Colonial Pacific Leasing Corporation v. Mcnatt, Datronic Rental Corporation

486 S.E.2d 804 (1997)

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Nature of the Case

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Facts

Linda and William McNatt (Ps), sole shareholders and president and secretary-treasurer, respectively, of Quick-Trip Printers, Inc., entered into negotiations with Itex for the acquisition of an Itex computer printing system. Ps executed equipment finance leases with Burnham Leasing Company, whereby Burnham agreed to purchase the equipment from the supplier. Burnham Leasing immediately assigned its interest in the leases to Colonial Pacific Leasing Corporation (D) and Datronic Rental Corporation. The lease had the following bona fides. The document went on to state that 'Lessee hereby accepts unconditionally and irrevocably the Equipment' and 'specifically authorizes and requests Lessor to make payment to the supplier of the Equipment.' Just above the signature line, in upper-case letters, was the lessee's acknowledgment and agreement 'THAT LESSEE'S OBLIGATIONS TO LESSOR BECOME ABSOLUTE AND IRREVOCABLE AND LESSEE SHALL BE FOREVER ESTOPPED FROM DENYING THE TRUTHFULNESS OF THE REPRESENTATIONS MADE IN THIS DOCUMENT.' Displayed on the front page of both leases was a disclaimer of warranties and claims. The equipment did not work, and the assignee/lessors delayed payment to Itex. Itex was ultimately paid. Quick-Trip Printers never made a lease payment to the assignee/lessors because the equipment never performed as the Itex agents led Ps to believe it would. The lessors repossessed the equipment. Four months after it signed the leasing documents, Quick-Trip Printers filed suit against the equipment supplier, the manufacturer, and the lessors, seeking, among other things, rescission of the leases. Colonial Pacific and Datronic each filed a counterclaim seeking payment pursuant to the leases assigned to them. The trial court granted summary judgment in favor of the assignee/lessors relying on the disclaimer of all warranties concerning the suitability of the equipment and a finding that Quick-Trip Printers had authorized the release of the funds. The trial court also granted the assignee/lessors summary judgment on their counterclaims. Ps appealed. The Court of Appeals reversed. It found issues in dispute on P’s failure of consideration claim and that the assignee/lessors released funds to Itex. It also held that the hell or high water clause had no effect against a claim that the employees of Itex committed fraudulent misrepresentation in getting Ps to sign the contracts. This appeal was taken to the Georgia Supreme Court.