Tag: account stated

Gurney, Becker & Bourne, Inc. v. Benderson Development Co., Inc., 47 N.Y.2d 995 (1979): Establishing Liability Through Account Stated Requires Existing Indebtedness or Express Agreement

Gurney, Becker & Bourne, Inc. v. Benderson Development Co., Inc., 47 N.Y.2d 995 (1979)

An account stated cannot create liability where none exists; it requires either an existing indebtedness between the parties or an express agreement to treat a statement as an account stated, even if the amount is not yet due.

Summary

Gurney, Becker & Bourne, Inc., a real estate broker, sued Benderson Development Co., Inc. for commissions allegedly due when a tenant exercised a renewal option. The trial court submitted the case to the jury on both implied contract and account stated theories, and the jury returned a general verdict for the plaintiff. The Court of Appeals reversed, holding that it was error to submit the case on an account stated theory because no commission was due at the time the statement was sent, as the renewal option had not yet been exercised, and the defendant had not expressly agreed to treat the statement as an account stated. A new trial was ordered because the basis of the jury’s verdict was unclear.

Facts

Gurney, Becker & Bourne, Inc. (plaintiff), a licensed real estate broker, claimed commissions were due from Benderson Development Co., Inc. (defendant) when a tenant exercised its renewal option.
A letter containing a typewritten notation stated that there was an “additional commission due and payable if tenant remains for another five years after 9/30/72.” At the time the letter was received, the tenant had not yet exercised the renewal option.

Procedural History

The trial court submitted the case to the jury as an action based on both implied contract and account stated theories.
The jury returned a general verdict in favor of the plaintiff.
The Appellate Division’s order was reversed by the Court of Appeals, and a new trial was granted.

Issue(s)

Whether the trial court erred in submitting the case to the jury as an action based on an account stated when no commission was due at the time the statement was sent and the defendant had not expressly agreed to treat the statement as an account stated.

Holding

No, because an account stated cannot create liability where none exists; it requires either an existing indebtedness between the parties or an express agreement to treat a statement as an account stated, even if the amount is not yet due.

Court’s Reasoning

The Court of Appeals reasoned that the rule regarding an account stated assumes that there is some existing debt between the parties or an express agreement to treat the statement as an account stated. The court cited American Lithographic Co. v Dorrance-Sullivan & Co., 241 NY 306; Jugla v Trouttet, 120 NY 21; and Bauer v Ambs, 144 App Div 274 in support of this principle.

The court emphasized that at the time the letter was received, no commission was due on the renewal option because the option had not yet been exercised. Since an account stated cannot be used to create liability where none exists, and the defendant had not expressly agreed to treat the letter as an account stated concerning the contingent commission, the trial court erred in submitting the case to the jury on an account stated theory.

The court acknowledged that the jury could have found that the defendant was required to pay a commission on the renewal term based on an implied contract theory. However, since the case was submitted on both theories, and a general verdict was returned, it was impossible to determine whether the erroneous charge predicated on the account stated theory was the basis of the verdict. Therefore, a new trial was necessary.

The court stated: “The rule that an account which has been rendered and to which no objection has been made within a reasonable time should be regarded as admitted by the party charged as prima facie correct assumes that there exists some indebtedness owing between the parties or an express agreement between the parties to treat the statement as an account stated although such statement may encompass amounts not yet due if there remain no further obligations to be performed by the party claiming payment.”

July 10, 1979
Interman Industrial Products, Ltd. v. R. S. M. Electron Power, Inc., 37 N.Y.2d 151 (1975): Availability of Summary Judgment for Accounts Stated

Interman Industrial Products, Ltd. v. R. S. M. Electron Power, Inc., 37 N.Y.2d 151 (1975)

An account stated, unsupported by a written document subscribed by the party to be charged, does not constitute “an instrument for the payment of money only” under CPLR 3213, and therefore does not entitle the moving party to accelerated summary judgment.

Summary

Interman sued R.S.M. to recover payment for silicon slices allegedly delivered pursuant to purchase orders. Interman moved for summary judgment under CPLR 3213, arguing that monthly statements of account constituted instruments for the payment of money only. R.S.M. disputed the quantities and prices of the goods. The Court of Appeals held that an account stated, without a written agreement signed by the defendant, is not an instrument for the payment of money only, and therefore does not qualify for the accelerated summary judgment procedure under CPLR 3213. The court reasoned that CPLR 3213 requires an explicit acknowledgement of indebtedness in a subscribed document to provide a speedy judgment.

Facts

Interman, a silicon material supplier, claimed it delivered silicon slices to R.S.M., a transistor manufacturer, based on purchase orders from April to August 1973. Interman alleged the agreed value was $40,839.94. Interman sent monthly statements of account to R.S.M., requesting notification of any discrepancies. R.S.M. received the statements but allegedly disputed the quantities and pricing, claiming Interman unilaterally raised prices without approval. R.S.M. issued a check for $8,693.15 but stopped payment, citing contract violations, while Interman claimed the check was stopped due to insufficient funds.

Procedural History

Interman served a summons, affidavit, and notice of motion, seeking accelerated summary judgment under CPLR 3213 based on the accounts stated. Special Term denied the motion, and the Appellate Division affirmed, holding that an account stated is not an instrument for the payment of money only under CPLR 3213. The Court of Appeals granted leave to appeal.

Issue(s)

Whether an account stated, unsupported by any written document subscribed by the party to be charged, constitutes “an instrument for the payment of money only” entitling the moving party to accelerated summary judgment pursuant to CPLR 3213?

Holding

No, because an account stated, without a written document subscribed by the defendant, does not constitute “an instrument for the payment of money only” as required by CPLR 3213.

Court’s Reasoning

The court emphasized that CPLR 3213 is designed for speedy judgment on presumptively meritorious claims where a formal complaint is superfluous. To qualify, the action must be based on an “instrument for the payment of money only.” The court noted the lack of a clear definition of this term in the statute’s history. The court distinguished prior cases where CPLR 3213 was granted, noting they typically involved commercial paper with a formal, explicit acknowledgement of indebtedness by the party to be charged, such as accepted sight drafts or promissory notes. The court contrasted these with cases where CPLR 3213 was denied, such as actions based on contracts requiring more than a simple promise to pay. The court found the absence of a subscribed written instrument from R.S.M. to be critical. Quoting Seaman-Andwall Corp. v Wright Mach. Corp., the court stated that a prima facie case must be made out by the instrument itself. Because Interman relied on an implied account stated without a written agreement, there was no instrument to establish a prima facie case. The court clarified that even a promissory note evidencing an account stated would be the instrument upon which summary judgment would need to be based. The key factor is that there must be a subscribed instrument demonstrating the obligation to pay.

June 11, 1975

Tag: account stated

Gurney, Becker & Bourne, Inc. v. Benderson Development Co., Inc., 47 N.Y.2d 995 (1979): Establishing Liability Through Account Stated Requires Existing Indebtedness or Express Agreement

Interman Industrial Products, Ltd. v. R. S. M. Electron Power, Inc., 37 N.Y.2d 151 (1975): Availability of Summary Judgment for Accounts Stated