Opinion
No. 81-209
Decided May 12, 1982
1. Appeal and Error — Summary Judgments — Standard of Review In cases involving motions for summary judgment, the supreme court must consider the pleadings and affidavits filed in support of the motion to see if they raise a genuine issue of material fact.
2. Appeal and Error — Summary Judgments — Standard of Review Where motions for summary judgment are filed against defendants, the supreme court will consider the motions in light of the defendants' arguments against them.
3. Evidence — Plain Meaning Rule When the language of an instrument is clear and unambiguous, the plain meaning rule prohibits the introduction of contradictory evidence.
4. Evidence — Plain Meaning Rule Where a guarantee agreement stated that guarantors "unconditionally guaranteed payment," the guarantors could not introduce parol evidence to alter this unconditional guarantee since the plain meaning rule prohibits the introduction of contradictory evidence when the language of an instrument is clear and unambiguous.
5. Guaranty — Liability of Guarantor — Defenses Courts have taken three different positions on the availability of a negligence defense to an action on an unconditional guarantee; some courts have refused altogether to permit a negligence defense; an emerging trend will allow the guarantor to raise a defense when there is affirmative rather than passive negligence; and a few jurisdictions will also permit the defense when the creditor fails to file or perfect a security interest, to the detriment of the guarantor.
6. Guaranty — Liability of Guarantor — Defenses In an action by a bank against guarantors under a guarantee of wholesale obligations, the guarantors could not avail themselves of a negligence defense based upon the bank's alleged failure to take proper inventory checks on the collateral for the underlying loan and to monitor the conduct of the dealer, since even if the supreme court were to allow an affirmative negligence defense, the bank's failure to take proper inventory checks was, at most, passive negligence.
7. Guaranty — Liability of Guarantor — Defenses New Hampshire law recognizes that the procuring of a contract or conveyance by means of fraud or negligent misrepresentation is an actionable tort, and hence could be raised as a defense to a claim based on a guarantee agreement, and where the guarantors under a guarantee of wholesale obligations raised a defense of fraud in the inducement, the trial court properly denied the bank's motions for summary judgment in its action on the guarantee agreement, since the defenses raised factual questions.
8. Contracts — Parol Evidence Rule — Generally The parol evidence rule does not preclude the use of testimony to prove fraud or misrepresentation.
9. Appeal and Error — Transcript — Absence Where there is no transcript of the hearing before the trial court, the supreme court will assume that the trial court found the facts necessary to support its decision.
10. Appeal and Error — Summary Judgments — Standard of Review In an action of debt on a note brought by a bank against the maker of a note, as a second action in addition to an action of debt based upon a guarantee agreement, where no evidence appeared in the record connecting the guarantee and the note, although both parties had acted as if there were a connection, and the bank apparently filed no affidavit in support of its motion for summary judgment and the makers' counter-affidavit made no mention of the note, the supreme court upheld the trial court's denial of the motion for summary judgment where there was no transcript of the hearing before the trial court, based on the assumption that the court found the facts necessary to support its decision, but if a defense to the action on the note did not exist, the bank, on remand, could renew its motion for summary judgment.
Hamblett Kerrigan, of Nashua (John P. Griffith and Edward D. Beasley on the brief, and Mr. Griffith orally), for the plaintiff.
Arthur O. Gormley, Jr., of Nashua, by brief and orally, for the defendants.
This interlocutory appeal comes to us from rulings by the Superior Court (Bean, J.) denying motions for summary judgment filed by the Nashua Trust Company in two cases consolidated below. We affirm.
On March 12, 1975, the Weismans signed a document entitled "Guarantee of Wholesale Obligations" to the Nashua Trust Company in connection with the extension of financial accommodations on a loan in default from the bank to Annex Auto Sales, Inc., an automobile dealer located in Nashua. After a default by the auto dealer, the plaintiff made demand upon the Weismans for payment of the full amount due, $176,158, and, upon nonpayment, brought the first action of debt based upon the terms of the guarantee agreement. The second action brought by the plaintiff was an action in debt against H. Robert Weisman for the $16,000 balance due, plus interest, costs and attorney's fees, on a note executed by the defendant H. Robert Weisman on February 17, 1977, in the original sum of $25,000. The plaintiff filed motions for summary judgment in both actions. The defendants filed counter-affidavits, and, after a hearing, the motions were denied. The plaintiff Nashua Trust Company, appealed and raises three questions:
I. Whether the parol evidence rule forbids the introduction of prior or contemporaneous oral evidence which would contradict the unconditional nature of the guarantee of wholesale obligations signed by defendants.
II. Whether the alleged negligence of the plaintiff is, as a matter of law, a defense of which the defendants may avail themselves.
