Gaston v. Boston Penny Savings Bank , 233 Mass. 23 ( 1919 )

Pierce, J.

The case is before this court on appeal from a final order.“Report dismissed” of the Appellate Division of the Municipal Court of the City of Boston. The case was submitted on an agreed statement of facts. The defendant asked the presiding judge to rule as a matter of law that the defendant was entitled on the facts to a finding in its favor. This the judge declined to do and found for the plaintiffs on the first and second counts in the sum of. $615.95, and reported the case to the Appellate Division.

The agreed facts disclose that Mr. Foss borrowed $25,000 from the defendant, secured by a pledge of certain securities. The note was dated July 6, 1917, and was payable in twelve months from date “with interest at the rate of 5% per centum per annum, payable semi-annually in advance.” In conformity with the terms of the note the interest for the first six months was paid in advance. The note provided that the due and demandable time of payment fixed therein should be accelerated upon the happening of certain specified events. So far as is material to the issue now presented that provision reads: “In case ... we make a general assignment for the benefit of our creditors . . . this note shall become due and payable immediately, anything herein to the contrary notwithstanding, and we hereby promise to pay the same immediately, and in case of the non-performance of this promise ... we hereby authorize and empower . . . [[the defendant] . . . to sell any or all of the securities then held ... it being mutually agreed . . . that the proceeds of said sale after deducting all costs and expenses are to be applied to the payment of any or all the liabilities aforesaid, with interest thereon to maturity; . . .” Mr. Foss made a general assignment to the plaintiffs for the benefit of creditors on November 7,1917. Shortly thereafter, in the exercise of" the power given by thé note, the bank sold the securities pledged and realized therefrom a sum insufficient to pay the principal and the interest for the second six months. The bank applied the proceeds to the payment of the principal debt, and to the payment of the interest so far as the money received went.

It contends that the obligation of Mr. Foss on making the assignment was not to pay the principal debt immediately, but was to pay that debt and a definite amount of interest which did not accrue from day to day but was “reserved by contract for the use of the particular fund for a twelve months’ period and represented a present debt — an established liability.” In a word, that a ¡fair construction of the contract is that the maker of the note agrees to pay for the loan of the money at once, a sum of money equal to six months’ interest on the principal; and on a general assignment for the benefit of creditors the principal sum and a further sum of money -equal to six months’ interest on the principal debt. The defendant further contends that this is not a case where the payee has exercised an option to call the principal debt and by that act has made the debt due and payable immediately, ■because, he argues, by the terms of the instrument itself “this note,” not the principal, becomes due and payable immediately on thehappening of the event, and that the additional words “‘with interest thereon to maturity,’ import an additional payment to be made by the maker, and unless these words are held to carry interest on the liability to the maturity date of the primary contract, they are given no meaning at all and may as well have been omitted from the instrument.”

We are of opinion the provisions of the note as to the payment of interest are to be taken in their common signification, and import that the payee is entitled to as much interest at the rate mentioned as shall accrue until the note is paid. And we are also of opinion that the words “with interest thereon to maturity,” as used in the provision “that the proceeds of said sale after deducting all costs and expenses are to be applied to the payment of any or all the liabilities aforesaid, with interest thereon to maturity,” have reference to the accrual of interest after the, liabilities, that is, principal and interest, in the note have been determined by the happening of any one of the contingencies specified in the note.

We do not assent to the contention of the defendant that a secondary contract to pay the principal sum and an “ amount of interest reserved by contract for the use of the particular fund” came into existence upon the assignment by reason of the expression “this note” shall become'due, instead of the more common phrase “all sums due.”

We are of opinion that the principal debt with accrued interest thereon became payable and demandable when the assignment was made on November 9, ,1917. We are of the further opinion that when the debt was paid, the incidental obligation to pay interest thereon came to an end in the absence of any express agreement to continue to pay it thereafter.

The plaintiffs, under the third count of their declaration, are entitled to recover the excess of interest paid in advance for the use of the money, and also that part of the money retained from the proceeds of the sále of the seéurities on account of the interest accruing on the note from January 6, 1918, to July 6, 1918.

Order dismissing report affirmed.