Marquette Co. v. Norcem, Inc.

• Decision Date: 31 October 1985
• Citation: 114 A.D.2d 738,494 N.Y.S.2d 511
• Parties: , 42 UCC Rep.Serv. 79 MARQUETTE COMPANY, Appellant-Respondent, v. NORCEM, INC., Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 511

494 N.Y.S.2d 511

114 A.D.2d 738, 42 UCC Rep.Serv. 79

MARQUETTE COMPANY, Appellant-Respondent, v. NORCEM, INC., Respondent-Appellant.

Supreme Court, Appellate Division Third Department.

Oct. 31, 1985.

Harvey & Harvey, Mumford & Kingsley (James B. Tuttle of counsel), Albany, for appellant-respondent.

Kane, Kessler, Proujansky, Preiss & Nurnberg, P.C. (Albert Proufansky of counsel), New York City, for respondent-appellant.

Before MAHONEY, P.J., and WEISS, YESAWICH, LEVINE and HARVEY, JJ.

MAHONEY, Presiding Judge.

Cross appeals from an order of the Supreme Court at Special Term (Williams, J.), entered July 2, 1984 in Greene County, which, inter alia, granted defendant's motion to vacate a default judgment entered against it.

In 1981, the parties entered into a contract covering a period from September 1, 1981 to March 31, 1984 during which defendant contracted to purchase cement exclusively from plaintiff. The quantity and sales price for the first two shipments of cement to defendant were set forth in the contract. With regard to the third shipment, the contract mandated that the parties were to negotiate a price not to exceed $38 per short ton. Plaintiff informed defendant that it was prepared to deliver the cement at $38 per short ton, the maximum amount allowed by the contract. When defendant notified plaintiff that it considered plaintiff's insistence on the maximum amount a refusal to negotiate in good faith, plaintiff responded by informing defendant that its refusal to purchase the cement at $38 per short ton was a breach of the contract.

Thereafter, plaintiff commenced the instant action for breach of contract by service upon the Secretary of State pursuant to Business Corporation Law § 306. The summons and complaint were forwarded to an individual who, according to the Secretary of State's current records, was the agent authorized to receive service for defendant. When the papers were returned to the Secretary of State because the authoriz agent had moved without leaving a forwarding address, plaintiff obtained a default judgment against defendant in the amount of $4,547,247. When plaintiff sought to enforce the judgment, defendant moved to vacate the default. Special Term vacated the default but let the judgment stand as security pending the final disposition of the action. This appeal by plaintiff and cross appeal by defendant ensued.

We reject plaintiff's contention that Special Term erred in vacating the default judgment because defendant did not demonstrate a reasonable excuse for its failure to appear and that it had a meritorious defense to the action. In Meyer v. Fisher & Sons Dental Lab., 90 A.D.2d 889, 456 N.Y.S.2d 520, this court held that, pursuant to CPLR 317, a person served with a summons other than by personal delivery to him or to his agent for service under CPLR 318 can be relieved of a default upon a finding of the court that he did not personally receive notice of the summons in time to defend and that he has a meritorious defense (see, Epstein v. Abalene Pest Control Serv., 98 A.D.2d 832, 470 N.Y.S.2d 497; Zuppa v. Bison Drywall & Insulation Co., 93 A.D.2d 997, 462 N.Y.S.2d 83). While the failure to demonstrate a reasonable excuse for not maintaining a correct address with the Secretary of State has been held to preclude relief pursuant to CPLR 5015(a) (see, Cristo Bros. v. M. Cristo, Inc., 91 A.D.2d 807, 458 N.Y.S.2d 50, appeal dismissed 59 N.Y.2d 760), it will not preclude...