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July 18, 1980;

Habib SABET, Hormoz Sabet and Firooz Corporation, Defendants

The opinion of the court was delivered by: CONNER


This removed action is presently before the Court on plaintiff's motion for summary judgment in lieu of a complaint.


 This is an action on a promissory note (the "note") in the principal amount of $ 1,500,000 executed by defendant Hormoz Sabet in his capacity as president of defendant Firooz Corporation ("Firooz"), at that time an Iranian private joint stock company; and on an unconditional personal guarantee (the "guarantee") of Firooz's obligations under that note executed by Hormoz Sabet and defendant Habib Sabet, Hormoz's father. *fn1" The note and guarantee were executed at a closing in New York on April 25, 1977, in connection with a loan in the amount of the note made to Firooz at that time by plaintiff Republic National Bank of New York ("Republic").

 Documents presented to Republic at the time of the closing indicate that the note as executed was a binding obligation of Firooz: those documents certify that the Firooz Board of Directors had approved the obtaining of a loan in this amount from Republic and had authorized Hormoz Sabet

"to negotiate with the Bank all the Terms and Conditions necessary for the Company to obtain the Loan from the Bank and to sign any contracts, agreements, promissory notes or other ... instruments with or in favor of the Bank, necessary to obtain the Loan,"

 and indicate that this Board resolution had been duly adopted and was in full force and effect on the date of the closing. In addition, Hormoz Sabet further signed a certificate stating in relevant part that "(t)he execution, delivery and performance by (Firooz) of the Note ... have been duly authorized by all necessary corporate action," and that "(t)he Note (constitutes) a legal and binding obligation of (Firooz) enforceable against the Company in accordance with its terms."

 The note provides in relevant part that Firooz will pay the principal sum of $ 1,500,000 to Republic, due on March 29, 1979, will pay interest on that amount of principal remaining unpaid before the due date on the first of the month at an annual rate of 9%, and will pay interest at an annual rate of 12% on any amount of principal not paid when due, whether due at stated maturity or by acceleration or as a result of any breach of the maker's covenants. Paragraph 6 of the note states:

"This note shall be deemed to have been made under, and shall in all respects be governed by, the laws of the State of New York."

 The guarantee signed by Hormoz and Habib Sabet states:

"FOR VALUE RECEIVED, and in consideration of the loan ... made and resulting in the indebtedness evidence by the (note) ... the undersigned, jointly and severally, hereby unconditionally guarantee to REPUBLIC ... that the unpaid principal of and interest on the Note will be promptly paid when due (whether at stated maturity, by acceleration or otherwise) and agree that the time for payment of the Note may be extended, performance of or compliance with any of the agreements of the maker contained in the Note may be extended or waived, the Note may be renewed all without affecting the liability of any of the undersigned hereunder and without notice to any of the undersigned.
1. Each of the undersigned hereby agrees that the obligations of the undersigned hereunder shall be unconditional irrespective of the genuineness, validity, legality or enforceability of the Note or any other circumstances which might otherwise constitute a legal or equitable discharge of a surety or guarantor and regardless of any rule, regulation, decree or order now or hereafter in effect in any jurisdiction purporting to affect in any manner any of the terms of the Note or the rights of the Bank or any subsequent holder ...
3. ... Each of the undersigned hereby waives presentment, protest, all notices ... with respect to the Note, acceptance of this Guaranty and all demands whatsoever, and agrees that this Guaranty, and the liability of each of the undersigned hereunder, shall be construed in accordance with and governed by the laws of the State of New York."

 Firooz regularly made the monthly interest payments due under the note from April 1977 through May 1979. In the spring of 1979, the political and economic situation in Iran became somewhat unstable following the departure of the Shah and the establishment of the Islamic Provisionary Revolutionary Government. Plaintiff does not dispute Hormoz Sabet's statement that by June 1979, Firooz and the Zam Zam Bottling Company ("Zam Zam"), an Iranian corporation also previously controlled by the Sabets, and a corporate guarantor of the Firooz note, had been expropriated by the Islamic Provisionary Revolutionary Government. The parties disagree on certain other matters pertaining to developments over these months, but agree that the principal amount of the Firooz loan was not repaid on March 29, 1979, as provided in the note and that on June 27, 1979, Cyril Dwek, Executive Vice President of Republic, sent Habib Sabet a telegram as follows:


 The parties further agree that on July 5, 1979, Hormoz and Habib Sabet sent Republic a check for $ 300,000; that Republic accepted this as part payment of principal on the Firooz loan; and that on July 2, 1979, Hormoz and Habib Sabet tendered a check in the amount of $ 15,500, representing interest at 12% on the Firooz loan of $ 1,500,000, and Republic accepted that check.


