165 A.D.2d 265 | N.Y. App. Div. | 1991
OPINION OF THE COURT
In December 1988, defendant Robert Winig (hereinafter defendant) borrowed $23,750 from plaintiff, which defendant used to purchase an interest in defendant Office Control Systems, Inc. (hereinafter OCS). In return for the loan, defendant executed a promissory note in favor of plaintiff and a guarantee. The note contained a cross-default provision which authorized plaintiff to accelerate the note and declare it immediately due whenever it had the right to do so under any other agreement in effect between plaintiff and defendant. The guarantee listed OCS as the borrower and provided that in the event of a default by the borrower on any indebtedness to plaintiff, defendant "hereby unconditionally promises and agrees to pay to [plaintiff] * * * all amounts which the Borrower shall owe to [plaintiff], whether such indebtedness now exists or shall hereafter arise”. In 1989 OCS defaulted on a note given to plaintiff some six months prior to defendant’s execution of the note and guarantee described above. Plaintiff demanded payment from defendant pursuant to the guarantee and, based upon the cross-default provision in the note executed by defendant, accelerated that note and demanded payment. When defendant refused to pay on either the guarantee or the note, plaintiff commenced this action and moved for summary judgment in lieu of complaint (see, CPLR 3213). Supreme Court denied the motion against defendant and this appeal by plaintiff ensued.
As to the guarantee, we are of the view that plaintiff is
The record conclusively establishes that defendant, who had experience in negotiating loans of this nature, signed a document which clearly and unambiguously constituted a guarantee of payment of OCS preexisting indebtedness. In these circumstances, the absence of any allegation that defendant was unable to read or understand the nature of the instrument he signed, or any allegation of misrepresentation as to the nature of the instrument he signed, is fatal to defendant’s claim of fraud in the factum (cf., Fleming v Ponziani, 24 NY2d 105, 111). Although the Uniform Commercial Code is not
As to plaintiffs claim based upon its attempt to accelerate the note executed by defendant, we conclude that plaintiff is not entitled to summary judgment. The cross-default provision authorizes acceleration whenever plaintiff "has the right to do so under any Loan Agreement, Security Agreement, Mortgage, or any other agreement or collateral instrument now or hereafter in effect between [plaintiff and defendant], pursuant to which the indebtedness evidenced by this Note is loaned or secured”. The guarantee executed by defendant is a collateral instrument, but it contains no provision for acceleration and, therefore, the cross-default provision in the note was not triggered. Although defendant is liable under the guarantee for the entire indebtedness owed by OCS, that indebtedness arose due to an acceleration provision in the note executed by OCS, to which defendant was not a party, and the cross-default provision, by its terms, applies only in the event of an acceleration authorized by an agreement executed by defendant.
Order modified, on the law, without costs, by reversing so