Case Information

SPRINGWELL NAVIGATION CORP., Respondent, v SANLUIS CORPORACIÓN, S.A., Appellant.

Appellate Division of the Supreme Court of New York, First Department

2007

849 N.Y.S.2d 34

Judgment, Supreme Court, New York County (Bernard J. Fried, J.), entered January 25, 2007, awarding plaintiff damages in the principal amount of $443,750, unanimously reversed, on the law, with costs, summary judgment granted to defendant and the action dismissed. The Clerk is directed to enter an amended judgment accordingly. Appeals from order, same court and Justice, entered December 19, 2006, which granted plaintiffs motion for summary judgment and denied defendant's cross motion for summary judgment, and from order, same court and Justice, entered December 12, 2005, to the extent it denied defendant's cross motion to dismiss the complaint for failure to state a cause of action, unanimously dismissed, without costs, as subsumed in the appeal from the ensuing judgment.

Plaintiff was the beneficial holder of a $1 million interest in an Unrestricted Global Note issued by defendant. The court properly found that as such, plaintiff had no right to sue upon an indenture agreement for interest payments (see MacKay Shields v Sea Containers, 300 AD2d 165 [2002]), since that document specifically reserved that right to the registered holder of the Note. However, the court erred in finding that plaintiff had a right to sue on the Note itself, inasmuch as plaintiff was not the holder of a negotiable instrument (see Caplan v Unimax Holdings Corp., 188 AD2d 325 [1992]; cf. Friedman v Airlift Intl., 44 AD2d 459 [1974]). Nor is there any basis for its finding that a right to sue for interest payments is bestowed upon plaintiff by the Trust Indenture Act of 1939, whose purpose was to prevent majority investors from taking collective action to make amendments to an indenture affecting the rights of other holders (see In re Board of Directors of Multicanal S.A., 307 BR 384, 388-389 [SD NY 2004]).

We have considered plaintiffs remaining contentions and find them unavailing. Concur—Lippman, P.J., Andrias, Williams, Buckley and Malone, JJ. [See 14 Misc 3d 1206(A), 2006 NY Slip Op 52425(U).]