Contel Credit Corp. v. Central Chevrolet, Inc.
Massachusetts Appeals Court
557 N.E.2d 77 (1990)
- Written by Douglas Halasz, JD
Facts
Maynard Hallman owned two car dealerships, Hallman Chevrolet, Inc. (HC) and Central Chevrolet, Inc. (Central) (defendant). From November 1981 through December 1982, Joseph Pugia served as Central’s general manager. In spring of 1982, Pugia left his position as Central’s general manager and purchased HC from Hallman. Thereafter, HC financed the lease of a telephone system through Contel Credit Corporation (Contel) (plaintiff), which required a guaranty. Although Pugia no longer worked for Central, Pugia signed the corporate-guaranty form as Central’s vice president and chief operations officer. Pugia then tricked Central’s secretary into signing the certificate-of-secretary portion of the form, which certified that Pugia had the express authority to bind Central to the guaranty. HC subsequently went bankrupt while still owing money to Contel under the lease agreement. Accordingly, Contel sued Central to recover the money owed pursuant to the guaranty. During the proceedings, Central did not present any evidence to show that Contel knew or should have known of Pugia’s dishonesty. Rather, the evidence showed that Contel relied upon the certificate of secretary. Notwithstanding, the trial court found that Contel should have investigated Pugia’s credentials and dismissed Contel’s complaint. Contel appealed.
Rule of Law
Issue
Holding and Reasoning (Perretta, J.)
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