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Universal C.I.T Credit Corp. v. Ingel

    Brief Fact Summary. This is an appeal from a directed verdict in favor of the plaintiff. The plaintiff is the assignee of the payee of a promissory note. The defendant refuses to pay on the note due to a contract dispute between the defendant and the payee on the note.

    Synopsis of Rule of Law. “Any writing to be a negotiable instrument must contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this Article”

    Facts. The defendant, Ingel (the “defendant”), excepted to a finding of a directed verdict in favor of the plaintiff, Universal C.I.T Credit Corp., (the “plaintiff”) in the amount of $1,630.12. The defendant also excepted to the exclusion of certain evidence.
    Allied Aluminum Associates conducted property improvements for the defendant. The work done for the defendant was financed with a promissory note payable over 60 monthly installments. The plaintiff is the assignee of the promissory note. The defendant was unhappy with the work performed by Allied Aluminum and refused to pay on the note. The defendant contended that the note was nonnegotiable; therefore, any defense which could be raised by Allied could also be raised against the plaintiff. The defendant argued that the note was nonnegotiable because it contained a promise other than the promise to pay, failed to state a sum certain, and had been materially altered.
    The defense argued that the trial court incorrectly excluded the testimony of Charles D. Fahey and Dora Ingel. Fahey was expected to testify to a credit report that was evidence of Allied improper business and advertising practices. Dora Ingel’s testimony regarded the admission of a letter that purported to show evidence of Allied’s fraud or breach of warranty.

    Issue. Was the trial court correct in finding that the note is a negotiable instrument and that the exclusion of certain evidence was proper?

    Held. Yes. The court found that the note was a negotiable instrument, therefore, payment on the note was required. Massachusetts General Laws Section: 3-104 (1) (b) states, “Any writing to be a negotiable instrument within this Article must . . . contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this Article.” The court found that the provision in the note for “interest after maturity at the highest lawful” rate does not render the note nonnegotiable for failure to state a sum certain as required by Section: 3-104 (1) (b). The interest rate after maturity would be the interest rate indicated in the Annotated Laws of Massachusetts. Therefore, the note would be treated no differently from a negotiable note payable “with interest.” The court further found that the alteration on the face of the note had no effect on the case because the alteration had no effect on the sum owed o
    n the note.
    Finally, it was determined that the trial judge correctly excluded the evidence offered by the defendant to show that the plaintiff was aware of complaints against Allied by previous customers. The court found that the evidence did not demonstrate that the plaintiff had “reason to know” of any fraud. The letter attempted to be admitted through the testimony of Dora Ingel was also properly excluded because it was immaterial whether the plaintiff may have found out about Allied’s allegedly fraudulent representations after the note had been purchased.

    Discussion. The interest rate indicated in the Annotated Laws of Massachusetts is, “If there is no agreement or provision of law for a different rate, the interest of money shall be at the rate of six dollars on each hundred for a year, but, except as provided in sections seventy-eight, ninety, ninety-two, ninety-six and one hundred of chapter one hundred and forty, it shall be lawful to pay, reserve or contract for any rate of interest or discount. No greater rate than that before mentioned shall be recovered in a suit unless the agreement to pay it is in writing.”


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