Alleged forged signature on an agreement: Still enforceable? Yes, if you accept the equipment and make payments, says Iowa Supreme Court

by Rox Laird | March 16, 2021

An equipment financing agreement was legally ratified by the lessee after it took possession of business equipment and made seven monthly payments before attempting to cancel the agreement, the Iowa Supreme Court ruled March 12.

The opinion in Great America Financial Services Corp. v. Natalya Rodionova Medical Care for a unanimous Court was written by Justice Brent Appel. [Disclosure: Plaintiff-appellee GreatAmerica Financial Services was represented in this case by Nyemaster Goode attorneys Randall Armentrout and Leslie Behaunek.]

GreatAmerica Financial Services Corporation (“GreatAmerica”) sought further review of an April 1, 2020, Iowa Court of Appeals ruling reversing and remanding a Linn County District Court decision granting GreatAmerica’s motion for summary judgment on its claim that Natalya Rodionova Medical Care (“NRMC”) violated an equipment-financing agreement with GreatAmerica by defaulting on the monthly payments.

The Supreme Court vacated the Court of Appeals ruling and affirmed the District Court.

A vendor provided two copy machines and a telephone system for New York medical provider NRMC under an equipment finance agreement.  The vendor sent the agreement, which bore the signature of “Natalia Rodionova” to Cedar Rapids-based GreatAmerica, who verified with NRMC that the equipment had been delivered. GreatAmerica then provided the financing and began sending monthly invoices to NRMC requesting payment under the “Agreement.”  NRMC returned a check on which was written the invoice number and agreement number.  NRMC made seven total monthly payments to GreatAmerica, before defaulting.

GreatAmerica argued the agreement was noncancelable under a “hell-or-high-water” clause, which said in part: “This agreement is noncancelable for the entire agreement term. You understand we are paying for the equipment based on your unconditional acceptance of it and your promise to pay us under the terms of this agreement . . . .”

NRMC argued that the provision was not enforceable because Dr. Natalya Rodionova said the equipment vendor forged her signature on the financing agreement, which she said she had never read or seen.  The Supreme Court disagreed. Adopting Restatement (Third) of Agency § 4.06 comment d, the Court held NRMC ratified the agreement despite the forgery allegation by taking possession of the equipment without attempting to reject and making seven monthly payments to GreatAmerica.

“We recognize that questions regarding acceptance, rejection, and ratification often raise factual issues that preclude summary judgment,” Appel wrote. “But here, on the undisputed facts, NRMC had possession of the equipment and paid invoices over a seven-month period.”

Appel wrote that the hell-or-high water provision of the finance agreement took effect upon NRMC’s acceptance of the equipment, at which point it was obligated to pay under terms of the agreement. Nor could NRMC claim the provision was unenforceable with its argument that it had not received a copy of the agreement prior to commencement of GreatAmerica’s civil action.

“Billing statements sent to NRMC, while they did not contain the full contract terms, made reference to an agreement number that NRMC could have investigated,” Appel wrote. “And, any reasonable business would have investigated in such a scenario before making the number of payments that NRMC made. Therefore, even if NRMC did not have actual knowledge of the specific hell or high water provision, NRMC accepted the contract terms through its ratification.”


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