Cadillac Auto. Co. of Boston v. Engeian

• Decision Date: 09 April 1959
• Citation: 157 N.E.2d 657,339 Mass. 26
• Parties: CADILLAC AUTOMOBILE COMPANY OF BOSTON v. Rita ENGEIAN.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 657

157 N.E.2d 657

339 Mass. 26

CADILLAC AUTOMOBILE COMPANY OF BOSTON v. Rita ENGEIAN.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 2, 1958.

Decided April 9, 1959.

No argument nor brief for plaintiff.

Charles W. Lavers, Boston, for defendant.

Before WILKINS, C. J., and RONAN, WILLIAMS, COUNIHAN and WHITTEMORE, JJ.

RONAN, Justice.

In an action of contract the plaintiff seeks to recover on a written guaranty by the defendant for the balance due under a conditional sale agreement. There was a finding for the plaintiff in the Municipal Court of the City of Boston. A report was ordered dismissed by a majority of the Appellate Division. The defendant appealed.

Evidence at the trial tended to show the following: On September 4, 1953, the defendant purchased an automobile from the plaintiff on a conditional sale contract, the balance after an initial down payment to be paid in monthly installments. The contract contained, among others, a provision accelerating any unpaid balance upon default or breach of any other condition in the contract, provision for repossession and sale, and a covenant by the purchaser that the vehicle would not be used for an unlawful purpose during the life of the contract. Another clause stated: 'Any provision of this contract prohibited by law shall be ineffective to the extent of such prohibition, but shall not invalidate the remaining provisions of this contract.' Payments were made by the defendant under the contract until January 3, 1955, at which time she requested that the plaintiff 'transfer the right to her contract as conditional vendee' to her brother, one George A. Homsy. She was told by the plaintiff's credit manager that, since the automobile had been sold to her on the basis of her own credit rating, the transfer would be permitted only on condition that she guarantee the account of her brother. She agreed to do so. Accordingly the transfer was effected by deleting the defendant's signature on the conditional sale contract and substituting Homsy's. No copy of the condition sale contract was delivered to Homsy. The defendant then signed the following instrument:

'Personal Guaranty by Third Party.

'In consideration of the making of the within contract by the vendor herein, the undersigned does hereby guarantee to said vendor, or any assignee of said contract, payment of all deferred payments as specified therein and covenants in default of payment of any installment or performance of any requirement thereof by vendee to pay full amount remaining unpaid upon demand. The liability of the undersigned to shall not be affected by any settlement, extensions, variations of terms of the within contract effected with, or by the discharge or release of the obligation of, the vendee or any other person interested, by operation of law or otherwise. Notice of acceptance of this guaranty, notices of nonpayment and nonperformance, notices of amount to indebtedness outstanding at any time, protests, demands, and prosecution of collection, foreclosure and possessory remedies, and the right to remove any legal action from the court originally acquiring jurisdiction, are hereby expressly waived.'

On January 31, 1955, a monthly payment was made, but on February 4, 1955, there was a default in the payment then due. On February 8, 1955, the plaintiff learned that the substituted vendee, Homsy, had been arrested for violation of the Federal narcotics law. It thereupon repossessed the automobile on February 11, 1955. By letter dated February 14, 1955, the plaintiff notified Homsy of the repossession and of the fifteen day redemption period provided by statute. On February 21, 1955, the defendant sent the plaintiff a check in the amount of a monthly instalment on the back of which was written, 'This is February 4 payment which you refused to accept as payment for G. Homsy car.' It was received by the plaintiff, whose credit manager replied by letter on February 23, acknowledging receipt of the check and adding, '* * * as I told you when you called, we will release the car upon payment in full of the above amount [the net balance on the automobile] * * *. We are not depositing the check you sent, but will hold it pending your further advice.' On March 2, 1955, the defendant sent the plaintiff another check in the amount of a monthly instalment and with it a letter which stated: 'Enclosed please find check to March 4 payment. This just to protect George until we decide what we are going to do. Thank you.' Both checks were retained by the plaintiff and produced on demand at the trial.

On March 10, 1955, the United States impounded and seized the automobile from the plaintiff. In a libel subsequently filed by the government the automobile was adjudged forfeit by reason by having been used in the illegal transportation of narcotics by Homsy.

At the close of the trial in the instant case, the defendant submitted sixteen requests for rulings, all of which were denied by the trial judge who found generally for the plaintiff after a finding 'that by reason of a novation the defendant released her rights as purchaser and became a guarantor for debt of substituted purchaser.'

