New York Law Review

Tag: Corporate Authority

  • Israel Discount Bank Ltd. v. Kestenbaum, 62 N.Y.2d 150 (1984): Sufficiency of Evidence to Defeat Summary Judgment

    Israel Discount Bank Ltd. v. Kestenbaum, 62 N.Y.2d 150 (1984)

    A party opposing summary judgment must present evidentiary facts sufficient to raise a triable issue of fact to defeat the motion.

    Summary

    This case concerns a dispute over a personal guarantee and a subsequent letter agreement. Israel Discount Bank sued Kestenbaum on a guarantee agreement. Kestenbaum argued the subsequent letter agreement released him from his guarantee and that the corporate officer lacked authority to enter the agreement. The Court of Appeals reversed the Appellate Division’s order, holding that Kestenbaum’s conclusory allegations lacked sufficient evidentiary support to defeat summary judgment. The court emphasized the necessity of presenting factual evidence to create a genuine issue for trial.

    Facts

    Israel Discount Bank Ltd. (plaintiff) sought to enforce a personal guarantee against Kestenbaum (defendant).
    The guarantee agreement was broad enough to encompass a subsequent letter agreement between the bank and Nu-Ka-Pool Apparel, Inc.
    Kestenbaum alleged that the corporate officer who signed the letter agreement on behalf of Nu-Ka-Pool lacked the authority to do so.
    Kestenbaum also argued the subsequent agreement released him from his personal guarantee.

    Procedural History

    The Supreme Court, New York County, granted summary judgment to the plaintiff and denied the defendant’s motion to serve an amended answer.
    The Appellate Division reversed.
    The Court of Appeals reversed the Appellate Division and reinstated the Supreme Court’s order and judgment.

    Issue(s)

    Whether Kestenbaum presented sufficient evidentiary facts to defeat the bank’s motion for summary judgment based on his personal guarantee.

    Holding

    Yes, because Kestenbaum’s allegations were conclusory and unsupported by evidentiary facts sufficient to raise a triable issue regarding the scope of the guarantee or the officer’s authority.

    Court’s Reasoning

    The Court of Appeals agreed with the dissenter in the Appellate Division that the guarantee agreement signed by Kestenbaum was broad enough to cover the subsequent letter agreement.
    The court found that Kestenbaum’s allegation that the corporate officer lacked authority was a “conclusory allegation” insufficient to create a question of fact.
    The court emphasized that none of Kestenbaum’s arguments were supported by “evidentiary facts sufficient to defeat a motion for summary judgment.”
    The court noted the affirmation of Kestenbaum upon which he relied was not in an authorized form, as only attorneys, physicians, osteopaths or dentists authorized to practice within the state can serve and file an affirmation bearing his signature alone in lieu of and with the same force and effect as an affidavit, and even those persons cannot do so when they are a party to an action. The court clarified that while anyone can make an affirmation instead of a sworn statement, to be effective, it must be made before a notary public or other authorized official, so the affirmant would be answerable for the crime of perjury should he make a false statement.
    In essence, the court reinforced the principle that to defeat a motion for summary judgment, the opposing party must come forward with concrete evidence demonstrating a genuine issue for trial, rather than relying on mere allegations or unsubstantiated claims.

  • New York Metro Corp. v. Chase Manhattan Bank, N.A., 52 N.Y.2d 732 (1980): Authority of Corporate Officer to Withdraw Funds Absent Resolution

    52 N.Y.2d 732 (1980)

    A bank can defend against liability for an unauthorized withdrawal from a corporate account by arguing that the corporate officer had authority to direct withdrawals, even without a specific corporate resolution on file.

    Summary

    New York Metro Corp. sued Chase Manhattan Bank for allowing the corporation’s president to make an unauthorized withdrawal. The bank argued it had a corporate resolution authorizing the withdrawal, which was later lost. The jury found that no such resolution was on file. The bank also argued that the president had the authority to withdraw funds regardless of any resolution. The trial court refused to submit this question to the jury. The Court of Appeals reversed, holding that the bank was entitled to have the jury consider whether the president had the authority to withdraw funds independently of a corporate resolution. Because there was evidence to support that contention, it was error for the trial court to not submit it to the jury.

    Facts

    New York Metro Corp. maintained a corporate account with Chase Manhattan Bank.

    The corporation’s president, Mr. Schuddekopf, directed a withdrawal from the account.

    The bank permitted the withdrawal.

    New York Metro Corp. claimed the withdrawal was unauthorized and sued the bank to recover the funds.

    The bank defended by claiming it had a corporate resolution on file authorizing the withdrawal, but the resolution was inadvertently destroyed.

    Procedural History

    The trial court instructed the jury to determine whether a corporate resolution authorizing the withdrawal was on file with the bank. The jury found that no such resolution existed.

    The trial court refused the bank’s request to instruct the jury on whether the president had the authority to make withdrawals independent of a corporate resolution.

    The jury found in favor of New York Metro Corp.

    The Appellate Division affirmed.

    The Court of Appeals reversed and remanded for a new trial.

    Issue(s)

    Whether the trial court erred in refusing to submit to the jury the question of whether the corporation’s president had the authority to direct withdrawals from the corporate account independent of any corporate resolution.

    Holding

    Yes, because the bank presented evidence that the president had such authority, and the jury should have been allowed to consider this evidence.

    Court’s Reasoning

    The Court of Appeals held that the trial court erred in refusing to submit the question of the president’s independent authority to the jury. The court noted that the bank, while primarily arguing the existence of a corporate resolution, also contended that the president had the authority to direct the withdrawal regardless. The court stated, “Inasmuch as there was evidence in the case to support this contention it was error not to have submitted it to the jury.” The court emphasized that the bank was entitled to have the jury consider all possible defenses, including the president’s inherent authority. The Court further explained that a jury verdict for the plaintiff could not be sustained on a theory that the bank did not exercise reasonable care, as that theory was never submitted to the jury.