State Bank of India v. Walter E. Heller & Co., Inc.

• Decision Date: 06 March 1987
• Docket Number: No. 82 Civ. 7404 (SWK).,82 Civ. 7404 (SWK).
• Citation: State Bank of India v. Walter E. Heller & Co., Inc., 655 F. Supp. 326 (S.D. N.Y. 1987)
• Parties: STATE BANK OF INDIA, Plaintiff, v. WALTER E. HELLER & COMPANY, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

655 F. Supp. 326

STATE BANK OF INDIA, Plaintiff, v. WALTER E. HELLER & COMPANY, INC., Defendant.

No. 82 Civ. 7404 (SWK).

United States District Court, S.D. New York.

March 6, 1987.

Dunn & Zuckerman, P.C. by Stuart M. Fischman, Andrew H. Lupu, New York City, for plaintiff.

Hahn & Hessen by Gabriel B. Schwartz, T. Gorman Reilly, New York City, for defendant.

MEMORANDUM OPINION AND ORDER

KRAM, District Judge.

Subject matter jurisdiction in this case is founded on diversity of citizenship under 28 U.S.C. § 1332. Plaintiff alleges breach of contract and gross negligence in a collection factoring agreement. The case is presently before the Court on defendant's motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. For the reasons set forth below, defendant's motion is GRANTED.

THE MOTION FOR JUDGMENT ON THE PLEADINGS

Rule 12(c) of the Federal Rules of Civil Procedure provides:

After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

Defendant Walter E. Heller & Company ("Heller") has relied solely on the pleadings in making its motion. On the other hand, plaintiff State Bank of India ("SBI") has responded with an affidavit and exhibits which contain "matters outside the pleadings." The Court has no intention of turning this matter into a motion for summary judgment. It has long been the rule that when a contract is clear in and of itself, circumstances extrinsic to the document may not be considered and that where the intentions of the parties may be gathered from the four corners of the instrument, issues of contract interpretation are questions of law. Bethlehem Steel Co. v. Turner Construction Co., 2 N.Y.2d 456, 460, 141 N.E.2d 590, 593, 161 N.Y.S.2d 90, 93 (1957). As a result, such issues are properly disposed of through a motion for judgment on the pleadings. See 5 Wright & Miller, Federal Practice and Procedure § 1368 (1969) ("The importance of the policy in favor of ensuring to each litigant a full and fair hearing on the merits of his claim or defense has made federal judges unwilling to grant a motion under Rule 12(c) unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law."). While it is within the Court's discretion to allow additional materials, here the Court concludes that the materials offered in no way assist SBI's opposition to the defense motion. Accordingly, defendant's motion to dismiss shall be considered on the pleadings. See Brooks v. American Export Industries, 68 F.R.D. 506, 509-10 (S.D.N.Y.1975).

FACTS

For the purposes of a Rule 12(c) motion, the Court must admit as true the well pleaded material facts alleged in the complaint. Gumer v. Shearson, Hammill & Co., Inc., 516 F.2d 283, 286 (2d Cir.1974); Shapiro v. Merrill Lynch, Pierce, Fenner & Smith, 495 F.2d 228, 231 (2d Cir.1974). See 2A J. Moore & J. Lucas, Moore's Federal Practice ¶ 12.15 (2d ed. 1984). The complaint incorporates the contracts sued upon, and the Court can consider them. Fed.R.Civ.P. 10(c); 5 Wright & Miller, Federal Practice and Procedure § 1327, n. 18 (1969).

The Parties

SBI is an Indian banking corporation which is licensed by the New York Superintendent of Banks to maintain a branch office in New York City. Heller is a commercial factor also located in New York City.

In 1981, following negotiations among SBI, Heller and Sharex International, Inc. ("Sharex"), a New York corporation that manufactured and sold apparel, two written agreements were executed, a factoring agreement between Heller and Sharex, under which Heller agreed to purchase Sharex's accounts receivable, and an assignment by Sharex to SBI of all amounts to be paid by Heller for the purchase of such accounts.

