First American Bank of New York v. Builders Funding Corp.

• Decision Date: 27 January 1994
• Parties: FIRST AMERICAN BANK OF NEW YORK, Respondent, v. BUILDERS FUNDING CORPORATION et al., Defendants, and Frank E. Himes, III, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 460

607 N.Y.S.2d 460

200 A.D.2d 946

FIRST AMERICAN BANK OF NEW YORK, Respondent, v. BUILDERS FUNDING CORPORATION et al., Defendants and Frank E. Himes, III, Appellant.

Supreme Court, Appellate Division Third Department.

Jan. 27, 1994.

Martin, Shudt, Wallace, Di Lorenzo, Copps & Johnson (Jaime B. Thomas, of counsel), Troy, for appellant.

Cooper, Erving, Savage, Nolan & Heller (Justin A. Heller, of counsel), Albany, for respondent.

Before CARDONA, P.J., and MERCURE, CASEY, WEISS and YESAWICH, JJ.

YESAWICH, Justice.

Appeal from an order of the Supreme Court (Conway, J.), entered May 4, 1993 in Albany County, which, inter alia, granted plaintiff's motion for summary judgment against defendant Frank E. Himes, III.

Plaintiff brought this action to recover on a note made by defendant Builders Funding Corporation (hereinafter the corporation) and on guarantees of payment executed by various defendants, including one signed by defendant Frank E. Himes, III. At issue is the propriety of Supreme Court's determination granting summary judgment against Himes and the denial of the latter's motion to compel discovery. Himes appeals.

The underlying facts are as follows. Himes, who at the time was president of the corporation, signed an "irrevocable and continuing" guarantee of corporate debt on August 1, 1988; in his capacity as corporation president, Himes also signed a "credit facility note" opening a $100,000 credit line on behalf of the corporation on August 26, 1988. By September 8, 1988 the entire $100,000 had been advanced to the corporation. Approximately two weeks later, Himes resigned as president.

Interest payments were made but the full principal of the loan, which was payable on plaintiff's demand, remained outstanding until May 10, 1991, when plaintiff demanded that it either be paid in full or that monthly principal payments be commenced. The corporation elected the latter option, but defaulted after several payments. In September 1992, plaintiff demanded payment in full of the approximately $54,000 which remained outstanding; the guarantors were also notified of this demand. When payment was not forthcoming, plaintiff instituted this action. Since that time several of the guarantors have made partial payments, reducing the principal still due to $27,580.80.

Himes does not deny signing the note and guarantee or that $100,000 was disbursed to the corporation. Neither does he deny that the corporation has defaulted on its obligation, nor that the amount noted remains unpaid. Rather, in an attempt to raise an issue of fact, Himes asserts that the note and guarantee have been altered since he left the corporation, that the corporation itself has been changed to such an extent that it is not the same entity whose debts he guaranteed, and that there was no consideration for the guarantee. However, a reading of Himes' submissions, together with the terms of the guarantee itself, reveals no specific factual allegation which would, if proven, provide a defense to plaintiff's claim; nor has he demonstrated that the discovery he seeks is anything more than a "fishing expedition".

Although Himes claims that the note and guarantee were modified, he does not specify what changes were made, nor does he claim that the alterations--if there were any--were fraudulent (see, UCC 3-407), or that plaintiff's...