 Subsequently, Republic brought this action in the Supreme Court of the State of New York, New York County, to recover the unpaid principal on the note, or $ 1,200,000, plus interest at the post-due rate of 12% from July 1, 1979, by means of an ex parte attachment order issued pursuant to CPLR § 6201(1) and by service of a summons and notice of motion for summary judgment in lieu of a complaint pursuant to CPLR § 3212, which authorizes such a procedure in actions based upon an instrument for the payment of money only. In accordance with the attachment order, Republic directed the Sheriff of the City of New York to levy against the contents of Hormoz Sabet's apartment at 820 Fifth Avenue in New York, and the sheriff did so. Papers were served on defendant Hormoz Sabet on July 31, 1979, and on Gulf Associates, Inc., the agent specified for service of process on Firooz in Paragraph Four of the note, on August 6, 1979.

 On August 15, 1979, defendant Hormoz Sabet filed a petition for removal of the case to the Southern District of New York on behalf of "all defendants served with process." The petition asserts that federal jurisdiction exists over the action based on diversity of citizenship, since Republic is a national banking association, with its principal place of business in New York, while Firooz is an Iranian corporation with its principal place of business in Teheran and each individual defendant is an Iranian citizen. Plaintiff did not oppose the petition, and the case was duly removed, with pending motions of Hormoz Sabet to vacate the attachment and of plaintiff to confirm it.

 On September 6, 1979, the parties entered into an agreement settling the issues raised by the motions to vacate or confirm the attachment. The agreement provides that Hormoz Sabet retains the right to seek recovery from Republic for damages to or loss of any of the items removed from his apartment by the sheriff, or damage to the apartment resulting from the sheriff's seizure of such items.

 On September 27, 1979, Habib Sabet was served with a summons and notice of motion in this case by a process server authorized under the laws of France, who left a copy of such papers with the doorkeeper at Habib Sabet's Paris residence and mailed a copy to him at that address. See affidavit of service signed at the United States Embassy on September 28, 1979.


 A. Hormoz Sabet

 Hormoz Sabet, the only defendant to appear formally in this action, has raised several contentions in opposition to plaintiff's motion. First, he contends that an issue of material fact exists with respect to whether Republic extended the due date of the Firooz note until March 29, 1980. In support of his assertion that this extension was granted, Hormoz Sabet states that Habib Sabet arranged for such an extension orally with Cyril Dwek of Republic in March 1979, and points to his letter of March 13, 1979 to Dwek, which states, in relevant part,

"I refer you to your discussions with Mr. Habib Sabet in Paris, whereby you kindly confirmed your acceptance to extend for a period of one year the loan in the amount of $ 1,500,000 extended to the Firooz Corporation.
"Mr. Habib Sabet will be in New York in the near future and will be meeting with you to discuss this matter.
"Alternatively, I shall return to New York within the next two weeks after a trip, and shall look forward to seeing you at that time." Affidavit of Hormoz Sabet of October 12, 1979, Exh. 3. *fn2"

 Secondly, Hormoz Sabet maintains that pursuant to an oral agreement entered into in Geneva, Switzerland, between Habib Sabet and Albert Benezra ("Benezra"), a director of Republic's affiliate, the Trade Development Bank of Geneva, following Dwek's telegram of June 27, 1979 demanding payment on the Firooz note, Republic agreed that, in return for the Sabet's immediate payment of $ 300,000 in principal on the note (which the Sabets assert was not yet due under Dwek's earlier extension), and for the Sabets' undertaking to assure interest payments on the extended Firooz loan, Republic would reaffirm Dwek's earlier grant of a one-year extension and would "endeavor to collect from the Firooz Corporation in Iran the full amount of the principal and interest due under the Note and to use a portion of the proceeds to repay to the Sabets the $ 300,000 which they personally were paying to Republic National Bank," as well as to collect from Zam Zam certain other monies due on a loan to Zam Zam and reimburse the Sabets for payments they had made to Republic under their personal guarantee of that Zam Zam obligation (the "Geneva agreement"). Since Republic has not attempted to collect either from Firooz or from Zam Zam, Hormoz Sabet alleges, Republic has breached the Geneva agreement with the Sabets and extinguished any duty the Sabets had to repay monies under the Firooz note.

 In his Supplemental Affidavit of November 2, 1979, Hormoz Sabet also asserts that, apparently as a result of a meeting with Republic's Honorary Chairman Edmond Safra in July 1979, as further consideration for the one-year extension, he and Habib Sabet agreed to and did provide assistance to Republic in Republic's attempts to satisfy a ...

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