Court Opinion

ID: 5866088
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:33:25.14793+00
Date Added: 2024-06-11T08:44:35.004109
License: Public Domain

Kassal, J.,
dissents in a memorandum as follows: On this record, I find factual issues exist and, therefore, conclude that Special Term erred in granting summary judgment on plaintiff’s fourth cause of action against appellant, Hofor Tobacco Corporation. Accordingly, I would reverse the order, vacate the judgment entered thereon and deny the motion. The fourth cause of action seeks to recover as against Hofor, as guarantor, under agreement dated September 20, 1978, for advances made to Robert J. Ball Sales, Inc. In its *438answer, Hofor has interposed as its second and third affirmative defenses, that the advances were not made in accordance with a corporate resolution of Ball Sales, dated September 19, 1978, filed with Fidelity which required that any checks, drafts or orders in excess of $15,000, drawn against the line of credit, contain two signatures, one of which was that of Hofor’s treasurer, Karl Schultz, or of its vice-president, Nahum Shar. The resolution was patently designed to permit Hofor to have some control over the use of the line of credit by Ball Sales with plaintiff bank so that Hofor could monitor withdrawals. The guarantee, dated one day before the bank resolution is alleged to be “conditional upon the delivery * * * of the corporate banking resolution”. Special Term correctly found that there were factual issues as to whether the advances by Fidelity, without the required two signatures, breached the obligation owed to Hofor as guarantor. Nevertheless, the court granted summary judgment as against Hofor, holding that a prima facie case had been made out and directed that the second and third affirmative defenses be converted to independent claims for relief, with Hofor to interpose a new pleading asserting those defenses as separate causes of action. This was error. The affirmative defenses are substantive, were properly interposed as defenses in the action and, under the circumstances, should have been resolved and not converted into causes of action for affirmative relief. This compelled Hofor, in lieu of defenses to plaintiff’s action, to proceed by way of a separate action to offset or recoup any advances made contrary to the terms of the bank resolution. What Special Term overlooked, however, was that once it appeared that there were factual issues, the motion for summary judgment should have been denied. This is consistent with the central function of the court upon such a motion to determine whether there are genuine triable issues of fact. As has been frequently observed, the function of the court is issue finding, not issue determination (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404; Esteve v Abad, 271 App Div 725, 727). The remedy is inappropriate where there is any doubt as to the existence of a triable issue (Moskowitz v Garlock, 23 AD2d 943, 944), since the granting of the motion is the procedural equivalent of a trial. As applied here, there is a further factual issue as to the extent of Hofor’s knowledge of the facts by reason of the interlocking directorate between the corporations. Furthermore, the issue of whether the circumstances sufficed to invoke an estoppel because Hofor owned 25% of Ball Sales must await the trier of the facts. I find Special Term improperly converted these related claims into independent claims although they were intentionally pleaded as affirmative defenses. The claims are so inseparable from plaintiff’s cause of action and the issues so inextricably interwoven as to preclude entry of judgment in favor of plaintiff (see Created Gemstones v Union Carbide Corp., 47 NY2d 250, 254; Stigwood Organisation v Devon Co., 44 NY2d 922; Dalminter, Inc. v Dalmine, S.p.A., 29 AD2d 852, affd 23 NY2d 653).