
USCA1 Opinion

	




        March 29, 1994          [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-2080                        FEDERAL DEPOSIT INSURANCE CORPORATION,                      AS RECEIVER OF BANK OF NEW ENGLAND, N.A.,                                 Plaintiff, Appellee,                                          v.                                  PAUL J. CHISHOLM,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                        Torruella and Boudin, Circuit Judges.                                              ______________                                 ____________________            Michael F. Gaffny on brief for Paul J. Chisholm.            _________________            David C. Aisenberg, Williams & Grainger, Margaret A. Burnham,             __________________  ___________________  ___________________        Kathleen C. Engel, and Burnham & Hines on brief for Federal Deposit        _________________      _______________        Insurance Corporation.                                 ____________________                                 ____________________                       Per  Curiam.   Paul Chisholm appeals  the district                       ___________             court's  denial of his Rule  60(b) motion for  relief from a             default  judgment entered  against him.   We  find that  the             district  court  did not  abuse  its  discretion in  denying             Chisholm's motion.  We therefore affirm its judgment.                                          I                       On February  4, 1987, Chisholm  signed a  personal             guaranty  of  all  present  and future  obligations  of  his             company, Sanborn  Wood Products, to Guaranty  Bank and Trust             Co.    Guaranty  later ceased  operation,  and  Bank of  New             England (BNE) assumed all of its rights and obligations.  On             February 5, 1988, Sanborn took out a $500,000 loan from BNE,             which was repayable "On  Demand."  The note stated  that the             loan  was "secured  by  Loan and  Security Agreements  dated             March 5, 1987 and  February 4, 1987 naming payee  as secured             party under its former name, Guaranty Bank & Trust Company."             Chisholm signed the note on behalf of Sanborn.                       On June 7, 1990, BNE demanded that Sanborn pay the             outstanding  balance of the loan  in full.   Six days later,             BNE filed suit against Sanborn and Chisholm in Massachusetts             state  court.  While the action was pending, BNE failed, and             the  FDIC   became  its   receiver.    FDIC   was  therefore                                         -2-                                          2             substituted as plaintiff in  the state court action,  and it             removed the action to federal court.                       The  district court  scheduled  a  trial date  for             October 14, 1992, and  rescheduled for July 6, 1993,  at the             parties' request.   Although the FDIC filed  an "Assented To             Motion   to  Continue   Trial,"   which  requested   another             continuance until September, the district court never  ruled             on the  motion.   Accordingly,  trial commenced  on July  6,             1993.  Chisholm did  not appear, apparently in the  mistaken             belief that the district court had rescheduled the trial for             September, and the court  entered a default judgment against             him for  the full amount  claimed.   In a margin  order, the             district  court denied Chisholm's  later request  for relief             from judgment.  Chisholm now appeals that denial.                                          II                       To obtain relief from a default judgment, Chisholm             must  show "both  a  good reason  for  the default  and  the                         ____                                    ___             existence  of  a meritorious  defense."    United States  v.                                                        _____________             Proceeds of Sale of 3,888 Pounds  Atlantic Sea Scallops, 857             _______________________________________________________             F.2d  46, 48 (1st Cir. 1988) (emphasis added).  Chisholm has             suggested two possible "meritorious defenses" that, he says,             warrant relief from  the default judgment.   First, he  says             that the note was "orally modified" so that it was no longer                                         -3-                                          3             payable  "On  Demand."   Second, he  says that  his personal             guaranty  applied  only  to  obligations  owed  directly  to                                ____             Guaranty Bank  and Trust, not  to any successor  in interest             such  as BNE or the FDIC.   We find that neither defense has             merit, and therefore  that the default judgment  need not be             set aside.                       "Agreements"  which tend  to "diminish  or defeat"             the FDIC's "interest" in "assets" acquired by it from failed             banking institutions are not  enforceable against the  FDIC,             unless  those  agreements  are,   among  other  things,  "in             writing."   12 U.S.C.    1823(e)(1).  This  rule, along with             the common law doctrine of D'Oench, Duhme & Co. v. FDIC, 315                                        ____________________    ____             U.S.   447  (1942),  protects   the  FDIC   against  "secret             agreements" which  might lead  it to  err in  evaluating the             worth  of   assets   it   acquires   from   failed   banking             institutions.    See, e.g.,  Langley  v. FDIC,  484  U.S. 86                              ___  ____   _______     ____             (1987); Timberland Design v. First Service Bank for Savings,                     _________________    ______________________________             932  F.2d 46  (1st Cir.  1991).   Because the  alleged "oral             agreement" modifying the note's payment terms obviously does             not meet  the statute's requirements, it  cannot be enforced             against  the FDIC,  so it  does not  provide a  "meritorious             defense" to the FDIC's action.                                         -4-                                          4                       Chisholm's   second   argument   focuses  on   the             guaranty's   language.     The   guaranty   says   that   it             "guarantee[s]  to   you  [Guaranty   Bank  &   Trust],  your             successors and assigns, full  and prompt payment at maturity             of all  present and  future obligations  of the  Borrower to             you,  including  all  renewals  and  extensions  thereof  or             substitutions therefor."  Chisholm argues that the  guaranty             applies only to obligations which originally ran to Guaranty                     ____             Bank  &  Trust itself,  because  the  words "successors  and                            ______             assigns" appear in  the "guarantees to  you" clause but  not             the "obligations of the  Borrower to you" clause.   That is,             he argues that because the loan at issue here came from BNE,             not from Guaranty Bank  & Trust (which no longer  existed at             the time), the guaranty does not apply.                       We  do not think this is a sensible reading of the             language.   The obvious reading  of the guaranty  is that it             applies  to  all  present  and future  obligations  owed  by             Sanborn to Guaranty or to Guaranty's successors and assigns.             The fact that  the BNE note  (signed by Chisholm)  expressly             incorporated the  guaranty,  and described  the guaranty  as             running  to  "payee  [BNE] .  .  .  under  its former  name,             Guaranty Bank  &  Trust  Company,"  supports  this  reading.             Chisholm has not pointed us to any authority for reading the                                         -5-                                          5             guaranty in the hypertechnical  manner he suggests, nor have             we  found any.   Moreover,  Chisholm  has suggested  no good             reason  why he  would  be willing  to  secure his  company's             obligations to a particular bank, but would be unwilling  to             secure obligations to that  bank's successor in interest; at             the  very least,  if  such a  distinction were  intended, we             should  expect to  find language  that explicitly  made that             distinction,  rather   than   boilerplate  language   in   a             preprinted  guaranty form,  the  natural  reading  of  which             suggests the opposite.  We therefore  find that Chisholm has             failed  to present a "meritorious defense."  That failure is             sufficient  to   preclude  us  from  finding   an  abuse  of             discretion in  the district court's refusal  to grant relief             from the default.   3,888 Pounds Atlantic  Sea Scallops, 857                                 ___________________________________             F.2d at 48-49.                       Affirmed.                       _________                                         -6-                                          6
