Westminster Nat. Bank v. Graustein

• Decision Date: 13 March 1930
• Parties: WESTMINSTER NAT. BANK v. GRAUSTEIN et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

270 Mass. 565

170 N.E. 621

WESTMINSTER NAT. BANK

v.GRAUSTEIN et al.

Supreme Judicial Court of Massachusetts, Worcester.

March 13, 1930.

Appeal from Superior Court, Worcester County; Weed, Judge.

Suit by the Westminster National Bank against Ida S. Graustein and others, in which defendant Graustein filed a cross-bill and the Gardner Trust Company was made a party plaintiff. From certain interlocutory decrees and orders and a final decree for plaintiff trust company, defendant Graustein appeals.

Interlocutory decrees and orders affirmed, and final decree modified, and affirmed as modified.W. A. Graustein, of Cambridge, for appellant.

H. W. Blake, of Gardner, for appellee.

SANDERSON, J.

This is a bill in equity brought under G. L. c. 214, § 3(7), to reach the interest of the defendant Graustein, who will be referred to as the defendant, in a fund held by the Old Colony Trust Company and to apply the same to the payment of her note and of certain monthly installments promised by her on account of two notes made by the Boston Condensed Milk Company and indorsed by her husband. Upon the findings these obligations were sold and transferred by the Westminster National Bank (hereinafter designated as the bank) to its successor and assignee, the Gardner Trust Company, which will be referred to as the plaintiff. The existence of the fund in question is admitted by the Old Colony Trust Company and found as a fact by the master to whom the case was referred.

1. The interests of the respective parties in the fund are set forth in a written instrument dated November 4, 1919, and executed by the defendant, the Old Colony Trust Company, the Boston and Maine Railroad and the Rutland Railroad Company. This agreement, after reciting that certain disputed claims by the defendant against the two railroad corporations had been adjusted, that one of them had been assigned to the plaintiff to secure the defendant's indebtedness to it, that the adjustment was subject to any rights of the plaintiff as such assignee, and that there was a controversy about the amount of the indebtedness, provided for the deposit by the railroad corporations with the Old Colony Trust Company of a joint special fund of $12,000 to protect the railroad corporations from any liability to the plaintiff on account of the assignment, and it was agreed that upon delivery to the Old Colony Trust Company of proper releases from the plaintiff, approved by the railroad corporations, discharging them from any liability to the plaintiff, and upon being satisfied that the indebtedness secured by the assignment has been liquidated, the Old Colony Trust Company would pay the fund to the defendant. It is evident that this fund could not be attached in an action at law. The provision of the statute as to the property which may be reached by the equitable process is broad and inclusive. Adamian v. Hassanoff, 189 Mass. 194, 195, 75 N. E. 126. The property sought to be reached was in existence when this suit was instituted. The Old Colony Trust Company held the money, and the defendant had a distinct interest in it. It was hers when her indebtedness to the plaintiff was satisfied, certain releases were obtained and the charges incidental to the management of the fund paid. See Lord v. Harte, 118 Mass. 271;Lewenstein v. Forman, 223 Mass. 325, 111 N. E. 962;Digney v. Blanchard, 229 Mass. 235, 238, 239, 118 N. E. 250. In Eastern Bridge & Structural Co. v. Worcester Auditorium Co., 216 Mass. 426, 103 N. E. 913, the court held that the lessee's right or option to purchase demised property at a fixed price could be reached and applied to the lessee's indebtedness. In the case at bar all the parties are before the court, and the rights of all may be finally adjudicated. Both the plaintiff and the defendant can be required to release the railroad corporations from all liability when the fund is ordered to be paid to the plaintiff upon the establishment of the indebtedness alleged.

