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February 3, 1971


Mansfield, District Judge.

The opinion of the court was delivered by: MANSFIELD

MANSFIELD, District Judge.

In this suit upon a written guaranty, plaintiff has moved pursuant to Rule 56, F.R.C.P., for summary judgment in the sum of 498,400,000 Lire ($207,334.40) with interest from June 30, 1967, together with reasonable attorneys' fees, costs and disbursements. In addition plaintiff seeks reasonable expenses incurred by it as the result of defendant's alleged bad faith opposition to plaintiff's earlier motion for summary judgment. Defendant has cross-moved for summary judgment in its favor, together with the costs and disbursements of this action.

 For the reasons stated below, plaintiff's motion is granted except for its claim for reasonable attorneys' fees and disbursements and for expenses arising out of its earlier motion, which is denied. Defendant's motion is denied.

 Plaintiff (called "Isveimer" by the parties) is a corporation formed under the auspices of the Italian government. Its purpose is to encourage industrial development in southern Italy. Defendant ("Sperti" herein) is an Ohio corporation having its principal place of business in Kentucky. In 1965 it, together with some other American investors, managed and controlled Societa Azionaria Conservazione Alimenti Freschi ("SACAF"), an Italian corporation engaged in the food-processing business in southern Italy.

 On February 8, 1965, plaintiff agreed to loan 500,000,000 Lire ($800,000) to SACAF; and by contract between the parties dated February 8, 1965, defendant guaranteed repayment of that loan to the extent of 26%, or 130,000,000 Lire ($208,000). The loan was carried out to the extent of advances of 498,400,000 Lire. (Sperti claims that the advances amounted to 491,400,000 Lire, but we hold otherwise for reasons explained below.) SACAF then experienced financial difficulty, which continued until May 1966, when a bankruptcy petition with respect to it was filed in the Court of Salerno, Italy. On June 30, 1967, SACAF wholly defaulted in repaying the loan, and the total amount guaranteed by Sperti became due and owing.

 Sperti did not pay, with the result that an action was commenced by plaintiff against it upon the guaranty in the New York State Supreme Court. Sperti was personally served in Kentucky with a Notice of Motion for Summary Judgment in Lieu of a Complaint, pursuant to N.Y.C.P.L.R. § 3213. On November 26, 1968, prior to the return date of the motion for summary judgment in the state court, Sperti removed this action to federal court.

 Plaintiff's motion for summary judgment was heard by Judge Edelstein on February 25, 1969. Sperti claimed that it had no evidence in its file that the money had been advanced to SACAF as alleged and also raised several procedural questions. Judge Edelstein dismissed the substantive claim upon plaintiff's documentary proof of the advances, Instituto per Lo Sviluppo Economico Dell' Italia Meridionale v. Sperti Products, Inc., 47 F.R.D. 310, 316 (S.D.N.Y. 1969) (Edelstein, J.), and similarly disposed of all of the procedural objections but one, holding that there was one triable issue of fact -- whether this court had in personam jurisdiction over the defendant. Id. at 317. That issue depended upon whether or not the cause of action arose out of Sperti's transaction of business in New York, within the meaning of C.P.L.R. § 302(a)(1). *fn1"

 To resolve the issue of jurisdiction Isveimer took various depositions of Sperti officers and counsel, on the basis of which it contends, and we agree, that this court has personal jurisdiction over defendant. Sperti now also agrees that it is amenable to jurisdiction. (Affidavit of Edward C. McLean, Jr., P 18; Brief of Defendant at 8.) Discovery revealed that the guaranty was executed by Sperti's president in New York and approved at a meeting of Sperti's board of directors, which also took place in New York. Sperti also had a New York office and conducted licensing activities through the law firm of Shea, Gallop, Climenko & Gould (which was in the same building as Sperti, but on a different floor). These contacts are enough *fn2" to support personal jurisdiction under C.P.L.R. § 302(a)(1). E. g., Liquid Carriers Corp. v. American Marine Corp., 375 F.2d 951 (2d Cir. 1967); Winston, Inc. v. Waldfogel, 292 F. Supp. 473 (S.D.N.Y. 1968); Atlantic Steamers Supply Co. v. International Maritime Supplies Co., Ltd., 268 F. Supp. 1009 (S.D.N.Y. 1967); Potter's Photographic Applications Co. v. Ealing Corp., 292 F. Supp. 92, 100-103 (E.D.N.Y. 1968).

 Since Judge Edelstein held that jurisdiction remained an open issue, his respected comments regarding ultimate liability and damages did not constitute a holding. United States v. Montreal Trust Co., 358 F.2d 239, 249 (2d Cir.), cert. denied, 384 U.S. 919, 86 S. Ct. 1366, 16 L. Ed. 2d 440 (1966); Arrowsmith v. United Press International, 320 F.2d 219, 221 (2d Cir. 1963) (en banc). We must therefore now decide these issues.

 The first issue concerns the amount of money advanced by plaintiff to SACAF. Plaintiff contends that of the 500 million Lire that it agreed to loan to SACAF it advanced 498.4 million Lire by directing the Banco di Napoli to make that amount available to Sperti. The records of that bank, maintained in the regular course of business, show payment of 498.4 million Lire under the SACAF loan agreement. Sperti, however, points out that although plaintiff directed the bank to forward that amount to SACAF, the bank only advanced 491.4 million Lire. The discrepancy occurred because the bank credited itself with 7 million Lire in payment of interest due it from SACAF on an unrelated loan.

 There is no contention that SACAF was not indebted to the bank for interest in the sum of 7 million Lire at the time when the bank applied that amount of the loan to reduction of SACAF's indebtedness to it. Thus SACAF had the benefit of 7 million Lire, albeit in the form of a reduction of its indebtedness to the bank rather than through use of the funds for some other purpose. As far as plaintiff was concerned, it made the money available to SACAF and it was not under an obligation to see that the funds were applied toward one use rather than the other as long as they were credited to SACAF's account.

 It was known by both SACAF and Isveimer that SACAF had maintained a credit and debit account with the Banco di Napoli in Salerno. (Deposition of Mario Giordano (the director-general of Isveimer) at 77.) The bank, in making its attachment, was no agent of Isveimer. *fn3" And the bank confirmed to Isveimer that the loan installment (including the disputed 7 million Lire) had been paid. Thus, any informal attachment or "garnishment" by the bank of Isveimer's loan to SACAF does not work to the advantage of SACAF and Sperti. Accordingly, we conclude that SACAF received the advance of 7 million Lire and became indebted for it to plaintiff.

 Sperti argues that under § 1955 of the Italian Civil Code its obligations to Isveimer upon the guaranty have been discharged; alternatively, it argues that under § 1275 of the Italian Civil Code Sperti's obligations to Isveimer have been reduced by about 50%. We shall consider, first, the undisputed factual background relied upon by Sperti, and then the legal arguments themselves.

 Prior to 1965 Isveimer made four loans to SACAF, each of which was secured by a separate mortgage of the SACAF factory at Fuorni, Italy, and by a separate privilege on the machinery installed in that factory. A "privilege" is a lien on personalty which is authorized by statute. Each privilege and mortgage was duly recorded. (Tesauro Aff. of March 5, 1970, P ...

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