follows: "I am a conveyancer, and was, at the time of these transactions, connected with the plaintiff bank; was one of the trustees of the bank, and looked up most of its titles for it, but not all. I sold a house to Hussey, and received in payment part cash and the note in suit, secured by a mortgage on the house. The defendant lent me $ 2000, and I assigned this note and mortgage to him as collateral security. Two or three months afterwards he wanted his money, and I asked him to assign the note and mortgage to Pickering and Mosely, which he did. He gave me up the note and mortgage, and I paid him all of my debt. I did not notice at the time how the note was indorsed. I borrowed only part of the money from Pickering and Mosely, and the assignment of the note and mortgage to them was as collateral security. Afterwards I applied to the plaintiff bank to take the mortgage, and the treasurer went and looked at the house and decided to take the mortgage. While negotiating with the bank, I do not remember that anything was said about indorsers. I do not think that the bank knew that the note was indorsed. Pickering and Mosely retained the note in their possession until I took it and delivered it to the bank. The bank, as a fact, did not rely upon indorsers, and did not, at this time, protest any of its mortgage notes. We all supposed that the mortgage was a perfectly good security, and the loan was made on its security. I wrote and signed the waiver of demand and notice on the note, long after it was transferred to the bank, and just before the note became due."

On cross-examination, he testified as follows: "I never took part in managing the business of the bank. I never was on the investment committee of the bank, and never had anything whatever to do with the investment of its funds. There were twenty-five or thirty trustees in all, of whom I was one. In the summer of 1874 I had no salary and no regular employment from the bank. Mr. Sanger was sometimes employed as conveyancer by the bank, and sometimes I was. I received value from the bank for the full amount of the note and interest. I received $ 500 cash, and took up a note of mine, with two sureties, for $ 2000. I asked the treasurer to have Mr. Sanger look at this title; but he said no, if they could not rely on me in this matter, they could not in others. The bank always attends to recording the papers. I did not ask the defendant to indorse the note, either as an accommodation indorser or otherwise." Against the objection of the defendant the witness further testified: "I asked that Mr. Sanger should look at the title, because I considered myself acting as a party, and not as attorney for the bank. I think I left the assignment from Pickering and Mosely to me, and my assignment to the bank, for record, and gave the mortgage and note to the bank. Whenever I looked up titles, the borrower paid my bill out of his loan; I never received any fees directly from the bank."

The defendant testified, against the plaintiff's objection, as follows: "I lent Jones some money, and took an assignment of this note and mortgage as collateral security; afterwards Jones paid me the amount of the loan, and I executed an assignment of the note and mortgage to Pickering and Mosely; Jones did not ask me to indorse the note, either as an accommodation indorser or otherwise, and I did not intend to indorse it. I did not know Pickering and Mosely in the transaction at all, but signed the papers, intending to execute an assignment, and delivered them to Jones for that purpose only. The first I heard of the note was some time in the early summer of 1876, when the treasurer of the bank told me that the bank had a note indorsed by me. I told him he was mistaken, as I had not indorsed any note. I called at the bank, and he showed me the note and mortgage; I thought at first that it was not my signature, but finally concluded that it was. I do not think that Jones's second indorsement was on the note when it was shown to me at this time."

The defendant asked the judge to rule that the plaintiff could not recover on its declaration, there being a variance between it and the proof, which showed that the bank took its title to the note by an assignment from Jones, and not by an indorsement from the defendant; but the judge refused so to rule, and the defendant excepted.

The defendant here rested his case, and the judge, at the request of the plaintiff, ruled that there was no evidence to be submitted to the jury which would warrant a finding for the defendant, and directed a verdict for the plaintiff.

If the above ruling was correct, judgment was to be entered for the...