Friends Lumber Inc. v. Cornell Development Corp.

• Citation: 663 N.Y.S.2d 327,243 A.D.2d 886
• Parties: , 1997 N.Y. Slip Op. 8556 FRIENDS LUMBER INC., Respondent, v. CORNELL DEVELOPMENT CORPORATION et al., Appellants.
• Decision Date: 16 October 1997
• Court: New York Supreme Court Appellate Division

Page 327

663 N.Y.S.2d 327

243 A.D.2d 886, 1997 N.Y. Slip Op. 8556

FRIENDS LUMBER INC., Respondent, v. CORNELL DEVELOPMENT CORPORATION et al., Appellants.

Supreme Court, Appellate Division Third Department.

Oct. 16, 1997.

Tobin & Dempf (R. Christopher Dempf, of counsel), Albany, for appellants.

McNamee, Lochner, Titus & Williams P.C. (Kevin Laurilliard, of counsel), Albany, for respondent.

Before CREW, J.P., and WHITE, YESAWICH, SPAIN and CARPINELLO, JJ.

CARPINELLO, Justice.

Appeal from a judgment of the Supreme Court (Lynch, J.), entered March 20, 1996 in Schenectady County, which granted plaintiff's motion for summary judgment in lieu of complaint.

From 1987 through 1994 defendant Cornell Development Corporation purchased lumber from plaintiff in conjunction with a residential real estate project. In 1989, Cornell Development's accounts payable to plaintiff began to increase and by 1992 the outstanding debt was quite substantial. Between 1992 and June 1993, efforts were made between the parties to resolve the issue of payment on the outstanding account, to no avail. During this time period, Cornell Development continued to purchase lumber from plaintiff.

By letter dated June 2, 1993, defendant Peter J. Cornell, president of Cornell Development, proposed that promissory notes be executed to pay the outstanding debt. Thereafter, on June 16, 1993, two promissory notes in the amount of $305,457.56 and $20,000, respectively, were signed by Cornell personally and as president of Cornell Development. The promissory notes were "[f]or value received" and were to be paid in full on or before June 15, 1994. Each contains a clause providing that the note cannot be changed or terminated orally. After defendants failed to pay the amounts due by June 15, 1994, plaintiff moved, pursuant to CPLR 3213, for summary judgment in lieu of complaint. Defendants opposed the motion claiming as affirmative defenses that consideration for the notes was lacking, that the notes were signed as a result of fraudulent misrepresentations made by plaintiff's officers and agents and that Cornell was forced to sign the notes under economic duress. In addition to these affirmative defenses, several counterclaims were interposed for breach of various warranties and negligence in conjunction with the lumber sold. Supreme Court granted plaintiff's motion, prompting this appeal.

As instruments for the payment of money only, the promissory notes are entitled to the expedited procedure outlined in CPLR 3213 (see, R-H-D Constr. Co. v. Miller, 222 A.D.2d 802, 803, 634 N.Y.S.2d 846; Lavelle v. Urbach, Kahn & Werlin, 198 A.D.2d 751, 604 N.Y.S.2d 614). The prima facie case proven by plaintiff--demonstration of the execution of the notes and defendants' default in payment (see, Seaman-Andwall Corp. v. Wright Mach. Corp., 31 A.D.2d 136, 295 N.Y.S.2d 752, affd. 29 N.Y.2d 617, 324 N.Y.S.2d 410, 273 N.E.2d 138)--can be defeated only by proof demonstrating the existence of a triable issue of fact with respect to a bona fide defense (see, Lavelle v. Urbach, Kahn & Werlin, supra ). Defendants have failed in this regard.

It is beyond contradiction that the promissory notes relate to defendants' antecedent obligations to plaintiff for lumber purchases. Accordingly, the failure of consideration defense cannot be considered a "bona fide" defense barring the CPLR 3213 motion (see, McCarthy v. Sessions, 170 A.D.2d 25, 572 N.Y.S.2d 749; Crumbliss v. Swerdlow, 158 A.D.2d 502, 551 N.Y.S.2d 265, lv. denied 75 N.Y.2d 710, 556 N.Y.S.2d 532, 555 N.E.2d 929; Perlstein v. Kullberg Amato Picacone/ABP, 158 A.D.2d 251, 252, 550 N.Y.S.2d 883; Tabor v. Logan, 114 A.D.2d 894, 495 N.Y.S.2d 67; see also, UCC 3-303[b]; 3-408).

Cornell claims that he was fraudulently induced into executing the notes based upon oral representations by plaintiff's officers and agents that the one-year term would not be enforced. With respect to this affirmative defense, we note several points. First, evidence in support of this claim is limited to Cornell's own general and unsubstantiated allegations (cf., Amirana v. Howland, 202 A.D.2d 783, 785, 609 N.Y.S.2d 96). Moreover, the execution of promissory notes was proposed by Cornell, an experienced business person, and he was responsible for drafting them (see, Chimart Assocs. v. Paul, 66 N.Y.2d 570, 571, 498 N.Y.S.2d 344, 489 N.E.2d 231; Keeseville Natl. Bank v. Gulati, 194 A.D.2d 970, 971, 599 N.Y.S.2d 175, lv. denied 82 N.Y.2d 663, 610 N.Y.S.2d 151, 632 N.E.2d 461). Finally, and most importantly, Cornell's claim in this regard is inconsistent with the unambiguous terms of the promissory notes themselves (see, Keeseville Natl. Bank v. Gulati, supra ) and therefore is barred by the parol evidence rule (see, Falco v. Thorne, 225 A.D.2d 582, 639 N.Y.S.2d 106; DH Cattle Holdings Co. v. Reno, 196 A.D.2d 670, 673, 601 N.Y.S.2d 714; National Bank of N.Y. City v. ESI Group, 167 A.D.2d 453, 454, 562 N.Y.S.2d 136; Benderson Dev. Co. v. Hallaway Props., 115 A.D.2d 339, 495 N.Y.S.2d 820, affd. 67 N.Y.2d 963, 502 N.Y.S.2d 1001, 494 N.E.2d 106).

Nor are defendants' vague and conclusory assertions of economic duress sufficient to defeat the motion. The alleged threat by plaintiff's officers and agents that plaintiff would sue defendants for the outstanding debt if Cornell did not sign the notes does not constitute economic duress and is therefore not a bona fide defense to the claim (cf., Sosnoff v. Carter, 165 A.D.2d 486, 568 N.Y.S.2d 43). The existence of economic duress is demonstrated by proof that one party to a contract has threatened to breach the contract by withholding performance unless the other party agrees to some further demand (see, 805 Third Ave. Co. v. M.W. Realty Assocs., 58 N.Y.2d 447, 461 N.Y.S.2d 778, 448 N.E.2d 445; Austin Instrument v. Loral Corp., 29 N.Y.2d 124, 130, 324 N.Y.S.2d 22, 272 N.E.2d 533). Indeed, defendants must establish that they were compelled to agree to the terms of the promissory notes because of a wrongful threat by plaintiff which precluded the exercise of their free will (see, id.). Just as a party cannot be guilty of economic duress for refusing to do that which he or she is not legally required to do (see, 805 Third Ave. Co. v M.W. Realty Assocs., supra; MLI...