The Agreements

The factoring agreement, which is governed by New York law, is in the form of a written proposal from Heller to Sharex, dated March 31, 1981, and accepted by Sharex on the same date. It provides in relevant part:

We Heller propose to you Sharex the following terms and conditions on which we will act as your sole Factor for financing your merchandise sales. You are to assign to us in absolute ownership all your sales accounts. Sales and deliveries of merchandise on credit terms shall be made only with written approval of our Credit Department as to the terms and credit of purchasers, and we shall have the right to withdraw approval at any time before delivery.

On all those sales accounts thus approved and assigned to us, we assume any loss thereon by reason of the insolvency of the customer, and we agree to purchase such sales accounts from you for the face amount thereof, on longest or shortest selling terms, at our option, less credits and factoring commissions and charges set forth below; such purchase price to be due and payable upon the earlier of a) receipt by us of payment of such sales accounts by your customers at our office in New York, New York or b) 120 days after maturity of any sales account if such sales account is not paid for the sole reason that your customer is financially unable to make such payment provided there are no merchandise or delivery disputes or any claims asserted by such customers.

All sums due you pursuant to this Agreement shall be remitted to you and we shall remit all payments received by us during any business week which are due to you on the Wednesday immediately following such business week but if any such Wednesday falls on a legal holiday, on the next business day thereafter. As to those of your sales accounts which our Credit Department declines to approve but on which, nevertheless, shipment of merchandise has been made, it is understood and agreed that all such sales accounts which are assigned to us and acceptable to us, are to be purchased and paid for by us on the same terms, conditions and commissions as provided herein in respect of approved sales, except only that you assume the credit risk thereon. If any such sales account for any reason is not paid to us in full when due, you agree to repurchase immediately such delinquent account from us at our request for an amount equal to the face value thereof, less payments, if any, collected by us thereon, plus actual expenses up to date of such repurchase incurred by us in attempting to collect or realize on such delinquent account; or, at our option, we may charge your account therewith. We will render you a monthly statement of your account with us and we may consider said statement as correct and so accepted by you unless we receive notice from you to the contrary within thirty days after statements are rendered to you.

For our services in making credit investigations, supervising the ledgering and collection of your sales accounts and assuming the credit risk on approved sales, we will charge you a commission as set forth below on all sales, same to be due at the time sales are invoiced.

One (1%) percent of all sales accounts assigned to us, but not less than $40,000.00 (the "Minimum Annual Commission") per contract year, as defined below. (See paragraph 1 of annexed Rider.)

Any amounts owing by you to us resulting from our guaranties of your credit, or for commissions, interest, etc., may at our option at any time be considered as advances against your sales accounts and chargeable to you. (See Paragraph 2 of annexed Rider.)

You hereby grant us a continuing security interest in all of your now owned and hereafter acquired accounts receivable, together with all instruments, notes, claims, choses in action and other types of obligations arising therefrom ("Accounts"), the merchandise which is the subject of such Accounts, contract rights, general intangibles and any and all present and future credit balances and reserves held by us or any of our subsidiary or affiliated corporations for your account, any and all of your other property that is now or hereafter in our possession or control, the proceeds and products of all of the foregoing, and your books and records pertaining to the foregoing, as collateral for the payment of any indebtedness, obligation or liability, absolute or contingent, direct or indirect, now or hereafter owing from you to us, including, but not limited to, obligations under this agreement and all amounts which become owing by you to us by reason of any obligation you may have, regardless of whether by agreement or by operation of law, to indemnify us for amounts paid by us to others while we are acting as your guarantor or surety or otherwise. (See Paragraph 2 of annexed Rider)

In the event of any default hereunder, we shall have all the rights of a secured party under the Uniform Commercial Code with respect to such security interest including but not limited to taking possession of any merchandise in which we have a security interest and disposing of same upon five days notice at public or private sale, and you shall be liable for any deficiency. Recourse to any of the foregoing collateral shall not at any time be required and we are authorized to charge your account the amounts of any and all of the above obligations. All accounts charged back to you for any reason shall be retained by us as further security and we will credit you only with the amounts collected thereon. You agree to join with us in executing one or more financing statements and any other document, in form and substance satisfactory to us, necessary to perfect and maintain a first and valid title and security interest in our favor in all your Accounts and the collateral referred to

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