Franklin Nat. Bank v. Wall St. Commercial Corp.
| Decision Date | 15 November 1963 |
| Parties | FRANKLIN NATIONAL BANK, Plaintiff, v. WALL STREET COMMERCIAL CORPORATION, John DeLyra and Irwin J. Rosen, Defendants. |
| Court | New York Supreme Court |
Kaye, Scholer, Fierman, Hays & Handler, New York City, for plaintiff; Charles H. Cohen, New York City, of counsel.
Francis J. Alwill, New York City, for defendants.
This is a motion by plaintiff for summary judgment in an action to recover the unpaid balance of a promissory note, together with an attorneys' fee computed in the amount of 20% on such balance. The complaint also includes a cause of action to recover the amount by which the corporate defendant overdrew its bank account. The action is brought against the corporate maker of the note and the individual defendants who executed a guarantee of payment of the corporation's indebtedness to the bank.
The defense consists of an alleged oral assurance given to the defendants by a bank officer that the note would become due at the time a mortgage on premises owned by the corporation was closed, and for which the bank had issued a stand-by commitment. Assuming the truth of this statement, the plaintiff is nonetheless entitled to summary relief.
The plaintiff bank is the named payee of the note which is a demand instrument. The execution and delivery of the note and the guarantees are admitted. If the alleged oral agreement to postpone the due date of the note until the closing of the mortgage was actually made, the condition attaching to the note was a condition subsequent which cannot be used to vary the unconditional promise appearing on the face of the instrument (Ford v. Hahn, 269 App.Div. 436, 55 N.Y.S.2d 854). The alleged agreement, furthermore, is unenforcible. Public policy commands that a person executing a promissory note to a bank be estopped from asserting an oral agreement not to enforce it according to its terms (Manufacturers Trust Company v. Palmer, 13 A.D.2d 772, 215 N.Y.S.2d 840).
The plaintiff, however, is not entitled to summary judgment on the cause of action for attorneys' fees in the sum of $18,000. The insertion in a note of a provision for the payment of attorneys' fees is enforcible (Roe v. Smyth, 278 N.Y. 364, 16 N.E.2D 366, 117 A.L.R. 1232; Waxman v. Williamson, 256 N.Y. 117, 175 N.E. 534). However, the stipulated amount inserted in the instrument must be reasonable and undisputed to warrant summary relief (cf. Waxman...
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