Evidence, Presumptions and burden of proof. Notice. Corporation, Officers and agents. Bills and Notes, Holder in due course. Contract, Implied.
At the trial of an action by the trustee in bankruptcy of a corporation against a furniture dealer for the proceeds, alleged to have been had and received by the defendant to the use of the corporation, of a check of the corporation payable to the defendant, it appeared that the check was given to the defendant by the corporation at the request of a customer of the defendant to pay for furniture purchased of the defendant by its customer, who was not shown to be in any way connected with the corporation. Excepting as above stated, there was no evidence as to the authority of the officer who signed the corporation's name to the check or as to the purpose for which it was issued. Held, that
(1) The defendant was prima facie a holder in due course of the check under G.L.c. 107, § 82, when he received its proceeds;
(2) There was no evidence requiring an investigation by the defendant to ascertain whether the check was authorized to be issued by the corporation;
(3) A finding for the defendant was warranted.
PIERCE, J.
This is an action of contract on an account annexed for money had and received, brought by the plaintiff as trustee in bankruptcy of the Great Western Hide Corporation, to recover $1,149.75 which the defendant received through the collection of a check of the bankrupt delivered to it under circumstances, as is claimed by the plaintiff, which preclude the defendant from retaining the money.
These circumstances are as follows: Sometime in July, 1919, prior to July 25, the defendant through a salesman sold for "cash before delivery" certain furniture to a Mrs. Wolff and charged the goods to Mr. E.A. Wolff; the salesbook entry reads, "Charge to Mr. E.A. Wolff, 202 Lincoln Street, to be delivered July 25th." Before the sale the salesman had never seen Mrs. Wolff and he did not know Mr. Wolff. Prior to July 25, the salesman had a telephone conversation with Mrs. Wolff wherein she told him to send down to B. Crohan, 71 South Street, Boston, Massachusetts, to get the money so the defendant could deliver the goods. The salesman accordingly dictated a. letter which he sent by messenger to Crohan, which was as follows:
"July 25, 1919.
Mr. B. Crohan, 71 South St., Boston, Mass.
Dear Sir:
Kindly deliver to bearer check for $1149.75 as per the enclosed bills. Please return these bills with the check as I have orders from Mrs. Wolff to mail receipted bills to Essex Hotel, Room 110. Thanking you, I am
Yours very truly,
Paine Furniture Company Dictated by [Signed] W. Marland Sewall.
W. Marland Sewall"
The messenger sent by the defendant brought back to the defendant a check in form as follows:
"Great Western Hide Co. No. 2872.
Boston, Mass., July 25, 1919.
Pay to the order of Paine Furniture Co. $1149.75
Eleven Hundred Forty Nine Dollars Seventy Five Cents Dollars
To the Great Western Hide Co.
Metropolitan Trust Company [Signed] Phil M. Paris
President Treasurer 5-122 Boston, Mass."
The defendant deposited the check to its account in The First National Bank of Boston, through which it was cleared to the defendant's credit. When Mrs. Wolff telephoned she did not state to the salesman who Crohan was or mention Great Western Hide Corporation; nor did the defendant or its salesman at this time know anything about the Great Western Hide Corporation or the relation to it of Paris, the signer of the check, except in so far as the check disclosed that Paris was the treasurer of the plaintiff corporation.
On the foregoing facts the defendant payee named in the check was a holder under R. L. c. 73, § 207, now G.L.c. 107, § 18, and is deemed prima facie to be a holder in due course. R. L. c. 73, § 76. G.L.c. 107, § 82. The evidence is clear that the defendant received the check for value, without actual knowledge of any infirmity in the instrument or defect in the title of the person negotiating it; R. L. c. 73, § 73, G.L.c. 107, § 79; and there is no evidence that the defendant in receiving the check had such knowledge of facts that its action in taking the instrument amounted to bad faith. G.L.c. 107, § 79. The evidence does not warrant a finding that the defendant knew or should have known that the check was an unauthorized use of the funds of the corporation to pay the debt of an officer of the corporation; and is entirely consistent with an exchange of the check for money, which money was given to Crohan by Wolff to purchase the check which Crohan was to deliver and did deliver to the defendant in payment of the debt of Wolff to the defendant. We find nothing in the evidence which required an investigation by the defendant to ascertain whether the issuance of the check was authorized. We think the case is governed by National Investment Security Co. v. Corey, 222 Mass. 453, and the Colonial Fur Ranching Co. v. First National Bank of Boston, 227 Mass. 12; and that the case of Johnson Kettell Co. v. Longley Luncheon Co. 207 Mass. 52, upon which the plaintiff relies, is not applicable.
What has been said covers all the exceptions argued by the plaintiff. These exceptions must be overruled.
Exceptions overruled.