Stetson v. President of the Exchange Bank

73 Mass. 425

• Court: Massachusetts Supreme Judicial Court
• Decided: October 15, 1856
• Status: Published

Opinion

Shaw, C. J

*

1. It appears to us that the course adopted by the court, as to the order of trial, was right, and in strict conformity with the new practice act, St. 1852, c. 312. The demurrer applied only to the declaration in set-off, and this constituted but part of the case. The defendants filed an answer, as well as a declaration in set-off, and that raised issues in fact, which remained. If this adjudication was not conclusive, as turning upon matters of form, • according to § 23 of the statute cited, still it was in the nature of an interlocutory judgment, which did not dispose of the cause. The defendants might file their exceptions, that the question might be brought before this court, if open to revision, after a final judgment, upon a transfer of the entire cause to this court by appeal or exceptions; but could not appeal and transfer the cause at that stage.

2. On the main question, whether the bank had a right to retain these notes for their own use, and, on a claim made on them for the value, to set off the debt due to them from the insolvents, the court are of opinion that, without contract or agreement to that effect, they could not. Upon the supposition that the bank had a mere naked custody of these notes, without proprietary or beneficial interest in them, by indorsement, assignment, hypothecation or otherwise, such naked possession of the notes, without even an authority to collect them and turn them into money, did not, with the debt due to them from the insolvents, constitute mutual credits, within the meaning of the St. of 1838, c. 163, § 3.

In one of the latest cases on this subject, Demmon v. Boylston Bank, 5 Cush. 194, it was held, that where the bank were creditors of the insolvent as holders of a discounted note, and debtors to the same insolvent as a depositor at the bank, these were mutual credits. But the distinction was there expressly taken between such a pecuniary credit, and the mere deposit of specific articles, without any lien or pledge, by contract, usage of trade or otherwise. The case of Rose v. Hart, 8 Taunt. 499, is there referred to, where this distinction is fully considered. It was there held that, to constitute such a credit, it must be property consigned, deposited or intrusted to be converted into money, so that the liability to account for it would ultimately become a debt.

This question, depending upon the provisions for proving and setting off mutual debts, under the insolvent laws, is quite distinguishable from that of proving and setting off claims against a deceased insolvent, as in M’Donald v. Webster, 2 Mass. 498, Phelps v. Rice, 10 Met. 128, and that class of cases. There all claims which do by law survive must be brought in and liquidated, whether debts or claims for damages ; for the reason that they do survive, and the estate is by law held liable for them.

These notes, at the time of the insolvency, were the property of the insolvents, subject to no charge or incumbrance ; by the assignment, the property in them vested in the assignees; they became the legal owners of them; and the refusal of the bank to deliver them was a conversion, for which an action of tort will lie.

3. Upon the question of fact, whether there was any agreement or contract by which these notes were pledged as collateral security for other notes discounted by the defendants, the court eft the case to the jury upon the evidence, and they found a verdict for the plaintiffs. Exceptions overruled.

Bigelow, J. did not sit in this case.