Anderson v. Home National Bank

Pierce, J. This is an action of tort for the conversion of seven shares of stock of the Brockton Co-operative Boot and Shoe Company. The answer is a general denial and a plea that the stock was pledged by the original owner thereof as collateral security for the payment of obligations owed by a firm of which the original owner was a member. The case was referred to an auditor whose findings of [43] fact are final by stipulation of the parties. His report discloses the following material facts: On October 27, 1915, the firm of Anderson and Nelson Company obtained from the defendant bank a loan of $8,000. In connection with this loan the individual members of the firm, including Swante Anderson, from whom the plaintiff in this action traces title, signed a pledge agreement covering among other stock the seven shares now in controversy, as collateral security for a note for $8,000 "or any renewal or renewals of said note.” At the same time Swante Anderson signed and delivered under his seal "at least two assignments and powers of attorney in blank” conferring "irrevocably” the' right to use, sell, assign and transfer all or any part of the pledged stock. On November 10, 1922, a new pledge agreement was signed by the original pledgors, including Swante Anderson, substantially the same as the first, except that this one read "for the payment of any note, notes, or other obligation of Anderson & Nelson now due, or which may hereafter be due to the Home National Bank of Brockton.” At this time the firm owed the defendant $25,000. On April 25, 1924, a few months subsequent to the incorporation of Anderson and Nelson Company on November 27, 1923, Swante Anderson, who was then a stockholder in the corporation, signed a similar agreement in which the only change was the substitution of the corporate for the firm name. At this time $22,000 was owed to the defendant. On February 23, 1925, Swante Anderson died leaving his widow as his executrix and sole beneficiary under his will. On July 30, 1925, the widow refused to sign a new pledge agreement, despite which refusal notes then maturing were renewed by the defendant. On March 19,1927, one McLeod, acting as attorney for the widow, informed the vice-president of the defendant that she would sign no more notes or pledge agreements and requested that the defendant take up the obligations owed by Anderson and Nelson Company which then had assets sufficient, if pressed, to pay its obligations to the bank, amounting to $25,000. From this time until January 16, 1930, the obligations of the corporation con44 tinned to be about $25,000. Shortly after March 31, 1927, two new shares of stock, without the knowledge of the widow, were added by the corporation to the collateral already held by the defendant. The contention of the plaintiff, not very clearly expressed, that the note dated January 17, 1930, for $26,000, is to be considered as a payment of the several notes issued by the corporation and firm to the defendant before that date, because the last note “covered all notes which were outstanding as of that day,” and “all these other notes [were returned] to Anderson and Nelson Company cancelled and marked paid, thus creating one note as the new obligation,” raises the question whether this last note could have been intended by the parties as given and received in payment of, rather than as an extension of, the original obligation, in view of the indisputable fact that the security was given to cover the original obligation and any extension thereof. Whether a note is given and received in payment of an existing obligation or note, or is given and received in renewal or extension of an existing obligation or note, is a question of fact, in the absence of agreement of the parties to that end. Kendall v. Equitable Life Assurance Society, 171 Mass. 568, 573. Stebbins v. North Adams Trust Co. 243 Mass. 69, 73. “It is a question of intention, and the intention to discharge the old note is presumed when a different intention is not shown by evidence or inferred from circumstances. When it appears that it will be for the benefit of the creditor that the old debt should be kept alive, the presumption does not arise, and the debt is not discharged. Accepting a negotiable note for a secured debt will not discharge the debt, because it will not be presumed that the creditor intended to give up his security.” Cotton v. Atlas National Bank, 145 Mass. 43, 45. Rosenberg v. Robbins, 289 Mass. 402, 410, 411. The same result follows in the case at bar. The defendant expressly disclaims any contention that it received greater rights against the collateral in suit than it had before the new note was taken. Cotton v. Atlas National Bank, 145 Mass. 43, 45, 48. The plaintiff contends that the making of the note of [45] January 17, 1930, and the assignment of it with the stock as security therefor, without the knowledge or consent of the plaintiff’s testatrix, were in themselves a conversion and discharged the pledge, citing Maglione v. Penta, 266 Mass. 413. But in the case at bar there was no sale of the collateral stock independently of the obligation which it secured. Had there been such a separate sale there might have been a conversion. Norcross v. Pease, 5 Allen, 331, 333. Fay v. Gray, 124 Mass. 500, 502. G. L. (Ter. Ed.) c. 266, § 85. The transfer of the security was in connection with an assignment of the debt or obligation which the previous notes evidenced, and was under circumstances that disclose no intent to evade any rights of the pledgors but rather an intent to transfer the pledged stock subject to such rights. There is no legal obstacle to such an assignment. Proctor v. Whitcomb, 137 Mass. 303, 308. Eddy v. Fogg, 192 Mass. 543, 546. Moreover, the power of attorney given to the defendant by the original pledgor is a sufficient authorization to allow the defendant to transfer the collateral under the provision which authorizes the defendant pledgee to "use, to sell, assign, transfer, and make over, all or any part of the said stock.” This power of attorney was not determined by the death of Swante Anderson. Cotton v. Atlas National Bank, 145 Mass. 43. It is to be noted that neither the plaintiff nor any of his predecessors in title to the pledged stock ever tendered the whole or any part of the obligations which the stock secured. Hence, even if the defendant transferred or assigned the stock, the plaintiff suffered no legal wrong unless the defendant put it out of its power to return the stock on tender of the obligation which it secured, or at least upon an offer to pay the principal obligation, such an offer being necessary as a condition precedent to the maintenance of an action for conversion. Whitman v. Boston Terminal Refrigerating Co. 233 Mass. 386, 391, and cases cited. Marder v. Moose Hill Spring Tonic Co. 286 Mass. 126, 131. If it be assumed that the assignment of the stock with the assignment of the note was a conversion, for the reason that [46] it put it out of the power of the defendant to return the stock so that no tender by the plaintiff was necessary, the plaintiff would be entitled only to the value of the security less the amount of the principal obligation. Whitman v. Boston Terminal Refrigerating Co. 233 Mass. 386, 391. It follows that, since the amount of the principal obligation owed to the defendant has at all times been much greater than the value of the stock when the widow refused to join in the re-pledge of the corporation securities, as it was also when the new note was assigned on January 17, 1930, the plaintiff is not entitled to recover. Upon all the facts found a majority of the court is of opinion that there was no error in finding [ordering judgment] for the defendant. Exceptions overruled.