Combine Intern. v. Berkley
| Citation | 141 A.D.2d 465,529 N.Y.S.2d 790 |
| Parties | , 8 UCC Rep.Serv.2d 64 COMBINE INTERNATIONAL, Plaintiff-Respondent, v. Arnold BERKLEY, also known as Buddy Berkley, Defendant-Appellant. |
| Decision Date | 30 June 1988 |
| Court | New York Supreme Court — Appellate Division |
T. LaGrotta, Little Neck, for plaintiff-respondent.
S.E. Tisman, New York City, for defendant-appellant.
Before MURPHY, P.J., and ROSS, CARRO, ASCH and ELLERIN, JJ.
Judgment, Supreme Court, New York County (Carmen Ciparick, J.) entered June 16, 1987, which granted plaintiff summary judgment in lieu of complaint in the total amount of $46,154.62 including interest, costs, and disbursements, unanimously reversed, on the law, and summary judgment denied, without costs. Plaintiff is directed to serve a complaint within 20 days of the service of this order, and defendant to serve his responsive papers within 20 days thereafter. The appeal from the Order of the same court, entered May 1, 1987, which granted the motion for summary judgment, is dismissed as subsumed in the appeal from the judgment without costs.
This is an action on four promissory notes given by Jablow Manufacturing Co., Inc. to Seema Gems, Inc. in payment for diamonds purchased for Jablow's jewelry business. Defendant Arnold Berkley was the president of Jablow and signed the notes. Plaintiff Combine International is another company engaged in the jewelry business and it purchased the notes at issue from Seema. When Combine presented the notes to Jablow's bank for payment, the bank refused to pay because Jablow's account was closed. Combine then brought this action to recover on the notes from Berkley individually.
Jablow issued the notes in connection with its purchase of diamonds from Seema on July 22, 1985 for a price of $40,707. Seema delivered the diamonds to Jablow and invoiced the corporation. In return, Jablow delivered to Seema four separate promissory notes in the aggregate amount of $40,707, each note payable on various days in January, 1986, six months in the future. The notes were in the name of the corporation, Jablow, but were signed by Berkley without identification of his representative capacity.
During the latter half of 1985, Jablow experienced severe cash shortages and disruptions of its business, eventually filing a Chapter 11 petition for bankruptcy in November 1985. Jablow asserts that its difficulties were well known in the tightly knit diamond industry and that Seema had specific actual notice of Jablow's financial difficulties, since after July 22, 1985 Jablow had difficulty paying another note to Seema and Seema refused to accept any further promissory notes from Jablow.
On September 16, 1985, Combine purchased from Seema the four notes here at issue, together with other notes due to Seema from other companies, for the net sum of $100,000 representing a discounted principal amount of the notes. Combine is a jewelry company located in Michigan owned by the uncle of the president of Seema. At one time, Seema was jointly owned by the uncle and nephew and had offices in Michigan and New York. In 1977, the uncle formed Cobmine to operate the Michigan business and the nephew operates the New York business under the Seema name. The New York address of Seema is listed by The Jewelry Board of Trade as a branch office of Combine.
In opposition to Combine's motion for summary judgment in lieu of complaint on the notes, defendant Berkley argued that the motion should be denied because he is not individually liable on the notes issued by the corporation, and that Combine is not a holder in due course.
In granting summary judgment to plaintiff, the motion court found that Combine made out a prima facie case by proof of the notes and the failure to make payments called for by their terms, and that the defendant had failed to come forward with sufficient evidentiary proof in support of his defenses.
We disagree and reverse, since we find that defendant did submit sufficient proof to raise triable issues of fact as to his defenses.
Under the UCC, a representative who signs his or her own name to an instrument is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative...
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