Nag Enterprises v. All State Industries

NAG Enterprises, Inc., filed a complaint in Oakland Circuit Court against All State Industries, Inc., and Meridian Industries, Inc., seeking a money judgment on a promissory note between All State as payor and Meridian as payee. The note had been assigned to NAG by Meridian with an unconditional guarantee of payment. Default judgment was entered against All State. Meridian filed an answer and counterclaim and NAG filed a motion for summary judgment. The defense and counterclaim stated that there was a contemporaneous oral agreement that the assignment and guarantee of the note were to be held only as security for funds advanced by NAG to Meridian's subsidiary, Huron Die Casting Company, which NAG was in the process of acquiring. At the hearing on NAG's motion for summary judgment, Meridian asked to amend its pleadings, but James S. Thorburn, J., entered the order of summary judgment, ruling that Meridian's request came too late because summary judgment had already been granted and the court at that time only had before it a motion for entry of an order. Meridian appealed from the order of summary judgment and NAG filed a motion to affirm. The Court of Appeals, in an order of March 3, 1977, granted NAG's motion to affirm. Meridian then sought leave to appeal to the Michigan Supreme Court. The Supreme Court vacated the order of the Court of Appeals and remanded the matter to the Court of Appeals for plenary consideration. 402 Mich 825 (1977). The basic questions in the case are whether the parol evidence rule would prohibit admission of evidence of the alleged oral agreement to hold the assignment and guarantee as security only and whether the court erred in denying Meridian's request to amend its pleadings. Held : 1. Parol evidence of a contemporaneous oral agreement is inadmissible where it is completely inconsistent with a clear and unambiguous written instrument.