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GELCO BUILDERS ET AL. v. SIMPSON FACTORS CORP. ET AL. (06/18/69)

SUPREME COURT OF NEW YORK, TRIAL TERM, NEW YORK COUNTY 1969.NY.42081 <http://www.versuslaw.com>; 301 N.Y.S.2d 728; 60 Misc. 2d 492 June 18, 1969 GELCO BUILDERS ET AL., PLAINTIFFS,v.SIMPSON FACTORS CORP. ET AL., DEFENDANTS Raphael Searles & Vischi (Sidney O. Raphael and Robert Scher of counsel), for plaintiff. M. Carl Levine, Morgulas & Foreman (Albert Foreman and Julius Berman of counsel), for Simpson Factors Corp. and others, defendants. Murray Kalik for Raymar Contracting Corp. and another, defendants. Arnold L. Fein, J. Author: Fein


Arnold L. Fein, J.

Author: Fein

 Defendants' motions to dismiss, to set aside the verdict of the jury and for a new trial and for other relief and all other motions by defendants, as to which decision was reserved, are now denied.

Plaintiff's motion to add interest is granted to the extent of directing the clerk to add and include in the judgment interest at the rate of 6% per annum, on the amount of the jury's verdict from January 30, 1963, the date of the commencement of the action, up to July 1, 1968, and at the rate of 7 1/4% per annum from July 1, 1968 to February 16, 1969 and at the rate of 7 1/2% per annum from February 16, 1969 to the date of the verdict.

Plaintiff is entitled to interest on a jury's verdict in its favor in an action for inducing breach of contract (De Long Corp. v. Morrison-Knudsen Co., 20 A.D.2d 104, affd. 14 N.Y.2d 346; CPLR 5001, subd. [a]).

CPLR 5001 (subd. [b]) provides: "Interest shall be computed from the earliest ascertainable date the cause of action existed, except that interest upon damages incurred thereafter shall be computed from the date incurred. Where such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date."

Even if it be assumed, as plaintiff contends, that the inducement to breach and breach of the covenant not to assign the payments due under the construction contract occurred on May 2, 1960, it was not proved that any part of the damages were incurred on that date. There was a continuing inducement and breach as each payment by plaintiff to Raymar Contracting Corp. was turned over to the factor. However, Raymar continued its performance of the construction job until on or about April 2, 1961, when its performance terminated. That was also the approximate date on which plaintiff became aware of the breach, the conspiracy, and the inducement, as well as the failure and inability of Raymar to perform, and the possibility that plaintiff might be required to perform in its stead, under the Miller Act (U. S. Code, tit. 40, ยง 270a et seq.).

There was no demonstration, with any degree of precision as to dates, when the various items of damage were incurred. As the jury was instructed, the allowable damages were only those expenditures necessarily incurred by plaintiff to complete the construction subcontract, to the extent they were incurred as a proximate result of the inducement to breach and the consequent breach. The dates on which Raymar defaulted on the payments it was required to make were not proved. Nor was it established, with even approximate certainty as to dates, when plaintiff became obligated to or did in fact make good such payments or when it undertook and did or paid for the construction work necessary to be completed.

Although CPLR 5001 (subd. [b]) permits interest "from the earliest ascertainable date the cause of action existed", it excepts "interest upon damages incurred thereafter" which "shall be computed from the date * * * incurred". The statutory test is not the date of breach, but rather the date the loss or damage was actually incurred. As the statute implicitly recognizes, the award of interest is founded on the theory that there has been a deprivation of use of money or its equivalent and that the sole function of interest is to make whole the party aggrieved. It is not to provide a windfall. (Lesjac Realty Corp. v. Mulhauser, 43 Misc. 2d 439; Matter of Kavares (MV AIC), 29 A.D.2d 68.)

The jury was not requested or instructed to fix the date or dates when the damages were incurred, nor to allow or include interest in any verdict it might render. The general verdict was in the sum of $850,000. Since the damages sought to be proved were substantially in excess of that amount, it cannot be determined which items the jury accepted or rejected, either in whole or in part. On the evidence before it, and appropriate instructions, the jury properly could have followed either course, or a combination of both. Therefore, it cannot be determined on what dates the various elements of damage found by the jury were incurred.

This makes it practically impossible and inequitable to apply the alternative provision in CPLR 5001 (subd. [b]): "Where such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date."

Under the circumstances, the court cannot determine "a single reasonable intermediate date." It is appropriate, therefore, to fix the interest date as the date of the commencement of the action. (De Long Corp. v. Morrison-Knudsen Co., 20 A.D.2d 104, affd. 14 N.Y.2d 346, supra ; Mathis v. Matthews, 39 N. Y. S. 2d 242.) The persuasive rationale of Mathis seems to be incorporated in the present CPLR 5001 (subd. [b]). (See the Legislative Studies and Reports, and the Practice Commentary to CPLR 5001, Book 7B, McKinney's Cons. Laws of N. Y., and the 1968-69 Pocket Part.)

Plaintiff now urges, for the first time in its brief, that interest be allowed at the rate of 6% per annum up to July 1, 1968 and at 7 1/4% per annum from July 1, 1968 to February 16, 1969 and at 7 1/2% per annum from February 16, 1969 to the date of verdict (citing Jamaica Sav. Bank v. Giacomantonio, 59 Misc. 2d 704).

CPLR 5004 provides: "Interest shall be at the legal rate, except where otherwise prescribed by statute." The determination of "legal rate" has always been construed in terms of the maximum permitted in the "usury statute", now section -501 of the General Obligations Law (Taylor v. Wing, 84 N. Y. 471).

Subdivision 1 of section 5-501 of the General Obligations Law was amended in 1968 to provide: "The rate of interest as computed pursuant to this title upon the loan or forbearance of any money, goods, or things in action, except as otherwise provided by law, shall be at the rate prescribed by the banking board pursuant to section fourteen-a of the banking law, or ...


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