Court Opinion

ID: 5938866
Source: CourtListenerOpinion
Date Created: 2022-01-13 05:37:54.656013+00
Date Added: 2024-06-11T08:47:06.761517
License: Public Domain

Murphy, P. J., and Milonas, J.,
dissent in a memorandum by Milonas, J., as follows: In my opinion, the judgment being appealed herein should be reversed and the petition granted.
On September 20, 1983, S. Toepfer, Inc., a company whose principals included Steven Toepfer, Howard Toepfer, A. E. Toepfer, their father, who is now deceased, and respondent Marcelle Toepfer, the latter’s widow, entered into a general liability agreement which, in exchange for certain loans and other accommodations, granted petitioner Algemene Bank Nederland N.V. a security interest in collateral that included *8all "property, rights and interests * * * which at any time shall come into the possession or custody or under the control of the Bank.” Two years later, respondent executed a letter of pledge with respect to shares in two residential cooperative apartments owned by her in 870 United Nations Plaza in Manhattan as collateral security for the continued indebtedness of S. Toepfer, Inc. Respondent also delivered an assignment of lease pursuant to which she assigned the proprietary lease to the bank. Then, in 1988, upon advice of counsel, a UCC financing statement was filed on behalf of petitioner. After the bank’s auditors suggested that the bank obtain possession of the stock certificates representing ownership in the cooperative unit, the bank’s agents met with Steven and Howard Toepfer and procured the certificates.
However, S. Toepfer, Inc. defaulted in its obligations to the bank, and, by the time that legal action was commenced in March of 1989, the company’s indebtedness had grown to more than $1.7 million. Moreover, the defendants in that matter never defended the lawsuit against them so the bank was granted a default judgment against Steven and Howard Toepfer, as well as respondent herein. After persistent and futile efforts to enforce the judgment, petitioner instituted this proceeding to compel the sale of the subject shares pursuant to CPLR 5206 since it appears to be the sole remaining asset. It should be noted that in his post-judgment deposition, respondent’s son Howard, endeavoring to explain the disappearance of in excess of $5 million in corporate inventory, consisting primarily of diamonds, urged that $1 million of the gems had been consigned in 1986 to a man in Cyprus and was now "uncollectible”, that another $1.8 million worth of diamonds was presented to his "kidnappers” as a ransom payment and that the remaining $3 million or so in diamonds was given to some unidentified Colombians in May of 1989 (the judgment had already been filed by this time) with no possibility of recovery.
Thus, respondent’s opposition to the present petition must be considered in the background of the mysterious vanishment of a small fortune in gems while, simultaneously, respondent and her sons defaulted on nearly $2 million owed to petitioner bank. At the very least, respondent’s unsupported, self-serving claim, advanced through Steven and Howard Toepfer, that petitioner had orally represented not to interfere with her possession of the premises during her life time is scarcely convincing. The letter of pledge itself expressly conditions her right to occupancy upon the following: "(i) Pledgor shall not *9be in default of any of her obligations hereunder or breach any covenant contained in a certain proprietary lease between 870 East Tower, Inc. and the Undersigned dated September 30, 1970; and (ii) Pledgor shall timely pay all obligations arising out of her ownership of the shares allocated to the apartment, or, if such shares have been sold or otherwise transferred to the Pledgee or to a third party, pay as rent to the owner of such shares, on a monthly basis, amounts sufficient to pay all such charges.”
The instrument proceeds to provide that respondent’s right to remain in the apartment shall terminate, in part, upon her failure to satisfy any of the foregoing requirements. Clearly, one of her obligations under the letter of pledge, indeed the primary necessity, is that there be compliance with the general liability agreement. It should also be reiterated that pursuant to this 1983 agreement, the bank already was accorded a security interest in the subject cooperative apartments), and the ensuing letter of pledge, assignment of lease and gaining control over the stock certificates did not create petitioner’s rights with respect to this property but merely served to transfer physical possession of the relevant documents. However, under no reasonable construction of the letter of pledge can the bank be found to have limited its right to dispose of the property as it deemed appropriate during respondent’s life even in the event of a default. Indeed, the letter of pledge specifically states that the pledgor’s occupancy shall also terminate "upon any foreclosure, sale, assignment, subletting or destruction of the Apartment or any eviction of Pledgor from the Apartment for any reason and by any agency other than the Pledgee if the liabilities to the Pledgee are not satisfied unless Pledgee otherwise consents in writing.” Since this instrument certainly contemplates the possibility of a foreclosure or sale, it is simply illogical to take out of context the phrase, "Pledgee hereby consents and agrees that Pledgor shall have the lifetime right to occupy the aforementioned Apartment 13A”, without setting alongside it the conditions which explain these words, in order to discern some sort of contractual ambiguity. Further, it makes even less sense to accept respondent’s conclusory allegation of an oral promise as a basis to preclude judgment to petitioner, particularly in view of section 15-301 (1) of the General Obligations Law, which declares that: "A written agreement or other written instrument which contains a provision to the effect that it cannot be changed orally, cannot be changed by an executory agreement unless such executory agreement is *10in writing and signed by the party against whom enforcement of the change is sought or by his agent.”
In the instant situation, the guaranty accompanying the general liability agreement includes, in unequivocal terms, a statement that it is "a continuing guaranty which shall remain in force until a notice written by the undersigned, revoking or modifying the same, shall have been received by the Bank” (see also, Chemical Bank v Wasserman, 37 NY2d 249, for the proposition that a purported oral representation is completely ineffectual to avoid operation of a written guaranty that bars modification or termination except in writing). Moreover, the Court of Appeals, in Citibank v Plapinger (66 NY2d 90), held that a guarantor under an unconditional guaranty, such as the one at issue herein, may not raise as a defense oral representations that contradict the terms of the guaranty even to the extent of claiming fraudulent inducement. In fact, the majority’s decision to affirm the judgment of the Supreme Court in this proceeding is so contrary to fundamental and widely acknowledged tenets of commercial law that it could, if left undisturbed, have a dire impact on common business practices.