Noblett v. General Electric Credit Corporation

• Decision Date: 12 November 1968
• Docket Number: No. 9704.,9704.
• Citation: 400 F.2d 442
• Parties: Ernest V. NOBLETT, Appellant, v. GENERAL ELECTRIC CREDIT CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

400 F.2d 442 (1968)

Ernest V. NOBLETT, Appellant, v. GENERAL ELECTRIC CREDIT CORPORATION, Appellee.

No. 9704.

United States Court of Appeals Tenth Circuit.

April 2, 1968.

Petitions for Rehearing and Rehearing Denied June 20, 1968.

Certiorari Denied November 12, 1968.

COPYRIGHT MATERIAL OMITTED

Val R. Miller, Oklahoma City, Okl. (Paul D. Sullivan, Duncan, Okl., on the brief), for appellant.

Gary C. Rawlinson and James D. Fellers, Oklahoma City, Okl., for appellee.

Before MURRAH, Chief Circuit Judge, LEWIS, Circuit Judge, and CHRISTENSEN, District Judge.

Petitions for Rehearing and Rehearing En Banc Denied June 20, 1968.

Certiorari Denied November 12, 1968. See 89 S.Ct. 295.

CHRISTENSEN, District Judge.

In this diversity action General Electric Credit Corporation obtained summary judgment against Ernest V. Noblett for rentals under a bowling equipment "Rental Lease", which had been assigned to the corporation by the lessor, Bowl-Mor Company.

Whether the case was factually ripe for summary judgment and whether Noblett in the rental agreement validly waived defenses as against the assignee as a matter of law, are the problems presented by this appeal.

Noblett's answer as amended had raised among other defenses that of failure of consideration by reason of alleged breaches of an express warranty against defects, an implied warranty of fitness and the obligations of the lessor to furnish advertising and training assistance.

The rental agreement included the following provision:

"The lessor may assign all its right, title and interest under this lease, including the payments due hereunder, but the assignee shall not be held responsible for any of the lessor\'s obligations. The obligations of the Lessee shall, however, continue in full force and effect."

Applying Massachusetts law in accordance with the terms of the rental agreement, and being of the view that Noblett thereby had waived the pleaded defenses, General Electric Credit Corp. v. Noblett, 268 F.Supp. 984 (W.D.Okl. 1967), the trial court granted summary judgment for the balance of the rentals in the sum of $64,389.91, together with interest of $3,541.45, $11,814 attorney's fees and costs of the action.

Section 9-206, Chapter 106, of the General Laws of Massachusetts, based upon the Uniform Commercial Code, provides:

"(1) Subject to any statute or decision which establishes a different rule for buyers or lessees of consumer goods, an agreement by a buyer or lessee that he will not assert against an assignee any claim or defense which he may have against the seller or lessor is enforceable by an assignee who takes his assignment for value, in good faith and without notice of a claim or defense, except as to defenses of a type which may be asserted against a holder in due course of a negotiable instrument under the Article on Commercial Paper (Article 3) * * *."

The equipment did not constitute "consumer goods" within the meaning of the Act.

The appellant Noblett contends that under any view of the Massachusetts law this case was not ripe for summary judgment since there was an issue of fact whether the assignee credit corporation took the assignment "for value, in good faith, and without notice of a claim or defense"; if not, under the terms of the Code no waiver agreement would be recognized.

In support of its motion for summary judgment the credit corporation filed below an affidavit from one R. N. Lamy, who stated that he was a Credit Specialist for General Electric Credit Corporation; that on the 24th day of May, 1965, General Electric Credit Corporation took an assignment from Bowl-Mor Company, Inc., for "good and valuable consideration" of the lease in question and "that said assignment was taken by General Electric Credit Corporation in good faith and without notice of any claim or defenses which Ernest V. Noblett might have against Bowl-Mor Company, Inc.".