III. Whether the trial court erred in denying the plaintiff's motions for summary judgment.
[1, 2] This case involves motions for summary judgment, so that we must consider the pleadings and affidavits filed in support of the motion to see if they raise a genuine issue of material fact. See Lourie v. Keene State College, 121 N.H. 233, 235, 428 A.2d 902, 903 (1981). Because the motions are against the defendants, we will consider the motions in light of the defendants' arguments against them.
[3, 4] First, the defendants sought to introduce parol evidence to contradict the unconditional nature of their payment guarantee and introduce additional terms to the agreement. When the language of the instrument is clear and unambiguous, the plain meaning rule prohibits the introduction of contradictory evidence. Maine Bonding Cas. Co. v. Foundation Constructors, 105 N.H. 470, 474, 202 A.2d 481, 483-84 (1964); see Lapierre v. Cabral, 122 N.H. 301, 305, 444 A.2d 522, 525 (1982). The instrument in question states that the defendants "unconditionally guarantee[d] payment." The defendants may not introduce parol evidence to alter this unconditional guarantee.
The defendants next claimed that the bank was negligent in its protection of their interests and that this negligence relieves them from the obligations which they undertook in signing the agreement. Specifically, they claim that the bank failed to take proper inventory checks on the collateral for the underlying loan and to monitor the conduct of the dealer.
Courts have taken three different positions on the availability of a negligence defense to an action on an unconditional guarantee. Some courts have refused altogether to permit a negligence defense. See, e.g., Joe Heaston Tractor Imp. Co. v. Securities Accept. Corp., 243 F.2d 196, 200 (10th Cir. 1957); United States v. Klebe Tool Die Co., 5 Wis.2d 392, 397, 92 N.W.2d 868, 871 (1958). An emerging trend, relying on 74 AM. JUR. 2d Suretyship 86, at 63, 92, at 67 and the RESTATEMENT OF SECURITY 132, at 358, will allow the guarantor to raise a defense when there is "affirmative" rather than "passive" negligence. See, e.g., Custom Leasing Inc. v. Carlson Stapler Shippers Supply Inc., 195 Neb. 292, 298-99, 237 N.W.2d 645, 649 (1976). A few jurisdictions will also permit the defense when the creditor fails to file or perfect a security interest, to the detriment of the guarantor. See, e.g., First Nat. Bank in Grand Forks v. Haugen Ford, Inc., 219 N.W.2d 847, 852 (N.D. 1974); D. W. Jaquays Co. v. First Security Bank, 101 Ariz. 301, 305, 419 P.2d 85, 89 (1966).
We hold that the defendants here may not avail themselves of a negligence defense in these proceedings. They cannot prevail under any of these positions. Even were we to allow an "affirmative negligence" defense, the plaintiff's failure to take proper inventory checks is, at most, passive negligence. Because it is not at issue in this case, we will not decide whether we would permit the defense when the creditor failed to file or perfect a security interest.
[7, 8] The defendants also raised a defense of fraud in the inducement. It is a valid defense and may be asserted by the defendants, if the facts are available to support it. New Hampshire law recognizes that the procuring of a contract or conveyance by means of fraud or negligent misrepresentation is an actionable tort, see, e.g., Ingaharro v. Blanchette, 122 N.H. 54, 57, 440 A.2d 445, 446-47 (1982); Chagnon Lumber Co., Inc. v. DeMulder, 121 N.H. 173, 175, 427 A.2d 48, 50 (1981), and hence can be raised as a defense to a claim based on the agreement. The parol evidence rule does not preclude the use of testimony to prove fraud or misrepresentation. Lapierre v. Cabral, 122 N.H. at 307, 444 A.2d at 526; Ingaharro v. Blanchette, 122 N.H. at 56, 440 A.2d at 446; see generally 3 A. CORBIN ON CONTRACTS 580, at 431-39 (1960). Since these defenses raise factual questions, the denial of summary judgment on the guarantee action was proper.
[9, 10] We have more difficulty reviewing the order denying the motion for summary judgment in the action on the note. No evidence appears in the record connecting the guarantee and the note, although both parties have acted as if there is a connection. The plaintiff apparently filed no affidavit in support of this motion, and the defendants' counter-affidavit makes no mention of the note. Because there is no transcript of the hearing before the trial court, we will assume that the court found the facts necessary to support its decision. See Sexton Motors, Inc. v. Renault Northeast, Inc., 121 N.H. 460, 463, 431 A.2d 116, 119 (1981); McCrady v. Mahon, 119 N.H. 247, 248-49, 400 A.2d 1173, 1174 (1979). If a defense to the action on the note does not exist, the plaintiff may renew his motion for summary judgment.
Affirmed; remanded.
All concurred.