Montgomery Door & Sash Co. v. Atlantic Lumber Co.

Braley, J. The very full and complete findings of fact made by the judge before whom the case was tried without a jury, having been well warranted by the evidence so far as it appears in the record, are conclusive. American Malting Co. v. Souther Brewing Co. 194 Mass. 89. It is manifest that the plaintiff . paid over the money in controversy upon the material misrepresentations made to its treasurer and business manager by the defendant’s counsel and agent accompanied by the written promise of reimbursement if it was subsequently called upon to repay the amount to the Ironton Door and Manufacturing Company from — 154 — which it purchased the lumber, or to the bank to whom the debt had been assigned. The defendant contends that under the declaration the rulings upon the findings as to its liability, which were given at the plaintiff’s request, were erroneous, and that its requests, so far as not granted, were wrongly refused. The fourth and sixth counts were disposed of in the defendant’s favor, and the demurrer to the seventh count, although not expressly waived, has not been pressed. But even if redundant this count sets out a good cause of action for money had and received, while the fifth count expressly declares upon the promise in writing. Woodbury v. Post, 158 Mass. 140. Nor was the plaintiff required to allege or prove that the defendant’s agent, whom the judge found to have been unaware of their falsity, knew that the representations were untrue. The plaintiff was induced to act to its harm and injury by relying upon what the agent said, and the defendant cannot escape repayment upon the ground that, although the statements were unfounded, the money can be retained because at the time it believed them to be as represented. Talbot v. National Bank of Commonwealth, 129 Mass. 67. Chatham Furnace Co. v. Moffatt, 147 Mass. 403. Nash v. Minnesota Title Ins. & Trust Co. 163 Mass. 574, 580. Adams v. Collins, 196 Mass. 422, 429. Griswold v. Hazard, 141 U. S. 260. The misrepresentation, that the plaintiff was not bound by the assignment to the bank because it had not formally accepted the instrument, was not, as the defendant assumes, a mistake of law, but of fact, and is to be classed with the other statements of which it formed an important part. Eustis Manuf. Co. v. Saco Brick Co. 198 Mass. 212, 218, 219, and cases cited. The defendant never acquired any title to the proceeds of the lumber, even if the plaintiff’s vendor obtained . from it without payment seven of the car loads and sold and re-1 shipped them to the plaintiff while in transit. The purchase was made in the ordinary course of business, without any intention to defraud, and while the buyer was solvent. If, by reason of the subsequent financial embarrassment of the Ironton company and the appointment of a receiver, there were equitable reasons which inclined him to admit the defendant’s moral right to a return of the lumber or possibly to recover the price as a — 155 — preference, his consent is expressly limited to a suit for that purpose which for this reason he did not propose to defend. The assignment, which had been taken in good faith and without knowledge by the assignee of the assignor’s financial condition, was valid by the law of their domicil. By receiving the order without objection, and placing it on file, the plaintiff assented to the transfer and became obligated to pay the indebtedness to the bank. Robbins v. Klein, 60 Ohio St. 199. Allyn v. Allyn, 154 Mass. 570. If the defendant’s agent and counsel assumed that the assignment was invalid and the plaintiff’s treasurer accepted his view, it is settled that money obtained under a mutual mistake of fact, without any intention on the part of the defendant to cheat or defraud, may be recovered back as having been received to the plaintiff’s use. Pearson v. Lord, 6 Mass. 81. Haven v. Foster, 9 Pick. 112. Stuart v. Sears, 119 Mass. 143. Blanchard v. Low, 164 Mass. 118. Cole v. Bates, 186 Mass. 584, 586. The plaintiff, moreover, would not have been barred if the mistake as to the effect and validity of the assignment had been caused by the treasurer’s negligence in not taking disinterested legal advice or making further investigation. Appleton Bank v. McGilvray, 4 Gray, 518, 522. Quimby v. Carr, 7 Allen, 417, 419. The defendant’s fifth, ninth, tenth and eleventh requests were rightly refused. It would not diminish the defendant’s liability, but afford further ground for recovery, if its contention that the promise in writing did not cover the judgment which the plaintiff has been obliged to pay was sustained. Upon proof of one, where several material misrepresentations are alleged, the action can be maintained, and the judge was satisfied that among other inducements, the plaintiff relied on the defendant’s assurance that the writing protected it from loss at the suit, not only of the receiver, but of the bank. But as judgment for the plaintiff was ordered without reference to