We are met at the outset with the defendant's contention that the guaranty agreement is 'void as an attempt to oust the court from its jurisdiction in a forum afforded the defendant under the laws.' Her argument is that its prohibition against her removing any action brought against her from the court originally acquiring jurisdiction is in its effect a waiver of her right to a jury trial which is void as against public policy, and invalidates the guaranty. The defendant makes no contention, however, that this action was not brought in a proper court. See G. L. c. 223, § 2; G. L. c. 246, § 4.

Illegality was not pleaded, and, 'as a general rule, a defendant cannot avoid an obligation on the ground of illegality without setting up such alleged illegality in his answer.' Barsky v. Hansen, 311 Mass. 14, 17, 40 N.E.2d 12, 14 G.L. c. 231, § 28. O'Brien v. Shea, 208 Mass. 528, 95 N.E. 99. Silver v. Graves, 210 Mass. 26, 31, 95 N.E. 948. Raymond v. Phipps, 215 Mass. 559, 561, 102 N.E. 905. Whittingslow v. Thomas, 237 Mass. 103, 104, 129 N.E. 386. Morello v. Levakis, 293 Mass. 450, 451, 200 N.E. 271. Smith v. Miles, 296 Mass. 126, 129, 5 N.E.2d 12. Adamsky v. Mendes, 326 Mass. 603, 606-607, 96 N.E.2d 236. However, '[t]his rule does not prevent the court from acting * * * where the illegality suggested by the evidence is such that it would be clarly contrary to public policy to enforce a contract tainted thereby.' Barsky v. Hansen, 311 Mass. 14, 17, 40 N.E.2d 12, 14. Riley v. Jordan, 122 Mass. 231, 233. Claflin v. United States Credits Sys. Co., 165 Mass. 501, 503, 43 N.E. 293. Noble v. Mead-Morrison Mfg. Co., 237 Mass. 5, 22, 129 N.E. 669. Coughlin v. Royal Indem. Co., 244 Mass. 317, 319, 138 N.E. 395. Reuter v. Ballard, 267 Mass. 557, 563, 166 N.E. 822. Baskin v. Pass, 302 Mass. 338, 342, 19 N.E.2d 30. Generally our decisions have held that contract clauses limiting the forum within which suit must be brought are unenforceable. Nute v. Hamilton Mut. Ins. Co., 6 Gray 174. Hall v. People's Mut. Fire Ins. Co., 6 Gray 185. Amesbury v. Bowditch Mut. Fire Ins. Co., 6 Gray 596. Nashua River Paper Co. v. Hammermill Paper Co., 223 Mass. 8, 111 N.E. 678, L.R.A.1916D, 691. Some decisions, however, have held such clauses to be valid. Daley v. People's Bldg., Loan & Sav. Ass'n, 178 Mass. 13, 59 N.E. 452. Mittenthal v. Mascagni, 183 Mass. 19, 66 N.E. 425, 60 L.R.A. 812. Similarly one may waive his right to jury trial, and even agree in advance that arbitration will be final. See G.L. c. 175, § 99, Twelfth. We need not decide, however, upon the validity of the clause under which the defendant waived her right to remove any action brought on the guaranty from the court originally acquiring jurisdiction, for it is well settled that '[i]f the part of a contract * * * which is valid, can be separated from that which is void, and carried into effect, it may be done.' Amesbury v. Bowditch Mut. Fire Ins. Co., 6 Gray 596, 607. Dean v. Emerson, 102 Mass. 480, 485. Eastern Expanded Metal Co. v. Webb Granite & Const. Co., 195 Mass. 356, 81 N.E. 251. Chace v. Gardner, 228 Mass. 533, 536, 117 N.E. 841. Sherman v. Pfefferkorn, 241 Mass. 468, 476, 135 N.E. 568. New England Tree Expert Co. Inc. v. Russell, 306 Mass. 504, 509, 28 N.E.2d 997. Lehan v. North Main St. Garage, Inc., 312 Mass. 547, 550, 45 N.E.2d 945, 144 A.L.R. 1100. Restatement: Contracts, § 603. The clause in question goes only to the method of settlement of disputes under the contract of guaranty and does not impair the substantive rights under it. Moreover, no attempt was made by the defendant to remove the action from the Municipal Court of the City of Boston. We do not intimate what our decision would be were the validity of this cause before us.

The defendant next urges that the guaranty was a nullity because the conditional sale which it incorporates did not comply with the requirements of G. L. c. 255. Specifically she contends that part of the transaction of January 3, 1955, was a new conditional sale by the plaintiff to Homsy; that no copy of the contract was delivered to him so that the sale did not comply with the statutory...