American Exp. Bank Ltd. v. Uniroyal, Inc.

• Decision Date: 06 December 1990
• Citation: 164 A.D.2d 275,562 N.Y.S.2d 613
• Parties: AMERICAN EXPRESS BANK LTD., Plaintiff-Appellant, v. UNIROYAL, INC., Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 613

562 N.Y.S.2d 613

164 A.D.2d 275

AMERICAN EXPRESS BANK LTD., Plaintiff-Appellant, v. UNIROYAL, INC., Defendant-Respondent.

Supreme Court, Appellate Division,

First Department.

Dec. 6, 1990.

Leo T. Crowley, of counsel (Elaine M. Laflamme, with him, on the brief; Winthrop, Stimson, Putnam & Roberts, New York City, attorneys), for plaintiff-appellant.

Joseph P. Moodhe, of counsel (Debevoise & Plimpton, New York City, attorneys), for defendant-respondent.

Before ROSS, J.P., and ROSENBERGER, ASCH, KASSAL and WALLACH, JJ.

ASCH, Justice.

Defendant Uniroyal, Inc., entered into an agreement on October 22, 1981 to sell accounts receivable in Turkey to plaintiff American Express Bank, Ltd. Uniroyal contracted to sell the right to receive payment for three types of accounts receivable satisfied by three different currencies, U.S. dollars, Deutsche marks and pounds sterling. This case involves only the dollar denominated account receivable. The amount set forth in the agreement for "Dollar Accounts Receivable" was $1,979,469.50. American Express agreed to purchase these accounts (and the Deutsche mark and pound sterling accounts receivable) at a price in U.S. dollars equal to 40% of their face value. As part of the agreement, Uniroyal warranted, inter alia, that "(i) it has legal and marketable title to the Accounts Receivable ... (iii) the Accounts Receivable being assigned to Buyer are good, valid and subsisting Accounts Receivable which are eligible and qualified ... for transfer, (iv) as to those Dollar Accounts Receivable which originally constituted foreign currency claims, SELLER duly elected ... to receive payment in U.S. dollars, such election remains in full force and effect and SELLER is entitled to receive a total of U.S. $1,979,469.50 for the Dollar Accounts Receivable; and with respect to all of the Accounts Receivable, SELLER is entitled, on and as of October 21, 1981, to elect to receive payment on the Accounts Receivable in the Turkish Lira equivalent of the face amounts thereof...."

Prior to entering this agreement, Uniroyal had elected under Turkish law to convert certain of the obligations underlying the Accounts Receivable from Dutch guilders and Belgian francs into U.S. dollars.

Contrary to expectations, the Turkish Central Bank did not convert the Dollar Accounts Receivable directly into Turkish lira for the full amount of $1,979,469.50. The bank differentiated those dollar sums as to their sources and converted the amounts which came from Dutch guilders and Belgian francs into lira directly from those currencies rather than from U.S. dollars causing a shortfall in the Dollar Accounts Receivable.

The parties agree that there is no issue of fact. The only issue is the interpretation of the phrase "face amount". If the phrase refers to accounts receivable in U.S. dollars, then Uniroyal was never entitled to receive the Turkish lira equivalent of the U.S. dollar amount, the warranty was not true and Uniroyal is liable under the express covenant. If the phrase "face amount" refers to Dutch guilder and Belgian franc amounts, then the warranty is true, and Uniroyal is not liable.

In interpreting a contract, the intent of the parties governs (Sheets v. Sheets, 22 A.D.2d 176, 180, 254 N.Y.S.2d 320). A contract should be construed so as to give full meaning and effect to all of its provisions (Trump-Equitable Fifth Ave. Co. v. H.R.H. Construction Corp., 106 A.D.2d 242, 244, 485 N.Y.S.2d 65 aff'd., 66 N.Y.2d 779, 497 N.Y.S.2d 369, 488 N.E.2d 115; Integretated Sales v. Maxwell Corp. of America, 94 A.D.2d 221, 227, 463 N.Y.S.2d 809). Words and phrases are given their plain meaning (Mazzola v. County of Suffolk, 143 A.D.2d 734, 735, 533 N.Y.S.2d 297). Rather than rewrite an unambiguous agreement, a court should enforce the plain meaning of that agreement (see, CCG Associates I v. Riverside Associates, 157 A.D.2d 435, 440, 556 N.Y.S.2d 859).

Where the intent of the parties can be determined from the face of the agreement, interpretation is a matter of law and the case is ripe for summary judgment (Pharmaceutical Horizons v. Sterling Drug, 127 A.D.2d 514, 515, 512 N.Y.S.2d 30, mot. for lv. dismd., 69 N.Y.2d 984, 516 N.Y.S.2d 1027, 509 N.E.2d 362; Levin v. Hoffman Fuel Co., 94 A.D.2d 640, 641, 462 N.Y.S.2d 195, aff'd., 60 N.Y.2d 665, 468 N.Y.S.2d 104, 455 N.E.2d 663). On the other hand, if it is necessary to refer to extrinsic facts, which may be in conflict, to determine the intent of the parties, there is a question of fact, and summary judgment should be denied (IBM Credit Financing Corp. v. Mazda Motor Mfg., [USA] Corp., 152 A.D.2d 451, 542 N.Y.S.2d 649; Leighton's Inc. v. Century Circuit, 95 A.D.2d 681, 463 N.Y.S.2d 790; Integrated Sales, supra, 94 A.D.2d at 227, 463 N.Y.S.2d 809).

Uniroyal argues, and the IAS court agreed, that the phrase "face amounts" refers to amounts in Belgian francs and Dutch guilders. However, this interpretation was reached only with reference to extrinsic facts, i.e. the terms of the Turkish supplemental decree, which is de hors the record, and which appears to have been quoted only in part in a memorandum submitted at nisi prius. Uniroyal also presents extrinsic matter, i.e., its contract counsel's factual allegations as...