Fleck v. Bank of Suffolk County, 1

• Decision Date: 15 January 1979
• Docket Number: No. 2,No. 1,1,2
• Citation: 412 N.Y.S.2d 177,67 A.D.2d 676
• Parties: Edwin FLECK et al., Respondents, v. BANK OF SUFFOLK COUNTY, Appellant. (Action) BANK OF SUFFOLK COUNTY, Appellant, v. Edwin FLECK et al., Respondents. (Action)
• Court: New York Supreme Court — Appellate Division

Page 177

412 N.Y.S.2d 177

67 A.D.2d 676

Edwin FLECK et al., Respondents, v. BANK OF SUFFOLK COUNTY, Appellant. (Action No. 1)

BANK OF SUFFOLK COUNTY, Appellant, v. Edwin FLECK et al., Respondents. (Action No. 2)

Supreme Court, Appellate Division, Second Department.

Jan. 15, 1979.

Sahn, Shapiro & Epstein, New York City (Morris Shapiro and Jerome M. Luks, New York City, of counsel), for appellant.

Harold L. Fisher, Brooklyn, for respondents.

Before O'CONNOR, J. P., and GULOTTA, COHALAN and MARGETT, JJ.

MEMORANDUM BY THE COURT.

In consolidated actions involving the enforcement of an unpaid promissory note, the Bank of Suffolk County appeals from an order of the Supreme Court, Kings County, entered February 16, 1978, which, Inter alia, denied it summary judgment.

Order reversed, on the law, with $50 costs and disbursements, and summary judgment is granted to the Bank of Suffolk County.

Appellant made a loan to respondents in the sum of $400,000. The note evidencing this loan contained a clause whereby those receiving the loan waived all defenses. Respondents now claim that the note was not to become effective unless they first received a mortgage from another bank. In fact, the note was intended to conceal appellant's participation in a building loan. "Public policy requires that a person who, for the accommodation of the bank, executes an instrument which is in form a binding obligation, should be estopped from thereafter asserting that simultaneously the parties agreed that the instrument should not be enforced" (Mount Vernon Trust Co. v. Bergoff, 272 N.Y. 192, 196, 5 N.E.2d 196, 197).

The case of Long Is. Trust Co. v. International Inst. for Packaging Educ., 38 N.Y.2d 493, 381 N.Y.S.2d 445, 344 N.E.2d 377, cited by Special Term, is inapplicable to the facts of this case, in that Long Is. Trust In no way involved an attempt to conceal the financial situation of the parties. Furthermore, the absolute waiver of defenses set forth in the note is substantially similar to an unconditional guarantee to repay a note, and parol evidence is therefore inadmissible to establish conditional delivery because such evidence would contradict the express terms of the written agreement (see Meadow Brook Nat. Bank v. Bzura, 20 A.D.2d 287, 246 N.Y.S.2d 787).

O'CONNOR, J. P., and COHALAN and MARGETT, JJ., concur.

GULOTTA, Justice, concurs in the result, with the following memorandum:

Assuming, Arguendo, the truth of the allegations made by respondent Edwin Fleck in opposition to the appellant bank's motion for accelerated judgment, it would appear that the parol evidence to be offered at trial could serve to support Fleck's claim that the $400,000 demand note which was executed in favor of the bank was never intended to be enforceable per se, but was intended rather to conceal the further participation of the bank in a building loan mortgage covering the financially troubled Parr Meadows Racetrack. Thus, according to Mr. Fleck, he agreed with an official of the Bank of Suffolk County that Fleck's corporation (Mortgagee Affiliates Corp. (hereinafter MAC)) would act as the bank's nominee to subscribe to the building loan mortgage to the extent of an additional $400,000, which sum was to be furnished to MAC by the appellant bank. In return, a demand note for $400,000 was executed and delivered to the bank subject to a condition precedent, i. e., that the note would only become enforceable in the event that the anticipated permanent mortgage lender,...