We are not unmindful of the practical difficulties of establishing by affidavit in strict compliance with Rule 56(e), F.R.Civ.P., a lack of notice on the part of a corporation having numerous officers, managing agents and employees. A reasonable application is all that is required. It is apparent that in any view this affidavit did not conform with the requirements that such an affidavit be made on personal knowledge, state facts which would be admissible in evidence and show affirmatively that affiant was competent to testify to the matters therein stated. See Zampos v. United States Smelting and Refining and Min. Co., 206 F.2d 171 (10th Cir. 1953). Cf. Bumgarner v. Joe Brown Company, 376 F.2d 749 (10th Cir. 1967); Preble v. Johnson, 275 F.2d 275 (10th Cir. 1960).

But at no time did the appellant indicate to the court below, directly or indirectly, that he questioned the sufficiency or effect of the affidavit. His affidavit in response to the motion was confined to assertions that Bowl-Mor had failed to perform its obligations and that there had been an understanding that a corporation to be organized by Noblett rather than he personally was to be liable for rentals. No denial or other reference was made to the Lamy affidavit on the question of notice. Noblett asked, and was granted, leave to make a further search and showing concerning his claim that there was some writing relieving him from personal responsibility. No such showing was made and no further affidavit was submitted. The appellant did not indicate to the trial court in any way that he questioned the form, substance or effect of the affidavit.

It was said long ago and observed in various applications since that "Errors as a rule to be reviewable on appeal must be definitely and timely called to the attention of the trial court in order to afford a fair opportunity for it to pass upon the matter to correct its own errors, if any." Scritchfield v. Kennedy, 103 F.2d 467 (10th Cir. 1939). An affidavit that does not measure up to the standards of 56(e) is subject to a motion to strike; and formal defects are waived in the absence of a motion or other objection. 6 Moore's Federal Practice § 56.22(1) p. 2817; 3 Barron and Holtzoff, Federal Practice and Procedure § 1237, p. 171; Auto Drive-Away Company of Hialeah, Inc. v. I.C.C., 360 F.2d 446 (5th Cir. 1966); United States for Use and Benefit of Austin v. Western Electric Co., 337 F.2d 568 (9th Cir. 1964); Klingman v. National Indemnity Company, 317 F.2d 850 (7th Cir. 1963). Cf. Wagoner v. Mountain Savings and Loan Association, 311 F.2d 403 (10th Cir. 1962).

The reliance of the trial court under the circumstances upon the sufficiency of the affidavit is completely understandable. The belated claim of error in such respect could be persuasive only to prevent a gross miscarriage of justice. Such is not the case here; there is a more dispositive reason why the summary judgment cannot stand.

The trial court determined that in agreeing that "the Assignee shall not be held responsible for any of the Lessor's obligations", and that "the obligations of the Lessee shall, however, continue in full force and effect", Noblett effectually indicated "that he will not assert against an assignee any claim or defense which he might have against the * * * Lessor" within the contemplation of § 9-206(1), and, hence, that he was barred from asserting against the appellee his defense of failure of consideration and related defenses.¹

Our attention has been directed to two unpublished decisions of courts in other states holding that the precise language used in the form of the lease in question is valid and binding under Massachusetts law for the purpose.² And we are mindful that in Straight v. James Talcott, Inc., 329 F.2d 1 (10th Cir. 1964), this court held that an agreement of a buyer that he would settle all claims against the seller directly with him and would not set up any such claim against his assignee, operated to waive defenses in a suit brought by the assignee.

No Massachusetts decision has been called to our attention, nor can we find any, defining how far from the precise language of the authorizing statute an agreement might depart and still be effective as a waiver. Neither the decision of the trial court nor any of the cases cited come to grips expressly with the most persuasive phase of appellant's argument — that the intent manifested by the quoted provision of the lease agreement was not to waive defenses as allowed by § 9-206(1) of the Uniform Commercial Code but to relieve the assignee of the duty of affirmative performance of the lessor's obligations under the lease with reference to an entirely different section of the Code. It is provided in § 2-210:

"(4) An assignment of `the contract\' or of `all my rights under the contract\' or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract."

The provisions of the lease agreement which speaks in terms of obligations is peculiarly suited to an indication for the purposes of § 2-210(4) that there was no "delegation of the performance of the duties of the assignor" or a "promise by him to perform those duties." Indeed, more apt language for this purpose could hardly be devised than was used in the lease agreement. But with respect to waiver of defenses, the language at...