## Facts

- Sidney and Jennie Sonneborn were buying a new tavern (Jen’s Park Inn) and asked Merit Music Service, Inc., a company that leased coin-operated vending and amusement machines, for a $1,500 loan to help complete the purchase.
- The parties had prior dealings: Merit had supplied machines to the Sonneborns’ earlier tavern, and the Sonneborns owed Merit substantial sums from past business.
- At settlement for the new tavern, the Sonneborns, their attorney, and others met; Merit’s president arrived later and agreed to make the $1,500 loan so long as Merit received security.
- The Sonneborns executed an assignment of their liquor license as security. Their attorney understood the liquor license assignment to be the only security required for both the old debt and the new loan.
- Other testimony indicated Merit also required “additional security” in the form of a commitment that Merit machines would be installed at the new tavern and that the Sonneborns would guarantee minimum revenues from those machines.
- After the loan check was signed and the liquor license assignment obtained (in the presence of the Sonneborns’ attorney), Merit later that evening presented the Sonneborns with a printed form leasing contract for machines to be installed at the new tavern.
- The form contract included minimum-guarantee payment provisions and an exclusivity term barring the Sonneborns from using competing machines.
- The Sonneborns signed the contract without reading it, later claiming they believed it was merely paperwork connected to the loan; their attorney was not present when they signed.
- A dispute later arose when competing machines appeared on the premises; Merit sued for injunctive relief to stop use of competitors’ machines and for money damages for breach of the leasing agreement.
- The Circuit Court for Baltimore City (sitting in equity) dismissed Merit’s complaint, accepting the Sonneborns’ contention that the minimum-guarantee provisions had been inserted after they signed.
- Merit appealed to the Court of Appeals of Maryland.

## Issues

1. Whether the evidence supported the chancellor’s factual finding that Merit inserted the contract’s minimum-guarantee provisions after the Sonneborns signed the leasing agreement.
2. Whether, absent fraud, duress, or mutual mistake, parties with capacity who sign a written contract without reading it are bound by its terms, including minimum guarantees and exclusivity provisions.

## Decision

- The Court of Appeals of Maryland held the chancellor was clearly erroneous in finding that Merit added the minimum-guarantee provisions after the Sonneborns signed.
- The court held that, in the absence of fraud, duress, or mutual mistake, a person with capacity who signs a written instrument without reading it is bound by the signature and the document’s terms.
- The court concluded the leasing contract was enforceable as written, notwithstanding the Sonneborns’ failure to read it and their later dissatisfaction with its terms.
- The decree dismissing Merit’s bill of complaint was reversed and the case was remanded for further proceedings consistent with the appellate ruling.

## Legal Principles

- A written contract is void if a party fills in blank spaces with material terms after execution, because there is no meeting of the minds on essential terms; however, the party asserting post-execution alteration must support that claim with evidence.
- On appellate review of an equity case, a chancellor’s factual findings are given weight but may be set aside when clearly erroneous in light of the record.
- In the absence of fraud, duress, or mutual mistake, a person who has capacity to understand a written document is bound by it if the person signs it, even if the person did not read it or have it read.
- The law presumes that a signer knows the contents of a document executed and understands at least the literal meaning of its terms; a unilateral assumption about what the document “must be” does not defeat enforcement.
- Contract terms are not invalid merely because they are severe or one-sided; absent a recognized defense, courts enforce agreements as written.
- The fact that a corporate officer (even one who is a nonpracticing attorney) discusses and obtains execution of a contract outside the presence of the other party’s attorney does not, by itself, establish fraud or invalidate the contract.

## Conclusion

In *Merit Music Service, Inc. v. Sonneborn*, the Court of Appeals of Maryland reversed an equity decree dismissing Merit’s suit to enforce a coin-operated machine leasing contract tied to a loan for a tavern purchase, holding that the evidence did not support the trial court’s finding of post-signature insertion of minimum-guarantee terms and reaffirming that parties with capacity who sign a written agreement without reading it remain bound absent fraud, duress, or mutual mistake.


Merit Music Service, Inc. v. Sonneborn, 225 A.2d 470, 245 Md. 213 (1967)