Matsushita Elec. Corp. of America v. Sonus Corp.

• Decision Date: 28 June 1972
• Parties: , 10 UCC Rep.Serv. 1363 MATSUSHITA ELECTRIC CORPORATION OF AMERICA v. SONUS CORPORATION et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 880

284 N.E.2d 880

362 Mass. 246, 10 UCC Rep.Serv. 1363

MATSUSHITA ELECTRIC CORPORATION OF AMERICA v. SONUS CORPORATION et al.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Dec. 9, 1971.

Decided June 28, 1972.

George Waldstein, Boston (Geoffrey D. Wyler, Boston, with him), for plaintiff.

Jerome Medalie, Boston (Jeffrey A. Braunstein, Boston, with him), for Sonus Corp.

Before TAURO, C.J., and QUIRICO, BRAUCHER and HENNESSEY, JJ.

QUIRICO, Justice.

This is a bill in equity brought by Matsushita Electric Corporation of America (MECA) to (a) recover a sum of money allegedly due it on certain promissory notes signed by Sonus Corporation (Sonus) as maker and by one Scott as guarantor, and (b) reach and apply in payment of this alleged debt certain securities and property owned by Scott. The answer filed by Sonus to the bill included counterclaims hereinafter described. At the start of the trial the parties filed a stipulation which eliminated the claims by MECA from the issues to be tried. ¹

The notes on which MECA sought recovery were given to it by Sonus in payment for component parts and assemblies sold by MECA to Sonus for the latter's use in its manufacture of sound actuated electrical switches. By way of counterclaim Sonus sought damages for MECA's alleged breaches of contract in connection with the sale of this merchandise. ² After a lengthy trial devoted entirely to the counterclaims, the judge found for Sonus on its counterclaims and awarded it damages and interest in the sum of $234,251.02. The case is before us on MECA's appeal from the final decree, but it has been argued only as to the part awarding these damages to Sonus.

The judge filed a lengthy decision which included findings of facts later adopted by him as his report of material facts under G.L. c. 214, § 23. The evidence consisted of ninety-five exhibits and a 1,429 page transcript of the testimony of witnesses. It is before us under an order of the judge pursuant to G.L. c. 214, § 24.

The case was briefed and argued on both sides as though it were an ordinary equity appeal from a final decree. In this case that is true only in form but not in fact. The only semblance to an equity suit in this entire proceeding was the part of the bill which attempted to reach some securities owned by Scott and to apply them to the debt allegedly due MECA. That vestige of equity disappeared on the opening day of the trial when the plaintiff tested after reading the stipulation of Sonus and Scott as to their indebtedness, and thus presented no evidence in support of its attempt to reach and apply Scott's securities. Stripped of that, we have a claim in contract by MECA against Sonus and Scott on promissory notes, and a claim by Sonus and Scott against MECA for breach of contract, with nothing but money damages sought on either side. But for the purported attempt to reach and apply the securities, these claims would be ordinary actions at law in contract. Treating them as cross-actions in contract, rather than as an equity suit and a counterclaim thereto, there is a considerable difference in the scope of appellate review and in the corresponding burden on this court.

This difference was described quite clearly in Moss v. Old Colony Trust Co. 246 Mass. 139, 143--144, 140 N.E. 803, 804, in the following language: 'The general and special findings of the judge in an action at law are to stand if warranted in law upon any possible view of the evidence. It is not the function of this court in an action at law to pass upon the weight of the evidence even though reported in full. The only question for us to decide on that phase of the case is whether upon the evidence, with all rational inferences which might be drawn therefrom, the findings can be sustained. The general finding is conclusive if there is any evidence to support it. . . . The rule in equity is different, where on appeal with full report of the evidence it is the duty of this court to decide the case upon its own judgment of the evidence, giving only due weight to the findings theretofore made, and not reversing them unless plainly wrong except in instances where the evidence is documentary, in which cases this court stands in the place of the trial judge in respect to drawing inferences of fact from the evidence.' ³

When, as here, a case ceases to possess any attributes of a suit in equity, and becomes in fact an action at law, it is appropriate that it be so amended as to form, preferably on motion of a party, but if necessary on the initiative of the court. This is necessary to control the nature and scope of appellate review. Had such an amendment been ordered, the trial judge would not have been required to make his detailed report of material facts, and this court would not now be required to read a transcript of 1,429 pages, much of which does not relate to any issue requiring our decision. Instead, the case would probably be before us on a manageable bill of exceptions, and we would be deciding only questions of law instead of reviewing or making findings of facts. Because this is the first occasion on which we have made these observations, we review the present case as though it were properly before us as an equity appeal. This is not to be regarded as a precedent. Thorndike, petitioner, 254 Mass. 256, 257, 150 N.E. 296.

