Merit Music Service, Inc. v. Sonneborn

225 A.2d 470 (Md. 1967)

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Nature of the Case

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Facts

P leased coin-operated vending and amusement machines. Ds owned and operated a tavern that was closed due to urban renewal. Ds tried to find another location for their business and discovered that Jen's was for sale. Ds approached P for a loan of $1,500. P and D had done business for a number of years at their former place of business and Ds owed P over $ 5,000 from their previous dealings. Attorneys and parties for everyone involved were present at the settlement. P agreed to loan Ds $ 1,500 provided that security was given for the loan. P requested that Ds' prior indebtedness, as well as the $1,500 loan, be secured by the liquor license formerly located at Ds' previous place of business and that this was the only security agreement discussed or executed by the parties in his presence. The real estate agent and who is also an attorney testified that in addition to the assignment of the liquor license D wanted additional security by way of a minimum guarantee from machines he was going to install in Jen's and that he believed Ds' attorney was present during this discussion. The agent was not present when the contract embodying the minimum guarantee provision was signed. From the preponderance of the evidence, it would appear that Ds' attorney was not present when the contract was executed. The loan check and liquor license agreement was executed in front of everyone, the majority of whom were attorneys. P returned later that night and asked Ds to sign more papers. D thought it was related to the loan and security agreement. Ds’ attorney was not present. Ds signed without reading and alleged that P left no copy. The agreement was a form machine leasing contract. Ds could not use machines from other companies, and the contract contained minimum guarantee clauses. Ds signed without reading it. P sued Ds to enjoin them from leasing from another company and for money damages. Ds claimed they would have never signed had they known that the contract was an equipment lease with a minimum guarantee. The Chancellor found that the contract on its face was valid despite the apparent harshness of its terms. The Chancellor also found that the contract was materially altered by P after its execution by Ds. P appealed.