Opinion ID: 552196
Heading Depth: 2
Heading Rank: 3

Heading: Trading Account Debt

Text: 97 Hutton assembles another litany of theories to contend that the Facility Agreement did not extinguish Aubin's Account debts. 13 We affirm the district court's summary judgment against Hutton on all such theories.
98 The district court held that [t]he facility agreement was a novation rather than an executory accord. We disagree. A novation contract usurps a pre-existing contract's legal effect. And to prove a novation, there must be a 'clear and definite intention on the part of all concerned that such is the purpose of the agreement. Not only must the intention to effect a novation be clearly shown, but a novation [must] never ... be presumed.'  Beck v. Manufacturers Hanover Trust Co., 125 Misc.2d 771, 481 N.Y.S.2d 211, 218 (1984). The facts cited by the district court do not establish such a clear intent as a matter of law. 99 But this is of no consequence to Hutton, because the Aubins, Haralson, and Aubin's trading companies assert the affirmative defense of payment in their motion for summary judgment on Hutton's account debt claims. 14 These Aubin parties claim that, in exchange for the Facility Agreement promises of RBI and Haralson, Hutton Group paid Hutton Company all amounts owing in the Accounts and this payment extinguished Aubin's corporate debts. The parties agree that after the Facility Agreement, Aubin's Accounts at Hutton Company were credited with approximately $48 million from Hutton Group, but they dispute the significance of this transfer. 100 New York looks to the intentions of the payor and the creditor in determining whether a transaction constitutes payment in termination of a debt. De Lanoy, Kipp & Swan, Inc. v. New Amsterdam Casualty Co., 171 Misc. 342, 11 N.Y.S.2d 625, 629 (1939), aff'd, 264 A.D. 713, 34 N.Y.S.2d 829 (1942), aff'd, 289 N.Y. 823, 47 N.E.2d 433 (1943). We hold that the following evidence establishes as a matter of law that Hutton intended that the Facility Agreement extinguish Aubin's Account debts. 101 Hutton Group agreed in the Facility Agreement's first paragraph that there shall be advanced today by [Hutton] Group to [Hutton Company] such amounts as are necessary to satisfy existing deficiencies, if any, and margin requirements relating to [the Accounts] (emphasis added). And [t]he word 'pay' means to satisfy by other means than cash, as well as by cash. Smith v. Treuthart, 130 Misc. 394, 223 N.Y.S. 481, 483 (1927). 102 That Hutton understood satisfaction to be synonymous with extinction is conclusively established by Hutton's conduct after signing the Facility Agreement. Not only did Hutton Group pay Aubin's Account debts with Hutton Company, it also put a $4 million surplus in the Accounts so that Aubin could keep trading. Aubin's commodities gambling paid off. By June 1985, the Accounts held over $20 million in equity. Aubin threatened to sue Hutton for not allowing him to withdraw what he claimed to be his gains. 103 Hutton responded by agreeing with Haralson that in exchange for repayment of its $4 million in seed money, Hutton would release equity in excess of current requirements from the Accounts and make no claim or lien against the Accounts other than standard margin requirements. By September 1985, Hutton Company had released over $49 million in gains to Aubin from the Accounts. Hutton does not explain how these actions could possibly be consistent with an intent to hold Aubin and his trading corporations liable for the pre-March 1985 trading losses. 104 Based on this evidence, we affirm the district court's summary dismissal of Hutton's direct claims on the Account debts. See Laird v. Shell Oil Co., 770 F.2d 508, 511 (5th Cir.1985) (when the judgment of a district court is correct, it may be affirmed for reasons not given by the court and not advanced to it).
105 The district court held that the remedy of equitable rescission of the Facility Agreement is unavailable to Hutton because Hutton has an adequate remedy at law: a breach of contract action against RBI for damages. We agree. 106 An adequate remedy at law defeats a claim for rescission under New York law. See Rudman v. Cowles Communications, Inc., 30 N.Y.2d 1, 330 N.Y.S.2d 33, 43, 280 N.E.2d 867, 874 (1972). The adequacy of the legal remedy for damages does not depend on the collectibility of the claim. American Cities Power & Light Corp. v. Williams, 189 Misc. 829, 69 N.Y.S.2d 197, 203 (1947). Therefore, we affirm the district court's summary judgment against Hutton on its rescission claim. 107 Because the $48 million was placed in the Accounts in exchange for and pursuant to the Facility Agreement and Note, the Accounts' owners were not unjustly enriched by the transfer of funds from Hutton Group to Hutton Company. And absent unjust enrichment, we may not grant Hutton quasi-contractual relief. See Feigen v. Advance Capital Management Corp., 150 A.D.2d 281, 541 N.Y.S.2d 797 (a non-signatory to a contract cannot be held liable [in quasi contract] where there is an express contract covering the same subject matter), appeal dismissed, 74 N.Y.2d 874, 547 N.Y.S.2d 840, 547 N.E.2d 95 (1989). We affirm the district court's summary judgment that the Facility Agreement precludes Hutton's quasi-contractual unjust enrichment claim.