Before reaching the principal issues involved in this appeal, we consider MECA's exception to the judge's denial of its motion for a mistrial. Sonus and Scott seasonably filed claims of jury trial on the issue of their alleged indebtedness to MECA. MECA filed no such claim. The trial started before a judge and a jury with MECA's counsel reading the stipulation by which Sonus and Scott admitted liability to MECA while Sonus saved its rights on its counterclaims (see footnote 1 above). MECA then rested and Sonus proceeded to present evidence on its counterclaims. By the fourth day of trial it became apparent that the trial could not be completed in the three days remaining of the term for which the jurors had been drawn to serve. Following a conference between the judge and counsel on this matter, Sonus and Scott filed a written waiver of their right to trial by jury. The judge thereupon told counsel he would discharge the jury and continue to hear the case without a jury. Counsel for MECA moved orally that the jury not be discharged and that a mistrial be declared. MECA argued that the stipulation of the parties 'was entered into in part on consideration that . . . (they) were going to go ahead with a jury,' and that it would prejudice their case to discharge the jury. The motion was denied and the jury were discharged. MECA again moved for a mistrial and the motion was again denied. There was no error.

MECA had a choice of remedies to enforce its claims, one being by an action at law and the other being by a bill in equity to reach and apply under G.L. c. 214, § 3(7) and (8). By electing to pursue the latter remedy, MECA 'must take it subject to the rules which govern courts of chancery, and can have a trial by jury only at the discretion of the court.' Ross v. New England Mut. Ins. Co., 120 Mass. 113, 117. McAdams v. Milk, 332 Mass. 364, 366--367, 125 N.E.2d 122. By contrast, Sonus and Scott had not voluntarily selected this remedy, and they could not be compelled to give up their right to a trial by jury on the issue of the indebtedness. Art. 15 of the Declaration of Rights of the Massachusetts Constitution. Powers v. Raymond, 137 Mass. 483, 485--486. Merchants' Natl. Bank v. Moulton, 143 Mass. 543, 544--545, 10 N.E. 251. Stockbridge v. Mixer, 215 Mass. 415, 417--418, 102 N.E. 646. See Cochrane v. Forbes, 265 Mass. 249, 254, 163 N.E. 848. Sonus and Scott were entitled to a trial by jury on the limited issue of their indebtedness to MECA, and could waive it without the consent of MECA. Gouzoulas v. F. W. Stock & Sons, 223 Mass. 537, 538, 112 N.E. 221, and cases cited. The filing of counterclaims by Sonus did not restore to MECA the absolute right to trial by jury which it had waived by electing the remedy in equity. In Gulesian v. Newton Trust Co., 302 Mass. 369, 371, 19 N.E.2d 312, we held in a similar situation that when the plaintiff 'voluntarily went into equity, he submitted himself to all the incidents of equity practice, including the hearing without jury of a counterclaim, even one based upon a purely legal cause of action.'

Nothing in the record permits a finding of prejudice to MECA by reason of the discharge of the jury. The record shows no abuse of discretion if we were to treat MECA's objection and motions as a request that the court exercise any discretion it had to allow such jury issues. See Parker v. Simpson, 180 Mass. 334, 355--356, 62 N.E. 401. Shapira v. D'Arcy, 180 Mass. 377, 379, 62 N.E. 412.

We now turn to the substantive questions argued on MECA's appeal from the part of the final decree awarding $234,251.02 to Sonus on its counterclaims. Sonus alleges that the merchandise delivered to it by MECA, or a substantial portion of it, (a) was delivered tardily, (b) was faulty and not consistent with the requirements of their contract, (c) departed from agreed specifications and was useless to it, and (d) failed to conform to certain samples and agreed specifications, MECA having expressly warranted that it would conform thereto. Sonus seeks damages by reason of these alleged breaches of contract by MECA.

The judge found in favor of Sonus on substantially all of the disputed factual aspects of its claim. A substantial portion of the evidence on which the judge made his findings consisted of oral testimony. The testimony of MECA's manager who negotiated with Sonus in this matter spans 280 pages of the transcript. The judge said of this MECA witness: 'upon cross-examination his memory and conduct became so vague, contradictory and confusing (particularly with reference to statements which he had made on deposition...