Bankers Trust Co. of Western New York v. Zecher
| Decision Date | 15 April 1980 |
| Citation | 103 Misc.2d 777,426 N.Y.S.2d 960 |
| Parties | , 29 UCC Rep.Serv. 323 BANKERS TRUST COMPANY OF WESTERN NEW YORK (formerly Banker's Trust Co. of Rochester), Plaintiff, v. Robert F. ZECHER, Ronald E. Raymer and William A. Rolston, Defendants. Robert E. ZECHER, Ronald E. Raymer and William A. Rolston, Third Party Plaintiffs, v. Ruth E. HILFIKER, Third Party Defendant. |
| Court | New York Supreme Court |
On July 24, 1975 plaintiff Bankers Trust Company of Western New York (formerly Banker's Trust Company of Rochester) entered into an equipment security agreement with Roseberry Inn, Inc. for the purpose of securing loans totalling $30,000 which were deposited by Bankers Trust into Roseberry Inn's corporate checking account as follows: $500 on July 24, 1975; $5,000 on September 30, 1975; $19,500 on February 13, 1976; and $5,000 on May 17, 1976. The agreement was filed in the Wayne County Clerk's Office on July 31, 1975 and with the Secretary of State on August 5, 1975.
On October 1, 1977 Roseberry Inn, Inc. defaulted on the loans and the sum of $11,136.31 plus interest became due and owing plaintiff.
The security agreement covered certain restaurant equipment which was placed in a building located at the intersection of Route 104 and Pratt Road in Sodus, New York, for a time operated as the Roseberry Inn. These premises were owned by Harry Chudnofsky, President of Roseberry Inn, Inc.
On or about January 13, 1978 defendants Robert F. Zecher, Ronald E. Raymer and William A. Rolston bought the premises in question, including the equipment, at a mortgage foreclosure sale. The mortgage had been held by defendant Ruth E. Hilfiker.
On October 6, 1978 and again on December 8, 1978 plaintiff Bankers Trust demanded of defendants Zecher, Raymer and Rolston that it be permitted to repossess the restaurant equipment, but these defendants refused. Plaintiff thereafter instituted this suit alleging conversion and unjust enrichment and demanding the sum of $11,136.31 plus interest from October 1, 1977 in damages.
Defendants Zecher, Raymer and Rolston raise four affirmative defenses as follows: 1) that the plaintiff acquired no interest in the equipment covered by the security agreement because it was not owned by Roseberry Inn, Inc. but by Harry Chudnofsky, individually; 2) that the plaintiff acquired no interest in the equipment because Roseberry Inn, Inc. was not a legally existing entity at the time the security agreement was entered into as it had not yet filed a certificate of incorporation with the Secretary of State; 3) that the plaintiff's security interest is defective in that the financing statement did not comply with Section 9-402 of the Uniform Commercial Code because it did not list Harry Chudnofsky, individually, as the debtor; and 4) that the financing statement is void in that it did not identify the collateral with sufficient particularity to put the public on notice as to the extent of the security interest claimed by plaintiff. In addition, defendants Zecher, Raymer, and Rolston cross-claim against defendant Hilfiker on the grounds that she misrepresented to them at the time of the mortgage foreclosure sale that all of the restaurant equipment was included, subject only to the interest of Cable-Wiedemer, Inc., which had sold or leased certain other restaurant equipment to Chudnofsky.
Plaintiff Bankers Trust now moves for summary judgment on its complaint against defendants Zecher, Raymer and Rolston. Defendants Zecher, Raymer and Rolston cross-move for summary judgment against plaintiff.
With respect to defendants' second affirmative defense, section 403 of the Business Corporation Law provides that "(u)pon the filing of the certificate of incorporation by (sic ) the department of state, the corporate existence shall begin . . . ." It is undisputed that the certificate of incorporation of Roseberry Inn, Inc. was executed on July 24, 1975, the same date the equipment security agreement was entered into and the first advance made, but that the certificate was not filed with the State until July 30, 1975.
Plaintiff argues nonetheless that the doctrine of de facto corporations is applicable here.
It has long been held that in order to establish the existence of a de facto corporation it is necessary to show that there is a law under which the corporation might be organized, an attempt to organize the corporation, and an exercise of corporate powers thereafter (Von Lengerke v. City of New York, 150 App.Div. 98, 102, 134 N.Y.S. 832, affd. 211 N.Y. 558, 105 N.E. 1101; Matter of Planz (Sees), 282 App.Div. 552, 553, 125 N.Y.S.2d 750). It is said that without a "colorable attempt" to comply with the statutory requirements there can be no de facto corporation (Kiamesha Development Corp. v. Guild Properties, 4 N.Y.2d 378, 388, 175 N.Y.S.2d 63, 151 N.E.2d 214), but "where there has been an attempt in good faith to comply with the requirements of the law with respect to filing a certificate of incorporation and a certificate has been filed in one or more of the places required by law, and there has been user of the corporate name, the corporation will be deemed a corporation de facto " (Stevens v. Episcopal Church History Co., 140 App.Div. 570,...
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