Chase Commercial Corp. v. Owen, No. 90-P-784

• Court: Appeals Court of Massachusetts
• Writing for the Court: FINE
• Citation: 32 Mass.App.Ct. 248,588 N.E.2d 705
• Parties: CHASE COMMERCIAL CORPORATION v. Morton I. OWEN & another. 1
• Decision Date: 20 March 1992
• Docket Number: No. 90-P-784

Page 705

588 N.E.2d 705 32 Mass.App.Ct. 248 CHASE COMMERCIAL CORPORATION
v.
Morton I. OWEN & another. ¹ No. 90-P-784. Appeals Court of Massachusetts,
Suffolk. Argued Jan. 15, 1992.
Decided March 20, 1992.

Page 706

Michael P. Pagnozzi, Boston (Lewis P. Aronson with him), for defendants.

Barry Y. Weiner, Boston, for plaintiff.

Before BROWN, FINE and IRELAND, JJ.

FINE, Justice.

This appeal concerns the claim of the defendants, parties to a contract dispute, that they were improperly denied[32 Mass.App.Ct. 249] a jury trial. The issue is presented in the following context.

On September 6, 1983, the plaintiff, Chase Commercial Corp. (Chase), made a substantial loan, secured by liens on assets, to the G.S.F. Corporation (G.S.F.). At the same time the loan documents were executed, the defendants, Morton I. Owen and Joseph A. Ippolito, the principals of G.S.F., agreed to guarantee the corporation's indebtedness to Chase. Both of the documents comprising the loan and security agreement were signed on behalf of G.S.F. by Ippolito as president and included a provision whereby G.S.F. and Chase waived their right to trial by jury in the event of a dispute under the agreement. The guaranty agreement, signed by both Owen and Ippolito individually, contained no such provision. In November of 1984, G.S.F. became bankrupt, leaving a substantial outstanding balance unpaid, and Chase brought suit against the defendants on the guaranty. The defendants filed an answer denying the indebtedness and raising numerous counterclaims. The answer also included a demand for trial by jury.

Chase moved for summary judgment on its claim and on the defendants' counterclaims. At the same time, Chase moved to strike the defendants' demand for a jury trial. The motion judge allowed Chase's motion for summary judgment as to the defendants' liability and as to several of the counterclaims, leaving for trial the amount of damages owed by the defendants and Chase's possible liability on the remaining counterclaims. The motion judge also ruled on the motion to strike the defendants' demand for a jury trial. Finding no evidence of overreaching, and presuming the defendants to be "sophisticated businessmen ... familiar with the terms of the instruments they sign," the judge allowed the motion.

Several additional counterclaims were dismissed by agreement of the parties, and the case proceeded to trial without jury. The judge issued a memorandum of decision incorporating his findings and rulings and ordered judgment to be entered against each defendant in the amount of

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$1,061,784. After judgment was entered, the defendants raised the issue [32 Mass.App.Ct. 250] of their right to a jury trial once again by a motion for new trial, which was denied. No issue is raised on appeal concerning the validity of any ruling on summary judgment or any finding or ruling made on the basis of the trial. The only contention on appeal is that the defendants were entitled to a jury trial. ²

1. Was the jury waiver clause part of the defendants' contract? The defendants first contend that they are not bound by the provisions in the two loan and security agreements waiving the right to a jury trial because, except for Ippolito in his representative capacity, they did not sign those agreements, and the guaranty agreement, which both did sign, contained no such provision. In addition, the guaranty agreement did not incorporate the entire loan and security agreements by reference. Compare J. & S. Constr. Co. v. Travelers Indem. Co., 520 F.2d 809, 810 (1st Cir.1975); United States Fid. & Guar. Co. v. West Point Constr. Co., 837 F.2d 1507, 1508 (11th Cir.1988); Hoffman v. Fidelity & Deposit Co., 734 F.Supp. 192, 194-195 (D.N.J.1990). Nevertheless, if the three documents were in essence part of one transaction, they must be read together to effectuate the intention of the parties. See Kearsarge Metallurgical Corp. v. Peerless Ins. Co., 383 Mass. 162, 166-168, 418 N.E.2d 580 (1981) (applying New Hampshire law). See also Chelsea Indus., Inc. v. Florence, 358 Mass. 50, 55, 260 N.E.2d 732 (1970); Gilmore v. Century Bank & Trust Co., 20 Mass.App.Ct. 49, 56, 477 N.E.2d 1069 (1985); Fred S. James & Co. of New England v. Hoffmann, 24 Mass.App.Ct. 160, 164, 507 N.E.2d 269 (1987).

[32 Mass.App.Ct. 251] It was not error in this case for the motion judge to rule that the three documents were part of one transaction and were, therefore, to be read together. The three documents were signed at the same time. The guaranty makes reference to the other agreements. It provides that, "to induce [Chase] ... to extend financial accommodation [to G.S.F.], ... the [defendants] ... hereby unconditionally guarantee to Chase ... that [G.S.F.] will promptly perform and observe every agreement and condition in any Credit Arrangement to be performed or observed by [G.S.F.]." The documents, moreover, were interrelated in purpose. Chase sought the defendants' personal guarantees because they were the principals of the corporation borrowing money. Compare Exchange Mut. Ins. Co. v. Haskell Co., 742 F.2d 274, 276 (6th Cir.1984); Fidelity & Deposit Co. v. Parsons & Whittemore Contractors Corp., 48 N.Y.2d 127, 421 N.Y.S.2d 869, 397 N.E.2d 380 (1979) (both cases in which the underlying agreement was executed subject to obtaining a surety bond, and later an insurer, a stranger to the underlying transaction, agreed to guarantee performance). The defendants were the ones who negotiated the loan on behalf of G.S.F., and they could easily monitor and control G.S.F.'s performance of its obligations under the...