Wednesday, December 25, 2013

Long Island Trust Co. v. International Institute for Packaging Education, Ltd. case brief

Long Island Trust Co. v. International Institute for Packaging Education, Ltd. case brief summary
344 N.E.2d 377 (N.Y. 1976)

CASE SYNOPSIS
Defendants appealed a judgment from the Appellate Division of the Supreme Court in the Second Judicial Department (New York), which affirmed the trial court's order granting plaintiff's motion for summary judgment against defendants in an action concerning conditional delivery of promissory note.

CASE FACTS
In plaintiff bank's action to recover on a promissory note, defendants, who were the individual guarantors of a corporate obligation, sought to interpose as a defense an alleged oral agreement that the guarantee would not become effective unless and until the payee procured the guarantee of other specific persons as co-guarantors. Plaintiff argued that defendants produced no evidence that would establish conditional delivery of note. Plaintiff also asserted that the defense of conditional delivery not available, as a matter of law, to defendants.

DISCUSSION

  • The court reviewed the record and held that a person, who was not a holder in due course, took an instrument subject to a defense of nonperformance of a condition precedent, and conditional delivery was a defense in the nature of condition precedent. 
  • The court further held that an instrument was unenforceable where the terms of conditional delivery had not been complied with, and parol evidence was admissible to show that delivery was conditional. 
  • Moreover, the condition precedent of a conditional delivery did not contradict the express terms of the agreement and could be proved by parol evidence.
CONCLUSION
The court reversed the order granting summary judgment to plaintiff and remanded for further proceedings.


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