American Bank & Trust Co. v. Lichtenstein

• Decision Date: 12 June 1975
• Citation: American Bank & Trust Co. v. Lichtenstein, 369 N.Y.S.2d 155, 48 A.D.2d 790 (N.Y. App. Div. 1975)
• Parties: AMERICAN BANK & TRUST COMPANY, Plaintiff-Appellant, v. Morton LICHTENSTEIN et al., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 155

369 N.Y.S.2d 155

48 A.D.2d 790

AMERICAN BANK & TRUST COMPANY, Plaintiff-Appellant, v. Morton LICHTENSTEIN et al., Defendants-Respondents.

Supreme Court, Appellate Division, First Department.

June 12, 1975.

J. Nespole, New York City, for plaintiff-appellant.

W. H. Mayer, New York City, for defendants-respondents.

Before MARKEWICH, J.P., and MURPHY, LUPIANO, TILZER and CAPOZZOLI, JJ.

PER CURIAM.

Order, Supreme Court, New York County, entered January 10, 1974, denying plaintiff's motion for summary judgment in lieu of complaint, unanimously reversed, on the law, and the motion granted. Appellant shall recover of respondent $60 costs and disbursements of this appeal.

Appeal from order of the Supreme Court, New York County, entered August 1, 1974, denying plaintiff's motion for reargument unanimously dismissed as non-appealable, without costs or disbursements (Sklan v. Sklan, 29 A.D.2d 526, 285 N.Y.S.2d 367; United Artists Television v. Quality Bakers of America Co-op, 27 A.D.2d 651, 276 N.Y.S.2d 385).

During the period of 1967 through 1970 plaintiff loaned to the defendant over $5 million. The loans were represented by promissory notes, payable on demand and in addition, each of the defendants executed written guarantees for payment to the plaintiff of the obligations of each of the other defendants. The record establishes that there is an outstanding balance with respect to the above loans of $504,013.81, plus interest. Indeed, on the motion for summary judgment, defendants did not deny that such sum was not repaid but instead, asserted numerous affirmative defenses. A review of the record, however, establishes that those defenses were patently insufficient and failed to raise triable issues of fact.

First, it is clear that the action was timely brought. In fact, most of the notes bear dates placing them will within the applicable period of limitations. And, those earlier notes to which the defense of the statute of limitations is apparently addressed, are no longer in issue since the debts underlying those notes have been extinguished as a result of plaintiff's having properly resorted to its contractual remedy and applying proceeds obtained from the sale of collateral to retire the earlier notes (Cf. House v. Carr, 185 N.Y. 453, 78 N.E. 171; Hulbert v. Clark, 128 N.Y. 295, 28 N.E. 638).

Second, the defense of usury is unavailable under these facts. The loans involved herein come within the scope of Banking Law § 108(3) and accordingly, are exempt from the usury laws. Even with respect to those individual notes which were for amounts of less than $5,000, the defense of usury is not applicable. It is clear that each note herein was part of a series of loans, evidenced by collateral promissory notes containing cross-collateralization provisions and therefore, each note became part of one entire loan exceeding $5,000, and within the above provision of the Banking Law (Irving Trust Co. v. Smith (D.C.N.Y.), 349 F.Supp. 146).

Third, the defense that the guarantees are not supported by consideration and therefore unenforceable is also without merit. The guarantees, which are in writing, were given upon the expressed pas consideration of 'any financial accommodations given', and therefore, come within General Obligations Law § 5--1105, and are enforceable (see Weyerhaeuser Co. v. Gershman (2nd Cir.), 324 F.2d 163).

Fourth, there is no merit to the defense of fraud in the inducement. That defense is based upon the allegation that an agent of the plaintiff initially informed the defendants that the account would be conducted or handled in the same manner and with 'the same protections that existed for (defendants) with a stockbroker. . . .' And, it is stated that whereas a stockbroker would have required sale of the...