Independence Discount Corp. v. Bressner
| Decision Date | 10 March 1975 |
| Citation | 365 N.Y.S.2d 44,47 A.D.2d 756 |
| Parties | , 16 UCC Rep.Serv. 845 INDEPENDENCE DISCOUNT CORP., Respondent, v. Joseph BRESSNER et al., Appellants. |
| Court | New York Supreme Court — Appellate Division |
Gainsburg, Gottlieb, Levitan & Cole, New York City (Eugene H. Feldman and Alan C. Krieger, New York City, of counsel), for appellants.
Frank, Frank & Berger, New York City (Arnold V. Goldstein, New York City, of counsel), for respondent.
Before COHALAN, Acting P.J., and CHRIST, BRENNAN, MUNDER and SHAPIRO, JJ.
MEMORANDUM BY THE COURT.
In an action, Inter alia, to recover for conversion of the proceeds of the sale of secured merchandise, defendants appeal from a judgment of the Supreme Court, Nassau County, entered January 31, 1974, in favor of plaintiff after a nonjury trial.
Judgment reversed, on the law, with costs, and complaint dismissed.
Plaintiff financed the purchase of certain appliances by Bressner Colorvision Corp. In return, Colorvision granted a security interest to plaintiff in all its future inventory of Philco-Ford household appliances and in all proceeds of the sale or other distribution thereof. The inventory financing and security agreement provided that Colorvision had the right, in the regular course of its business, to sell the appliances covered by the security agreement, and obligated Colorvision to pay 'all amounts due (plaintiff) with respect to the Products financed hereunder * * * immediately upon the sale or other disposition of such Products'. The agreement was silent as to whether Colorvision could commingle sale proceeds with its own funds. The effect of these provisions was that where an appliance was sold in the regular course of business the purchaser took free of plaintiff's security interest, but plaintiff obtained a perfected security interest in the proceeds (Uniform Commercial Code, § 9--306).
The inventory was sold and the proceeds were commingled with the general corporate funds of Colorvision. Thereafter Colorvision went into bankruptcy. It appears uncontroverted that the balance in the corporate bank accounts has always been greater than the outstanding debt owed to plaintiff. Since plaintiff's security interest in the proceeds commingled in those accounts is limited by subdivision (4) of section 9--306 of the Uniform Commercial Code, the security interest has apparently been effectually extinguished and plaintiff, as a general creditor of Colorvision, will receive less than 100 cents on the dollar in payment of the debt. Accordingly, plaintiff instituted this action against the two principal officers and majority stockholders of...
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