Cooke v. Real Estate Trust Co.

Marbury, J., delivered the opinion of the Court. This is an appeal from a judgment entered in the Baltimore City Court in favor of the appellee against the appellant for the sum of 8283.19, with an attorney’s fee for 839.47 without interest. This judgment was entered on a promissory note given by the appellant to an oil burner company known as White Heat, Inc., or order, for the same amount as the judgment. This note is payable in monthly installments with a provision that, if any installment is not paid, the entire amount will become due at the election of the holder.

The note further authorizes any attorney of record to appear and confess judgment for the amount appearing due and payable, plus 15 per cent attorney’s fee and costs of suit. There is a waiver of all rights of appeal and stay of execution. The note was under seal and on the reverse side of the note, there is printed an endorsement which was signed by the payee when the note was endorsed to the appellee. This endorsement constitutes an agreement by the appellee that in the event the holder receives any complaint as to the quality of the workmanship in executing the contract, which gives rise to the note, the payee will immediately adjust such complaint to the satisfaction of the maker or failing to do so, will repurchase the note paying the amount of any unpaid balance thereon.

The note was endorsed “without recourse otherwise.” The note was dated September 29, 1939, and was obtained, under circumstances hereafter set out, in connection with a conditional sales agreement entered into between the appel ¹³⁶ lant and White Heat, Inc., under date of September 22, 1939. This sales agreement was in the form of an order signed by the appellant to White Heat, Inc., to furnish an oil burner in a building located at 3015 Belmont Avenue, Baltimore, Maryland, for the sum of §239.19 and carrying charges. This order, which was accepted by White Heat, Inc., contains a statement that the burner is guaranteed to heat the boiler to its full rated capacity and if it fails to do so, the burner will be removed and all payments refunded. There was attached to this, a manufacture’s guarantee by White Heat, Inc., for the replacement of any defective parts, either in material or workmanship and for free service for one year.

The additional service agreement with the guarantees was assigned to the appellee on September 29, 1939. There was also delivered to the appellee a certificate of satisfaction dated September 28, 1939 and signed by the appellant, certifying that she had issued the note, and that the articles had been delivered and installed on her premises in a satisfactory manner. The case was instituted on February 1, 1940, by the filing of a narr, warrant of attorney, and promissory note. After various legal skirmishes had ensued, the case came before the court below on the appellant’s motion to strike the order to docket the case from the files, and to strike from the files the appearance of an attorney for the appellant, which had been entered in accordance with the authority given in the note and also on the appellant’s motion to deny the application of the appellee for a judgment by confession, and on the motion of the appellee for a judgment by confession.

The court below, after taking testimony, denied the two motions of the appellant and entered a judgment by confession, from which this appeal'was taken. The evidence in the record, offered on behalf of the appellee, shows that the appellee received from White Heat, Inc., an application from the appellant, and on September 29, 1939, paid White Heat, Inc., §238 for her note, which was endorsed by White Heat, Inc., and de ¹³⁷ livered to the appellee. Before making the payment, the appellee insisted upon and received the customary satisfaction slip signed by the appellant. The contract was assigned and delivered to the appellee at the same time.

The note was attached to the contract. The note was endorsed without recourse on the form printed on the back. There is some dispute between the appellant on the one side, and the appellee, and the court below on the other, as to the question of who presented the form of the note. The appellant claims that the testimony should indicate that the form of the note was presented by the appellee, while the appellee and the court contend that that the note was presented by White Heat, Inc. All of this evidence was given by the Vice-President of the appellee.

Mr. Wilhelm, the President of White Heat, Inc., who made the agreement with the appellant, was not called to testify either by the appellant or the appellee. The appellant was the only witness called in her own behalf and she stated that she lived at 3015 Belmont Avenue, and taught night school, and Mr. Wilhelm came to see her to sell her an oil burner. She decided to buy it and signed a contract with him, after the guarantees had been fully pointed out to her. After all this had been done and the contract had been put in the pocket of Mr. Wilhelm and a yellow copy given to the appellant, Mr. Wilhelm pulled out two little slips of paper, which the appellee did not read, and asked her to sign “these two receipts.” She said she had not received any thing yet, and he said this was the usual procedure, and she signed the receipts, not paying any attention to them.

This was on the same night she signed the contract. Mr. Wilhelm put the slips back in his pocket. She stated that one of them she signed had nothing but her name written on it, and she did not read what was printed on it. These two papers were identified by the witness as the satisfaction slip and the note sued on.

The appellant did not see Mr. Wilhelm for about two weeks, but the man came the next day to put things in the cellar, this being on a Saturday. On Monday they began work. Sometime during that week the burner ¹³⁸ was installed; finishing on September 30th. The oil came on October 2d and the furnace was started.

Two or three days later the appellant received a letter from the appellee sending her an account book to present at its office when making payments on the loan. She called the Vice-President of the appellee at once, and told him that the furnace was acting terribly, and she wanted it taken out. Prior to her call to the appellee, she had told Mr. Wilhelm that the furnace was not satisfactory. After her conversation she went down to see the appellee, and saw the note she had signed, which was the first time she knew there was such a note.

The burner was not satisfactory. She sent Mr. Wilhelm a letter demanding that it be removed, notified the appellee to fix it, and did not make any payments on it. At the time she saw the Vice-President of the appellee, he said‘that he would see that Mr. Wilhelm would make the burner satisfactory. He called Mr. Wilhelm up in her presence, and so told him.

Mr. Wilhelm did not make it satisfactory, although he tried to. The witness further testified that she can, of course, read, but that she did not read the receipts, although she read the contract. On this state of the record, the appellant contends that the lower court had no right to extend the judgment without giving the appellant the right to have a jury trial, because the note was obtained from her by fraud, it is non-negotiable, and the conditional sales contract assigned to the appellee simultaneously with the note contained a provision, by which, if the oil burner did not heat properly, the money would be refunded, and the uncontradicted testimony was that the oil burner did not heat properly. As the case comes before us we must take the uncontradicted testimony of the appellant as to the circumstances surrounding the execution of the note and the satisfaction slip.

This testimony shows without any question that her signatures to these papers were obtained by' fraud of the most flagrant character. The President of the oil burner company first talked her into ¹³⁹ buying an oil burner, showed her the contract, and pointed out the features of it which guaranteed proper installment and maintenance of the burner, and she read this over and signed it and got a copy of it. Under this contract she was to pay for it in monthly installments and if the burner failed to heat her boiler to its full rated capacity, it was to be removed and all payments refunded. Such a contract would sound reasonably safe to anyone.

The subsequent proceedings, however, indicate an entirely different attitude on the part of the President of the oil burner company. He secured the signature of the appellant to a note promising to pay for a burner, which had not been installed, and her signature to a slip saying that the burner was satisfactory, when as a matter of fact, she could not know this, because it had not been installed. If this occurred as testified, it can only be described as a most reprehensible fraud. It was just this sort of dealing, which led to the passage of the Act of 1941, Chapter 851, regulating retail installment sales.

Had that act been in force at the time of the making of this contract, the appellant would not be in the position she now is. Assuming, therefore, the presence of fraud in the obtention of the note, which fraud was, however, according to the testimony, actually unknown to the appellee at the time it purchased the note, how are its rights against the appellant affected ? It has been a number of times held by this court, in conformity with the general rule elsewhere, that