| Sce v Ach |
| 2008 NY Slip Op 08474 [56 AD3d 457] |
| November 5, 2008 |
| Appellate Division, Second Department |
| David P. Sce, Respondent, v Paul Ach,Appellant. |
—[*1]
In an action to recover on a promissory note, the defendant appeals (1), as limited by hisbrief, from so much of an order of the Supreme Court, Suffolk County (Whelan, J.), datedAugust 7, 2007, as granted those branches of the plaintiff's motion which were for summaryjudgment on the complaint and dismissing the counterclaims, and (2) from a judgment of thesame court entered October 12, 2007, which, upon the order, is in favor of the plaintiff andagainst him, in the principal sum of $40,000.
Ordered that the appeal from the order is dismissed; and it is further,
Ordered that the judgment is reversed, on the law, those branches of the plaintiff's motionwhich were for summary judgment on the complaint and dismissing the counterclaims aredenied, upon searching the record, the defendant is awarded partial summary judgmentdismissing so much of the complaint as seeks damages for nonpayment of installment paymentsdue from September 1, 1996 until July 1, 1997, of the promissory note, which was due on August1, 1997, so much of the complaint as seeks damages for nonpayment of installment payments duefrom September 1, 1996, until July 1, 1997, is dismissed, the remaining claim is severed, and theorder is modified accordingly; and it is further,
Ordered that one bill of costs is awarded to the appellant.
The appeal from the intermediate order must be dismissed because the right of direct appealtherefrom terminated with the entry of the judgment in the action (see Matter of Aho, 39NY2d 241, 248 [1976]). [*2]The issues raised on appeal from theorder are brought up for review and have been considered on the appeal from the judgment(see CPLR 5501 [a] [1]).
In July 1996 the defendant executed a promissory note in the sum of $70,000 in favor of theplaintiff. The note was given to the plaintiff as partial payment for the purchase of his health foodrestaurant business in Bay Shore. The terms of the note provided, inter alia, that it was to berepaid in 12 equal monthly installments of $6,089.20. The first payment was due on September 1,1996 and the last was due on August 1, 1997. The defendant made payments on the note totaling$30,000 and then ceased any further payment.
On July 28, 2003 the plaintiff commenced this action and then moved, inter alia, forsummary judgment on the complaint and dismissing the counterclaims. The defendant opposedthe motion, arguing that the action was time-barred and that, in any event, the plaintiff was notentitled to summary judgment since there were issues of fact regarding fraud in the inducementof the underlying transaction. The Supreme Court awarded summary judgment to the plaintiffand thereafter entered judgment in his favor in the principal sum of $40,000, the unpaid balanceof the note, plus interest. We reverse the judgment.
The plaintiff made a prima facie showing of entitlement to judgment as a matter of law bydemonstrating the existence of the note executed by the defendant, the unconditional terms ofrepayment, and the defendant's default thereunder (see Bank of N.Y. v Vega Tech. USA, LLC, 18 AD3d 678 [2005];East N.Y. Sav. Bank v Baccaray, 214 AD2d 601 [1995]; see generally Alvarez vProspect Hosp., 68 NY2d 320 [1986]). The burden then shifted to the defendant to comeforward with sufficient evidence to raise a triable issue of fact (see Lacoparra v Bellino,296 AD2d 480 [2002]). The defendant met this burden.
The statute of limitations for an action to recover on a promissory note is six years(see CPLR 213 [2]). With respect to a note payable on demand, the cause of action torecover on such a note accrues at the time of its execution (see Lynford v Williams, 34 AD3d 761, 762 [2006]). However, withrespect to a note payable in installments, such as the one at bar, there are separate causes ofaction for each installment accrued, and the statute of limitations begins to run on the date eachinstallment becomes due and is defaulted upon, unless the debt is accelerated (see PhoenixAcquisition Corp. v Campcore, Inc., 81 NY2d 138, 141 [1993]; Fulgenzi v Rink, 253AD2d 846 [1998]; Pagano v Smith, 201 AD2d 632, 633 [1994]). There is no indicationthat the plaintiff ever accelerated the debt under the terms of the note.
The note states that "[t]he first payment shall be due and payable on Sept 1, 1996 and on the1st day of each month thereafter with the balance due on the 1st day of Aug 1997." Therefore, forpurposes of the statute of limitations, a cause of action for the default in the payment of any oneinstallment due under the note accrued on the first day of each month of the 12 months at issue,commencing on September 1, 1996 and expired, respectively, 6 years thereafter. It is undisputedthat the plaintiff commenced this action on July 28, 2003 the date when the summons andcomplaint was filed with the County Clerk (see CPLR 304). Accordingly, any cause ofaction which accrued under the note more than 6 years prior to July 28, 2003 is time-barred. Thiswould include every payment due from September 1, 1996 until July 1, 1997, leaving only atimely cause of action to recover the last installment payment called for in the note, which wasdue on August 1, 1997. Consequently, except for a cause of action to recover the last paymentdue under the note, the plaintiff's action is otherwise time-barred.[*3]
Furthermore, the plaintiff was not entitled to summaryjudgment with respect to the last installment since the defendant raised an issue of fact as towhether the plaintiff's alleged misrepresentations regarding the business constituted fraud in theinducement. As stated by the Court in the case of Slavin v Victor (168 AD2d 399[1990]): "[p]romissory notes given in exchange for purchase of a business cannot be viewed in avacuum where genuine issues of fact exist as to whether the transaction was induced bymisrepresentation, even where the obligation is termed unconditional" (id. at 399[internal quotation marks and citations omitted]; see Millerton Agway Coop. v BriarcliffFarms, 17 NY2d 57 [1966]; Silber v Muschel, 190 AD2d 727 [1993]).
Finally, although the defendant did not cross-move for summary judgment herein, "CPLR3212 (b) permits the court to search the record where there is a pending motion for summaryjudgment, and then award judgment where it is warranted in favor of a nonmoving party as to acause of action that has been placed in issue by the papers" (Santagata v Vinegar Hill Group, LLC, 41 AD3d 576, 576 [2007],quoting Dunham v Hilco Constr. Co., 89 NY2d 425, 429-430 [1996]). Accordingly, thedefendant is entitled to partial summary judgment dismissing so much of the complaint as seeksdamages for nonpayment of installment payments of the promissory note, due from September 1,1996 until July 1, 1997. Spolzino, J.P., Ritter, Santucci and Carni, JJ., concur.