J. G. Brill Co. v. Norton & Taunton Street Railway Co.

75 N.E. 1090, 189 Mass. 431, 1905 Mass. LEXIS 912

• Court: Massachusetts Supreme Judicial Court
• Decided: November 27, 1905
• Status: Published

Opinion

Loring, J.

[After the foregoing statement of the case.] It is settled by Usher v. Raymond Skate Co. 163 Mass. 1, and the cases there cited, that a corporation is not liable on an accommodation indorsement in the hands of one who takes with knowledge of that fact. Such an indorsement is ultra vires. That means that the corporation would not be liable on it even if it had been authorized by all the directors and the majority of the stockholders. Nevertheless, when a person takes a negotiable note before maturity signed by a corporation in due course of business from one who apparently has received it for a debt due from the corporation, the defence that it is in fact an accommodation note cannot be set up. Such were the cases relied on by the plaintiff in its argument here. Monument National Bank v. Globe Works, 101 Mass. 75. Merchants’ National Bank v. Citizens’ Gas Light Co. 159 Mass. 505. The same is true of Craft v. South Boston Railroad, 150 Mass. 207, which the plaintiff seeks to distinguish. There the note was made by the corporation and was made payable to the plaintiff. But a payee may be a bona fide purchaser in due course of a note payable to himself. Boston Steel & Iron Co. v. Steuer, 183 Mass. 140.

If the note sued on in such a case is signed by the treasurer and there is no evidence of actual authority, the implied authority of a treasurer to sign notes has to be considered. But in the case at bar where by the terms of the note and the fact that it is taken by the plaintiff for a debt due not from one to whom it appears to have been negotiated but from one for whose accommodation it appears to have been indorsed, no such question arises. For it is settled that where a note is taken from the payee, in payment of a debt due from him, indorsed by a third person, the indorsement is prima facie an accommodation indorsement, and the person who _ takes it is chargeable with knowledge that the indorsement is an accommodation indorsement. National Bank of Commonwealth v. Law, 127 Mass. 72. See also Harrington v. Baker, 173 Mass. 488.

In the case at bar the plaintiff having taken the original notes for $3,750 each from the Bibber-White Company for a debt due from that company, the indorsement of the Mansfield and Easton Street Railway Company, in the absence of evidence to the contrary, was an accommodation indorsement, and the plaintiff was chargeable with knowledge of that fact. The plaintiff left the case there and did not show, as was shown in Beacon Trust Co. v. Souther, 183 Mass. 413, that as between the Bibber-White Company and the Mansfield and Easton Railway Company those notes were in fact the obligations of the railway company given for a debt due from it.

The plaintiff has argued that the cancellation of the previous notes is a good consideration even if the indorsements of the Mansfield and Easton company were void. Assuming without deciding that this might be so, if it were shown that the renewal notes were in fact given to secure the cancellation of the previous notes without regard to their validity, the answer here is that no such case was in fact made out, or attempted to be made out, at the trial.

For these reasons none of the rulings requested should have been given.

As there was no evidence on which a finding could be made in favor of the plaintiff, it is not necessary to go further.

Exceptions overruled.