| Five Star Bank v CNH Capital Am., LLC |
| 2008 NY Slip Op 07313 [55 AD3d 1279] |
| October 3, 2008 |
| Appellate Division, Fourth Department |
| Five Star Bank, as Successor to National Bank of Geneva,Respondent, v CNH Capital America, LLC, as Successor to Case Credit Corporation and NewHolland Credit Corporation, et al., Defendants, and White's Farm Supply, Inc.,Appellant. |
—[*1] Phillips Lytle LLP, Buffalo (Patricia A. Mancabelli of counsel), forplaintiff-respondent.
Appeal from a judgment of the Supreme Court, Ontario County (Kenneth R. Fisher, J.),entered July 19, 2007. The judgment was entered in favor of plaintiff and against defendantWhite's Farm Supply, Inc. upon plaintiff's motion for summary judgment.
It is hereby ordered that the judgment so appealed from is unanimously reversed on the lawwithout costs, the motion is denied, summary judgment is granted in favor of defendant White'sFarm Supply, Inc. and the second amended complaint is dismissed.
Memorandum: Supreme Court erred in granting plaintiff's motion seeking summaryjudgment on the second amended complaint against defendant White's Farm Supply, Inc. (WFS).Plaintiff, as successor to the National Bank of Geneva (NBG), commenced this action asserting,inter alia, a cause of action for conversion with respect to farm equipment owned by DevineFarms, LLC, Anita Devine, Timothy Devine and Robert Devine (collectively, Devinedefendants), allegedly in violation of plaintiff's rights as a secured creditor. In a prior relatedappeal, we granted the cross motion of Case Credit Corporation and Case Corporation (Casedefendants) for summary judgment dismissing the amended complaint of NBG against them (National Bank of Geneva v Case CreditCorp., 37 AD3d 1169 [2007]). We note at the outset that, although WFS appealed fromthe order granting plaintiff's motion rather than from the subsequent judgment in which the orderwas subsumed, we exercise our discretion to treat the notice of appeal as valid and deem theappeal as taken from the judgment (see Hughes v Nussbaumer, Clarke & Velzy, 140AD2d 988 [1988]; see also CPLR 5520 [c]).
It is undisputed that the Devine defendants and NBG entered into a security agreementpursuant to which certain farm equipment and other collateral owned by the Devine defendantssecured [*2]a line of credit extended by NBG to the Devinedefendants. NBG perfected its security interest by filing financing statements (see generallyUCC 9-310 [a]). Thereafter, the Devine defendants purchased new equipment from WFS andtraded in the secured equipment, the value of which was credited against the purchase price ofthe new equipment. The Devine defendants subsequently defaulted on their obligation to NBG,whereupon NBG commenced the aforementioned action. Although NBG amended its complaintto include WFS as a defendant, it is further undisputed that WFS had sold the equipment in thecourse of its business prior to the commencement of NBG's action against it. WFS is the onlyremaining defendant in the action commenced by plaintiff.
"To establish a cause of action in conversion, 'the plaintiff must show legal ownership or animmediate superior right of possession to a specific identifiable thing and must show that thedefendant exercised an unauthorized dominion over the thing in question . . . to theexclusion of the plaintiff's rights' " (Castaldi v 39 Winfield Assoc., 30 AD3d 458, 459 [2006]; see Colavito v New York Organ DonorNetwork, Inc., 8 NY3d 43, 49-50 [2006]; Meese v Miller, 79 AD2d 237,242-243 [1981]). Here, although WFS exercised dominion and control over the securedequipment, we conclude that the exercise of dominion and control was not unauthorized until theequipment was sold. Prior to the sale of the equipment, NBG had the right to demand theequipment from WFS and, had it done so, WFS would have been required to turn over theequipment to NBG (see Bank of India v Weg & Myers, 257 AD2d 183, 190 [1999]).Thus, we conclude that the court erred in determining that there was a conversion by WFS at thetime it accepted the equipment as partial payment on the new equipment. We further conclude,however, that the court properly determined that plaintiff established that WFS converted theequipment when it sold the equipment in the course of its business (see id. at 191-192;cf. National Bank of Geneva, 37 AD3d at 1170-1171; Ancell's World of Interiors vTrauner, 264 AD2d 789, 790-791 [1999]).
Nevertheless, the court erred in granting plaintiff's motion inasmuch as plaintiff failed toestablish that it sustained any damages based on the conversion by WFS. Prior to thecommencement of NBG's action against WFS, the Devine defendants and NBG entered into asettlement agreement whereby the Devine defendants paid a portion of the entire indebtednessand NBG released the liens on the collateral, released the Devine defendants from the obligationof the security agreement, and satisfied the debt. Although the settlement agreement providedthat NBG was entitled to apply any proceeds it obtained from the action against the Casedefendants to the total indebtedness, it failed to reserve its rights with respect to other potentialdefendants that may have interfered with its secured interest in the collateral. Because theobligation of WFS to plaintiff originated in the security agreement between NBG and the Devinedefendants (see generally UCC 9-315 [a] [1], [2]), and the debt obligation of the Devinedefendants was satisfied by the settlement agreement, there is no debt against which to apply anydamages obtained from WFS. It is well established that a creditor is "entitled to one satisfactionof [its] debt and no more" (Whitestone Sav. & Loan Assn. v Allstate Ins. Co., 28 NY2d332, 335 [1971]; see generally Alaimo v First Fed. Sav. & Loan Assn. of Rochester, 52AD2d 251, 254 [1976], affd 42 NY2d 1030 [1977]). Thus, under the circumstances ofthis case, we search the record pursuant to CPLR 3212 (b) and grant summary judgmentdismissing the second amended complaint against WFS, a nonmoving party (see generallyMerritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 111 [1984]). " '[I]n view ofthe uncontroverted proof in the record, there is no basis upon which relief might be granted toplaintiff on the [second amended] complaint' " (Rochester Home Equity v Guenette, 6 AD3d 1119, 1120 [2004]).Present—Scudder, P.J., Hurlbutt, Green and Gorski, JJ.