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Gannett Co., Inc. v. Tesler

Appellate Division of the Supreme Court of New York, First Department
Nov 14, 1991
577 N.Y.S.2d 248 (N.Y. App. Div. 1991)

Summary

holding that all defenses were properly rejected because, "by the plain language of the guarantee, defendant was precluded from raising any defenses or counterclaims relating to the underlying debt"

Summary of this case from Citicorp Leasing, Inc. v. United American Funding, Inc.

Opinion

November 14, 1991

Appeal from the Supreme Court, New York County (Herman Cahn, J.).


The IAS court correctly determined that plaintiff should be granted judgment on its claim based on defendant's personal guarantee of collection. Plaintiff produced evidentiary proof in admissible form establishing that it had, in fact, made every reasonable effort to recover the amount owed on the promissory note from the principal obligor before pursuing defendant for the deficiency. (Leaseway Sys. Corp. v. Rushmore Weber, 93 A.D.2d 318, 320.)

Similarly, IAS dismissed defendant's 1st through 20th affirmative defenses and first counterclaim alleging fraud in the inducement, discharge in release, and failure of consideration, since, by the plain language of the guarantee, defendant was precluded from raising any defenses or counterclaims relating to the underlying debt (Citibank v. Plapinger, 66 N.Y.2d 90, rearg denied 67 N.Y.2d 647). In any event, defendant specifically waived the aforementioned defenses by confirming the guarantee at a time when he was aware of plaintiff's alleged fraud (Lumber Indus. v Woodlawn Furniture Corp., 26 A.D.2d 924, 925).

The IAS court erred, however, in denying plaintiff summary judgment on the remaining 21st through 24th affirmative defenses and second counterclaim alleging the inadequacy of the sale of the principal's assets by the Trustee in Bankruptcy. This sale, duly noticed, subject to higher and better offers and approved by order of the Bankruptcy Court, was a "commercially reasonable" sale approved in a judicial proceeding pursuant to UCC 9-507 (2) (Nassau Trust Co. v. Bayer, 119 A.D.2d 814).

The IAS court erred in permitting defendant disclosure for the purpose of overcoming the presumption that the Trustee's sale of the principal's assets was proper. Since the sale was "commercially reasonable" under UCC 9-507 (2), and since defendant waived all defenses to the underlying transaction when he executed the personal guarantee and subsequent confirmation thereof, disclosure can produce no relevant information. As no issues of fact remain, defendant's motion to compel disclosure should have been denied (Chemical Bank v. PIC Motors Corp., 58 N.Y.2d 1023, 1026).

Concur — Carro, J.P., Wallach, Ross, Smith and Rubin, JJ.


Summaries of

Gannett Co., Inc. v. Tesler

Appellate Division of the Supreme Court of New York, First Department
Nov 14, 1991
577 N.Y.S.2d 248 (N.Y. App. Div. 1991)

holding that all defenses were properly rejected because, "by the plain language of the guarantee, defendant was precluded from raising any defenses or counterclaims relating to the underlying debt"

Summary of this case from Citicorp Leasing, Inc. v. United American Funding, Inc.
Case details for

Gannett Co., Inc. v. Tesler

Case Details

Full title:GANNETT CO., INC., Respondent-Appellant, v. MAX A. TESLER,…

Court:Appellate Division of the Supreme Court of New York, First Department

Date published: Nov 14, 1991

Citations

577 N.Y.S.2d 248 (N.Y. App. Div. 1991)
577 N.Y.S.2d 248

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