any particular count, the scope and effect of the instrument remain for examination. The benefit conferred on the defendant by the immediate payment of the money was a sufficient consideration to support the promise. Train v. Gold, 5 Pick. 380, 384. Albro v. Merritt, 97 Mass. 517. It was intended to be, and was, a contract of indemnity, and should — 156 — receive a liberal construction to accomplish the purpose for which it was given. Bird v. Washburn, 10 Pick. 223, 226. Curtis v. Banker, 136 Mass. 355. If not drawn with minute accuracy to express all the terms which had been discussed, the defendant broadly undertook to secure the plaintiff against the consequences which might arise by making the payment, and it was accepted on this understanding. The debt had been contracted with the Ironton company, and although payable to the bank, the language of the contract includes suits brought by the creditor, as well as by the receiver in its name, to recover the debt. Hayward v. Lecson, 176 Mass. 310, 325. To exclude from the terms of indemnity the contingency, that the bank might claim the money, of which both parties were aware, would deprive the plaintiff of- the full protection which the defendant, unless guilty of fraud, intended to provide. The evidence of the contemporaneous understanding and the construction which the parties put upon its terms, as shown by their correspondence,* were admissible to aid in the construction of the contract. Smith v. Vose & Sons Piano Co. 194 Mass. 193. It having been correctly ruled, that the contract covered the enforcement of the debt by suit in the name of the assignor for the benefit of the bank, which was brought and prosecuted to judgment, the judge properly declined to give the defendant’s remaining requests, and we discover no error of law in the rulings in favor of the plaintiff, to which the defendant excepted. — 157 — The plaintiff’s exceptions relate only to the measure of damages, and the trial judge limited the defendant’s liability to the amount it received, with interest from the date when the plaintiff was compelled to pay the judgment. But the words, “ to the amount of your indebtedness to them this day paid to -us,” does not narrow the general tenor of the agreement which as we have said was intended to provide full indemnity. It is immaterial that the debt was merged in the judgment. Under either count the claim is for reimbursement, and the plaintiff’s damages must be measured by the loss actually sustained, which includes interest, and legal costs and expenses. Clarke v. Moies, 11 Gray, 133. Curtis v. Banker, 136 Mass. 355. Valentine v. Wheeler, 122 Mass. 566, 568. Westfield v. Mayo, 122 Mass. 100,107. Berry v. Ingalls, 199 Mass. 77, 80. The defendant, although seasonably notified of the pendency of the action and requested to assume the defense, and also that the plaintiff, if obliged to pay the judgment, would look to it for full satisfaction, made no reply and failed to appear. In going on and defending the suit the plaintiff is not shown tó have acted unreasonably, or for the purpose of enhancing damages, and the defendant is estopped by the notice and its conduct from contesting the validity of the judgment. It consequently is liable for the amount which the plaintiff has been obliged to pay, with interest from the date of payment, and also for reasonable counsel fees necessarily incurred in the litigation. Fish v. Dana, 10 Mass. 46. Train v. Gold, 5 Pick. 380. Milford v. Holbrook, 9 Allen, 17. Westfield v. Mayo, 122 Mass. 100. Richstein v. Welch, 197 Mass. 224, 230. While the defendant’s exceptions must be overruled, the plaintiff’s exceptions because of this error must be sustained, but the new trial is to be confined to the assessment of damages only, from which the amount paid by the defendant since the present action was begun, may be deducted. So ordered. Footnotes [*] It appeared in evidence that on or about October 15,1904, demand was made by the Ironton Door and Manufacturing Company on the plaintiff for the price of the lumber, and thereupon, on that date, the Montgomery Door and Sash Company wrote to the Atlantic Lumber Company as follows : “ In reference to the Ironton matter, will state that we understand these people have gone into bankruptcy, and now they claim this lumber was positively assigned to the Second National Bank at the time of shipment. The lumber was not billed to us by the bank, of course, but on the bill-heads of the Ironton Door and Manufacturing Company. Whatever is done in the matter, you, of course, will stand back of us and be responsible for everything just as your Mr. Wilson agreed when here. We hope, however, we will not have any trouble in the matter.” To this the Atlantic Lumber Company replied on October 19, 1904, as follows : “ In reference to the Ironton matter, we beg that you will not communicate direct in reference to any letters sent to you, but that you will forward them to us, or copies of them, that we may suggest to you what to write.”