A. Alport & Son, Inc. v. Hotel Evans, Inc.

• Decision Date: 02 November 1970
• Citation: 317 N.Y.S.2d 937,65 Misc.2d 374
• Court: New York Supreme Court
• Parties: , 8 UCC Rep.Serv. 1040 A. ALPORT & SON, INC., Plaintiff, v. HOTEL EVANS, INC. and Morton Cherlin, Defendants.

Page 937

317 N.Y.S.2d 937

65 Misc.2d 374, 8 UCC Rep.Serv. 1040

A. ALPORT & SON, INC., Plaintiff, v. HOTEL EVANS, INC. and Morton Cherlin, Defendants.

Supreme Court, Special Term, Sullivan County.

Nov. 2, 1970.

[65 Misc.2d 375] Baum & Gersten, Monticello, for plaintiff.

Weinsoff, Weinsoff & Weinsoff, Ellenville, for defendants.

MEMORANDUM

JOHN T. CASEY, Justice.

The plaintiff, A. Alport & Son, Inc., has moved this court pursuant to CPLR 3213 for an order granting it summary judgment against the defendants, Hotel Evans, Inc. and Morton Cherlin.

The plaintiff and defendant corporation, Hotel Evans, Inc., entered into an agreement whereby the plaintiff would supply certain plumbing fixtures and materials for the alteration and construction of approximately twelve rooms at Hotel Evans, Inc. The defendant corporation agreed, as part of the payment schedule for such items, to execute and deliver certain promissory notes. Furthermore, the individual defendant, Morton Cherlin, the president of Hotel Evans, Inc. agreed to and did personally endorse the notes. For a considerable period of time plaintiff supplied and the defendant corporation accepted the fixtures and materials. The notes, however, were returned to plaintiff upon the ground that the defendant corporation lacked sufficient funds. The plaintiff now seeks judgment for the amount of the notes with interest, costs and attorney's fees.

In opposition to the motion, the defendants have set forth several claims: (1) the merchandise delivered was defective in that some of the fixtures were of improper color and that some of the fittings were of improper size; (2) in light of the defective condition of the merchandise the plaintiff agreed to make an adjustment in price, and further agreed to refrain from negotiating the notes until such an agreement had been made; (3) the defendant corporation was compelled to expend a substantial amount of money to remedy such defects and will enter a counter-claim in this action for an amount in excess of the relief sought by plaintiff; (4) the promissory notes are defective and, therefore, a motion under CPLR 3213 is improper.

The defendants make two claims concerning the form of the instruments. They claim one note (the note for $1600.00) contained an indefinite interest rate, and therefore, was not a negotiable instrument. The note contained the notation 'with interest at bank rates'. The requirements for a negotiable instrument are set forth in Section 3--104 of the Uniform Commercial Code, which provides in pertinent part: Any writing to be a negotiable instrument within this Article must

(b) contain an unconditional promise or order to pay a sum certain in money * * *.

An instrument which recites 'interest is payable at the current rate' fails to contain a promise to pay a sum certain. U.C.C. § 3--106, Official Comment.; c.f. Woodhouse, Drake & Carey, Ltd. v. Anderson, 61 Misc.2d 951, 952, 307 N.Y.S.2d 113. A non-negotiable instrument, however, may qualify as an 'instrument for the payment of money only' under CPLR 3213. Louis Sherry Ice Cream Co. v. Kroggel, 42 Misc.2d 21, 245 N.Y.S.2d 755. An instrument satisfied the requirements of that section if it constitutes a clear, unequivocal, unconditional promise for the payment of money only. Instituto Per Lo Sviluppo Economico Dell'Italia Meridionale v. Sperti Products, Inc., D.C., 47 F.R.D. 314. ¹

In the instant case the promise to pay is clear and unequivocal and the only facts which must be established outside the instrument is the amount of the bank interest rate at the time of the note. The need to establish such a fact does not compel the conclusion that the instrument fails to fall within CPLR 3213. See Seaman-Andwall Corp. v. Wright Machine Corp., 31 A.D.2d 136, 295 N.Y.S.2d 752; Koegel v. Birnbaum, 27 A.D.2d 653, 278 N.Y.S.2d 177, aff'd, 19 N.Y.2d 896, 281 N.Y.S.2d 89, 227 N.E.2d 887; Wagner v. Cornblum, 62 Misc.2d 161, 308 N.Y.S.2d 495; Paul v. Weiss, 48 Misc.2d 683, 265 N.Y.S.2d 687; c.f. New York Conference Ass'n of Seventh Day Adventists of Syracuse v. 915 James St. Assoc., 63 Misc.2d 38, 310 N.Y.S.2d 742; but see Mike Nasti Sand Co. v. Almar Landscaping Corp., 34 A.D.2d 554, 309 N.Y.S.2d 697; Orenstein v. Orenstein, 59 Misc.2d 565, 299 N.Y.S.2d 648. Accordingly, although the defendants are correct in claiming that the note is not a negotiable instrument, the instrument qualifies as an instrument for the payment of money only, and, therefore, is a proper predicate for a motion under CPLR 3213.

As to the note for $900.00, the defendants maintain it 'shows an alteration in the interest rate without any initialing thereon by the maker'. The note is a form upon which the pertinent information has been typewritten. On the portion of the note concerning interest, the words 'bank rates' have been typewritten and underneath those words the number '8 1/2' has been handwritten. The note, as did the other note, also contains other handwritten numbers which presumably were placed thereon by the bank when it computed the interest due. Furthermore, the second note was executed approximately one month after the first and it is improbable that plaintiff would have written 'bank rates' on one note and 'bank rates' and later have handwritten '8 1/2' on the other. Finally, the plaintiff is in a position to state what it did concerning this issue and it has failed to come forward with any explanation. I assume, therefore, that the handwritten '8 1/2' was added to the note by the bank. Thus the instrument originally called for interest at 'bank rates'. Consequently, for the reasons already set forth the instrument is not a negotiable instrument. This being so, I need not consider whether the instrument was altered. This instrument, like the other instrument, however, is sufficient for a motion under CPLR 3213.

Since the instruments fail to qualify as negotiable instruments, the sections of the U.C.C. concerning the liability of an endorser can be applied, if at all, by analogy only. At the time the individual defendant signed the instruments he concededly intended to accept the status of an accommodation endorser. Accordingly, I will treat him as such. Similarly, at the time he executed the instruments by his own admission he...