[3] 2. The plaintiff had sufficient title to the promissory note to enable it to maintain the suit. It was in the principal sum of $10,000 payable in monthly instalments, signed by the defendant and payable to Julius Meyer or order. Upon the day of its date, November 3, 1914, the mortgage securing it was assigned to the bank by Meyer, and this assignment included in terms an assignment of the note which was delivered to the bank, but not indorsed by the payee. At common law the assignee of a negotiable note was obliged to sue in the name of his assignor. Jones v. Witter, 13 Mass. 304;Blunt v. Norris, 123 Mass. 55, 56,25 Am. Rep. 14;Troeder v. Hyams, 153 Mass. 536, 540, 27 N. E. 775.G. L. c. 231, § 5, permits the assignee of a nonnegotiable legal chose in action, which has been assigned in writing, to maintain an action thereon in his own name. This statute was first enacted in 1897, and in the following year the Negotiable Instruments Act was adopted. St. 1898, c. 533. Section 49 of that act, now appearing in G. L. c. 107, § 72, provides that where the holder of an instrument payable to his order transfers it for value without indorsing it the transfer vests in the transferee such title as the transferor had therein, and the transferee acquires in addition the right to have the indorsement of the transferor. See Dean v. Vice, 234 Mass. 13, 17, 124 N. E. 673. Furthermore, in a suit in equity if an assignment is absolute and unconditional and there is no remaining right or liability in the assignor which can be affected by the decree it is not necessary to make him a party to the suit. Currier v. Howard, 14 Gray, 511, 513;Montague v. Lobdell, 11 Cush. 111, 115;Allyn v. Allyn, 154 Mass. 570, 28 N. E. 779;Jenkins v. Eliot, 192 Mass. 474, 476, 78 N. E. 431;Hunneman v. Lowell Institution for Savings, 205 Mass. 441, 446, 91 N. E. 526;Record v. Littlefield, 218 Mass. 483, 484, 485, 106 N. E. 142;Cashman v. Bean, 226 Mass. 198, 202, 115 N. E. 574. It does not appear that there is any liability of the payee named in the note which will be affected by the decree.

3. When the borrower puts his obligation in the form of a negotiable instrument, he consents to its transfer and cannot object to the identity of an owner who seeks to enforce it. It appeared that the defendant's original application for a loan was made to the bank, and although the note and mortgage ran to Meyer, the defendant, before the loan was actually made, knew through her authorized agent that the bank and not Meyer was making the loan and was the real party in interest. The defendant's belief that her note had been indorsed to the bank rather than assigned is an immaterial consideration. Kelly v. Commissioner of Banks, 239 Mass. 298, 301, 131 N. E. 855;Cosmopolitan Trust Co. v. Leonard Watch Co., 249 Mass. 14, 19, 143 N. E. 827. There were no misrepresentations concerning the matter, and the defendant lost no rights by reason of her lack of knowledge. The master found, so far as it was a question of fact, that there was no deceit or fraud, and the facts found concerning the identity of the contracting parties, the assignment of the note, the bank's bookkeeping methods, the deduction and application of payments, and the failure of the bank to deduct payments in certain months to apply to the indebtedness do not constitute fraud as matter of law. The findings of fact are conclusive against the defendant's contention that the plaintiff cannot maintain this suit because of its fraud.

4. On January 29, 1920, the defendant filed a bill in equity in the Middlesex Superior Court against the present plaintiffs and the Boston and Maine Railroad to set aside the assignment to the bank of her claim for reparation against the Boston and Maine Railroad and the Rutland Railroad Company on the ground that the assignment was without consideration and was obtained by duress and fraud. The defendant in her answer in the present suit alleged that certain findings in the Middlesex suit adverse to the present plaintiff were res judicata in this suit, but at the hearing she objected to the introduction of the extended record in the Middlesex case on either of the plaintiff's claims, and later moved to strike out the evidence. The exceptions to the admission of this evidence and to the denial of the motion were rightly overruled. The master correctly ruled that the issues determined in the Middlesex equity suit were controlling and binding in the present litigation so far as they were relevant and material, and correctly adopted the report of material facts filed in that case. A decision between the same parties upon matters well pleaded or litigated, including matters which might have been litigated, is conclusive in future suits between the same parties. Eastman Marble Co. v. Vermont Marble Co., 236 Mass. 138, 128 N. E. 177;Cohen & Hammond, Inc., v. Arnold, 250 Mass. 255, 145 N. E. 463;Harrison v. Fall River, 257 Mass. 545, 154 N. E. 255;Olsen v. Fall River, 257 Mass. 556, 154 N. E. 256;Rappel v. Italian Catholic Cemetery Association, 259 Mass. 550, 156 N. E. 709. Many of the issues involved in this proceeding were decided in the former suit.

5. The question whether there was consideration for this note was essentially one of fact, Sullivan v. McEttrick, 248 Mass. 496, 498, 143 N. E. 536;Mercantile Guaranty Co. v. Hilton, 191 Mass. 141, 77 N. E. 312, and the conclusion reached in the former suit and by the master in this, that the bank held the note for value, cannot be disturbed. The note and mortgage securing it were executed November 3, 1914, but the loan was not made until November 16, 1914, when additional security was given, and $10,000 was credited to the defendant's account with the bank. The evidence justified the conclusion that all of the occurrences leading up to the loading of the money were a part of one transaction and that the money was loaned as the result of the execution and delivery of the note and of the other agreements made.

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