Case Name: The National Shawmut Bank of Boston vs. William J. McGlinn & others
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1926-01-06
Citations: 254 Mass. 308
Docket Number: 
Parties: The National Shawmut Bank of Boston vs. William J. McGlinn & others.
Judges: 
Reporter: Massachusetts Reports
Volume: 254
Pages: 308–316

Head Matter:
The National Shawmut Bank of Boston vs. William J. McGlinn & others.
Suffolk.
November 18, 1925. —
January 6, 1926.
Present: Rugg, C.J., Bbaley, Piebce, & Sandebson, JJ.
D. J. Lyne, for the defendants.
J. S. Stone, for the plaintiff.

Opinion:
Pierce, J.
This is an action of contract brought by the plaintiff to recover the amount due on a promissory note executed by one of the defendants, Charles E. Brickley, and before delivery indorsed "Charles E. Brickley & Co."
The plaintiff alleges that Charles E. Brickley and Company was a copartnership consisting of the defendants Charles E. Brickley, William J. McGlinn, J. Russell Butler and Warren Ackerman. The three persons, Ackerman, McGlinn and Butler, who alone present these bills of exceptions, filed a single separate answer and are represented by one and the same counsel. The second bill of exceptions states that "This answer set forth in three paragraphs substantially that the said note was the sole personal and individual obligation of the said Charles E. Brickley and not the legal obligation of the partnership 'Charles E. Brickley & Co./ or of the defendants, William J. McGlinn, J. Russell Butler and Warren Ackerman." The further issues raised by this answer, of payment, absence of consideration, and denial of the genuineness of the signature of Brickley (the alleged maker of the note), are not pressed and are assumed to be waived. The defendants filed a declaration in set-off. The case was tried to a jury. The plaintiff had a verdict on its declaration, and a verdict in its favor on the defendants' declaration in set-off. At the close of the evidence the defendants presented a written motion that the jury be directed to return a verdict in their favor. The presiding judge denied the motion and these defendants duly excepted.
The following facts disclosed by the reported evidence are not in dispute. About September 16, 1920, the defendant Brickley organized a partnership consisting of the four defendants, under the firm name of Charles E. Brickley and Company, "to transact a general stock brokerage and commission business and to buy, sell and deal, as principals .or brokers, in stocks, bonds, cotton, grain and other securities and commodities." The business was to "be carried on in the City of New York and at such other places throughout the United States as shall be agreed upon by the parties." In fact the business was established in New York, Philadelphia and Boston prior to November 4, 1920.
The sixth section (c) of the articles of copartnership provided that "No money except the said drawing accounts shall be drawn by any of the partners, except on a division of profits among them." The sixteenth section of the aforesaid articles contained this provision: "... Neither shall the partnership, nor any partner on its behalf, borrow any money for any purpose, unless the same shall be secured by recognized stock exchange collateral sufficient at all times to afford at current market quotations a margin of at least 20%." In substance the articles further provided, section 12, (a) that all transactions shall be "truly and correctly kept in regular books of account" and (d) "Each partner shall at all times have free access to examine, copy and take extracts from all books of account, letters, papers and documents belonging to the partnership."
Robert S. Potter, vice-president of the plaintiff bank, had been connected with it for about eleven years, and as a senior in college had some acquaintance with Brickley when Brickley was a freshman, knew him favorably and had confidence in him. Rejecting all evidence unfavorable to the case of the plaintiff, the evidence warranted the jury in finding the following facts. On November 4,1920, the defendant Brickley came into the plaintiff bank and said to Potter that he would like to borrow for his firm $10,000, told Potter what he was doing, that he was going to open a Boston office and that it would be an accommodation if the bank would make a loan to the firm. Potter, who had learned in a general way that Brickley was in business in New York, had substantial people with him, and was doing well, replied that he would be very glad to let him have the money. He gave Brickley a note to make out and asked him what to do with the proceeds, what form they would take. Brickley said they would be sent to the credit of the firm in New York. Brickley made out a note dated November 4, 1920, which note was in all respects similar to the note in suit. It was signed by Brickley personally, was payable to the National Shawmut Bank, and before delivery was indorsed Charles E. Brickley and Company. • The money was deposited temporarily in the plaintiff bank to the credit of Brickley, and four or five days later $9,000 was transferred by the National Shawmut Bank to the Bank of America, New York, to the credit account of C. E. Brickley and Company. The jury could further find that, some time after the $9,000 was sent for deposit to the credit of C. E. Brickley and Company, Brickley paid the remaining $1,000 of the money borrowed for the firm into the treasury of Charles E. Brickley and Company in the form of a check for $700 and for $300.
