60 A.D.2d 774 | N.Y. App. Div. | 1977
Order unanimously reversed, with costs, and motion denied. Memorandum: Defendant appeals from an order granting plaintiffs motion for summary judgment to recover money held in escrow following the sale of a "travel lift” in which Northern Yachts, Inc. (Northern), had granted on January 25, 1972 a security interest to plaintiff bank in return for a loan evidenced by a promissory note. The security agreement provided that the collateral secured any and all indebtedness of the debtor to the bank, "now existing or hereafter incurred * * * whether such indebtedness is from time to time reduced and thereafter increased, or entirely extinguished and thereafter reincurred”. The bank duly filed a financing statement with respect to this security agreement. In July, 1972 that indebtedness was paid and plaintiff returned the note to Northern, marked "paid”; but at that time the latter owed the bank over $70,000 on others loans. In the ensuing 16 months plaintiff made various additional loans to Northern, including a $20,000 loan on November 16, 1973, secured by another agreement pledging the said "Marine Travel Lift, 30 ton capacity”, which also provided that it secured payment of all liabilities of the debtor to the bank, "existing or hereafter arising”; and the bank duly filed a financing statement with respect thereof. Two weeks later the note evidencing the $20,000 loan of November 16, 1973 was "paid” through bank set-off against other funds of Northern, and it was so marked and returned to Northern. At the same time the bank declined to make additional contemplated loans to Northern, ostensibly because it learned that the latter had given a security agreement to another bank covering all of its assets. Plaintiff was not appeased by a statement by the debtor’s president that the security agreement given to the other bank was not intended to cover the travel lift. Because certain checks deposited by Northern were dishonored, its account was then overdrawn by about $16,000. In the month of December, 1973 there was an informal meeting of the creditors of Northern. Defendant was attorney for Northern. He claims that at that meeting plaintiffs vice-president Keane informed him that plaintiff had no lien or further interest in the travel lift. Since his client owed him $24,000 for attorney’s fees and disbursements, he thereupon "purchased” the travel lift from the client in extinguishment of its fee indebtedness to him, and he promptly painted a notice on the equipment that it was his property. Plaintiff then attached to the travel lift a notice of its lien. Northern was adjudicated bankrupt on April 11, 1974. Plaintiff commenced an action to enforce its lien on the travel lift, making defendant a party thereto; and the trustee in bankruptcy abandoned its interest in the travel lift. By agreement between plaintiff and defendant the travel lift was sold for $24,000 and the proceeds were deposited in escrow, subject to the outcome of this action. Defendant contends that because the notes of January 25, 1972 and November 16, 1973, which were secured by the travel lift under the security agreements, were paid and returned to Northern, the bank had no further interest in the travel lift; and also that the bank is estopped from asserting any interest in the travel lift by reason of its conduct and oral assurance by its vice-president Keane to defendant that it had no interest therein. The provision in the security agreements that the collateral secured all existing