Court Opinion

ID: 9456074
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:41:28.134713+00
Date Added: 2024-06-11T17:34:50.514533
License: Public Domain

CHAMBERS, Circuit Judge
(dissenting) :
The issues revolve around continuing guaranties signed by the Scharffs to assist Dora Williams and her husband, Richard R. Williams, get a loan or loans at the Bank of Hawaii in Guam. (Mrs. Williams is a sister of Mr. Scharff.) The Williamses later defaulted.
Unless there be some defense, the documents signed would clearly impale the Scharffs. But the answer of the Scharffs pleads deceit. It may be taken as a pleading of fraudulent representations by the bank as to the contents of the written documents. There is no basis in the pleadings or in the evidence received or tendered for mutual mistake and reformation.
I am confident Guam law would permit with parol evidence a defense, if proved, that one had been fraudulently misled as to the contents of a document that one signed. See Stock v. Meek, 35 Cal.2d 809, 221 P.2d 15 (1950). The elements of fraud in a defense of fraud are the same as in an action for fraud and the standard is strict. Clar v. Board of Trade, 164 Cal.App.2d 636, 331 P.2d 89; Maslow v. Maslow, 117 Cal.App.2d 237, 255 P.2d 65.
However, we have underlying here a short pre-trial order that creates confusion. First, it says, “The sole issue for consideration at trial is as to whether the written guarantee [there were two] as signed by Scharffs governs, or whether the Scharffs had been led to believe [by whom?] that the guarantee was for $2500.” A page later the order says, “The sole issue for trial will be the question as to the extent of guarantee.” In my view, the trial court should be advised to get a better pre-trial order.
At the trial an ex-bank official turned real estate broker was permitted to tes*165tify that in signing the guaranties (in text unlimited) he assured the Scharffs that their liability would be $2500. (Query: Did he represent that the documents so provided?) The Scharffs confirmed his story. All such evidence came in over an overruled objection made at the outset. But, in closing argument to the court, it can be said counsel for the bank thoroughly made the point that such evidence was improper.
Then the findings and conclusion prepared by counsel for the bank (and approved by counsel for Scharffs as to form) say:
“14. Evidence was offered by defendants, Ferdinand E. Scharff and Isabel Q. Scharff to the effect that plaintiff’s agent, G. Ricardo Salas (at the time guaranties attached to plaintiff’s complaint were signed) stated to defendants, Ferdinand E. Scharff and Isabel Q. Scharff that their liability was limited to $2,500.00. Such evidence, however, is incompetent and inadmissible as contradicting the terms of the said guarantees, which are unlimited as to amount.
“15. No fraud, deceit or artifice was practiced upon defendants, Ferdinand E. Scharff and Isabel Q. Scharff by plaintiff, through its agent, G. Ricardo Salas, or otherwise.”
Of course, the trial judge may not have believed the Scharffs and the ex-bank official (he surely did not have to do so), but in the frame of things as I find them, I cannot be sure, in view of Finding 14, what was meant by Finding 15.
I see no room for mutual mistake. In my view, whatever the bank and its officers did was no mistake of fact on its part. For mutual mistake, both parties must be mistaken. There is the factual question: Were the Scharffs deceived?
So I would if I could, order a new trial.