In contradiction of the evidence for the plaintiff, the defendants offered evidence which would have warranted a finding that the loan of November 4, 1920, was a loan to Brickley personally and not a loan to the partnership of which he was a member. Such conclusion of fact could well rest upon the admitted fact that the transaction in this case differed from the usual banking practice when a member of a firm borrows for the firm, in that in such a case it is usual to have the firm sign the note, it is usual when a man borrows0 for his firm to deposit the proceeds of the borrowing to the credit of the firm, and it is usual for a bank to take collateral to secure a loan to a brokerage firm. A finding that the loan was an individual one to Brickley could be supported by the testimony of Brickley, one Connor, and the defendant Butler that Brickley sought the loan in order to pay Connor $10,000 which he owed him, and that the $10,000 which he borrowed of the bank was paid into the treasury of the firm as a part of a contribution Connor's nephew, Butler, was to make to the capital of the firm. And the jury could further find that Butler was credited in the capital account with $9,000 on November 9,1921, and with $1,000 on November 9, 1921; and that Potter knew the $10,000 was to be sent to New York to pay the debt owed to Connor.
The answer to the position of the defendants on a motion for a directed verdict is that Brickley, though called by the plaintiff, was not its witness, and that the jury were free to believe the statement of Potter, however much it appeared to be contradicted, that Brickley sought and received the loan for the firm of C. E. Brickley and Company. On the evidence it is plain the jury could disregard the entry in the ledger above referred to, and find that the $10,000 borrowed by Brickley came to the use and benefit of C. E. Brickley and Company with the firm's knowledge of the source from which it came.
Upon the assumption that Brickley had no authority to borrow the money as he did borrow it, the judge, without exception, charged the jury: "If Mr. Brickley came over here from New York . . . and the bank let him have the money on the paper which he signed, and that money was sent over to New York to this partnership, and remained there and was used by this partnership, then if this partnership knew where that money came from, and the circumstances under which it was obtained, you will then consider whether they did not ratify his act and say in effect, 'What Mr. Brickley did in Boston was all right. We will retain the proceeds of what he did.' If you find that is what they did say, then you would be warranted in finding that they are responsible because of the transaction which Mr. Brickley undertook and consummated here in Boston." The charge in this regard rests upon the familiar rule that a person knowingly cannot receive and retain the benefits and also escape the obligations which flow from unauthorized acts which were declared to be done in the name and on behalf of that person. Collins v. Splane, 230 Mass. 281, 286. Tremont Trust Co. v. Noyes, 246 Mass. 197, 207.
The judge further charged the jury: "I intended to and think I did say to you, in substance, that if you find that the note which is sued on here, or the note that was given back of that, the first one, on November 4, was for a personal loan to Brickley, then the plaintiff cannot' recover against the other three defendants. I am sure I told you that. If, in addition to that, the plaintiff knew, or had reasonable cause to believe, that the note was Brickley's note, then the result would be the same."
The first request, for a directed verdict, was refused rightly. The jury could find on the evidence of Potter and Brickley that the loan was made to the firm and that the money went into the treasury of the firm. There was no error in refusing requests numbered 31, 32, 39 and 43. The jury could find that the defendants must have made inquiry as to the origin of the deposit of $9,000 to the firm's credit, and properly could infer that they learned the source from which it came and the fact that Brickley had borrowed $10,000 on behalf of the firm.
The judge could not have ruled, request 44, "As a matter of law, the fact that the name of the firm of the defendants, McGlinn, Butler and Ackerman appears on the back of the note is conclusive . . . that the liability of the defendants . . . was but conditional and secondary, and therefore prima facie at least that the partnership signature was affixed for the accommodation and benefit of Brickley; and so your ver? diet must be for the defendant." It is plain the judge by this request was required to rule in the same breath that this partnership signature was prima facie for the accommodation of Brickley, and at once rule that because the signature was prima facie for accommodation the jury without further ado must find for the defendants..
We think requests numbered 49 and 52 were sufficiently covered by the charge.
In the consideration of this case we have regarded it in the light the legal question would have presented had the action been upon the original note. What has been said is equally applicable to the renewal note and to this action thereon. The case presents no reversible error.
Without extended discussion of the defendants' first bill of exceptions, we are of opinion the defendants suffered no substantial legal harm by the refusal of the judge to order further answers to their interrogatories. Cutler v. Cooper, 234 Mass. 307.
Exceptions overruled.