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BARCLAYS BANK OF NEW YORK v. GOLDMAN

June 22, 1981

BARCLAYS BANK OF NEW YORK, Plaintiff,
v.
Gordon GOLDMAN and Ruhama Goldman, Defendants and Third-Party Plaintiffs, v. DANKNER DIAMONDS (ISRAEL) LTD., Moshe Dankner and Yoram Dankner, Third-Party Defendants



The opinion of the court was delivered by: CANNELLA

MEMORANDUM AND ORDER

Plaintiff's motion for summary judgment is granted. Fed.R.Civ.P. 56.

The third-party defendants' motion (1) to dismiss the complaint for lack of subject matter jurisdiction is denied, Fed.R.Civ.P. 12(b)(1), and (2) to dismiss the third-party complaint for insufficiency of service of process, failure to state a claim upon which relief can be granted, and failure to plead the circumstances constituting fraud with particularity, is granted in part and denied in part. Fed.R.Civ.P. 9(b), 12(b)(5), 12(b)(6).

 The third-party plaintiffs are granted leave to file an amended third-party complaint and to serve process on third-party defendant Dankner Diamonds (Israel) Ltd. within thirty days of the date of this Memorandum and Order.

 FACTS

 Plaintiff Barclays Bank of New York ("Barclays" or "Bank") brings this diversity action against defendants Gordon Goldman and Ruhama Goldman (the "Goldmans") *fn1" as guarantors of debts incurred by third-party defendant Dankner Diamonds (Israel) Ltd. ("DDIL"), a diamond importer and dealer. The Goldmans have counterclaimed for the return of certain payments they say they were not obligated to make, and have also commenced a third-party action for indemnity against DDIL, a corporation organized in Israel with its principal place of business in New York, Moshe Dankner, a citizen and resident of Israel, and Yoram Dankner, a resident of New York. Moshe is Yoram and Ruhama's father and Gordon is Ruhama's husband.

 On September 15, 1975, the Goldmans, who were at the time officers of DDIL, signed, as guarantors, a document entitled "Guarantee and Security Agreement" (the "guarantee agreement"). *fn2" In pertinent part, the guarantee agreement provides that the guarantors (1) "absolutely and unconditionally (guarantee) to (the) Bank the prompt payment of claims of every nature and description of (the) Bank against (DDIL) ... and any and every obligation and liability of (DDIL) to (the) Bank ... of whatsoever nature and howsoever evidenced, whether now existing or hereafter incurred ... ((all) of the foregoing are hereinafter referred to as "Obligations')," (2) "(consent) that (these) Obligations or the liability of any other guarantor, surety, indemnitor, indorser, or any other party for or upon (DDIL's) Obligations ... may, from time to time in whole or in part, be renewed, extended, modified, accelerated, compromised, settled or released by (the) Bank ... without in any way (affecting) or releasing the liability of (the guarantors) hereunder," and (3) waive demand for payment from DDIL. The agreement further provides that the guarantors will pay an attorney's fee of fifteen percent of the principal and interest due if an attorney is used to enforce its terms.

 At about the same time the guarantee agreement was signed, the Bank renewed a line of credit it had previously extended to DDIL. On September 30, 1975, P. G. Elkins, Barclays's vice president and manager, wrote to DDIL, to the attention of Gordon Goldman, as follows:

 
We are pleased to advise you that your Company's line of credit in our books has been renewed for a further year at the increased level of $ 75,000 .
 
The above line of credit is granted subject to the following terms and conditions:
 
1) The line to run for a period of one year to expire September 24, 1976 prior to which time it will be renewed.
 
2) Interest to be charged at the rate of 2% over the Bank's prime rate, payable quarterly in arrears.
 
3) The line to be secured by a pledge over inventory and accounts receivable with a U.C.C. filing.
 
4) The line to be guaranteed by Mr. & Mrs. G. Goldman.
 
5) Compensating balances of 15% of the line to be maintained.
 
6) The Bank to be provided with a "comfort" letter from the parent, M. Dankner & Sons Ltd. stating that should Dankner Diamonds (Israel) Ltd. have financial difficulties and not be able to meet its liabilities, M. Dankner & Sons Ltd. will ensure that the Bank will be repaid.
 
Should the above terms and conditions meet with your approval, please sign and return the attached copy of this letter signifying your agreement. *fn3"

 On October 2, 1975, K. R. Pugsley, another Barclays vice president, wrote to DDIL to amend the September 30 letter, again to the attention of Gordon Goldman:

 
Further to our letter of September 30, 1975, in which we outlined the terms and conditions of the facility we have agreed to provide your company, we make the following amendment:
 
Borrowings are limited to 75% of the total amount of promissory notes held in our possession up to a maximum borrowing of $ 75,000 .
 
All other terms and conditions remain unchanged. Please sign and return the attached copy of this letter signifying your agreement. *fn4"

 Gordon countersigned and returned a copy of each letter to indicate DDIL's agreement therewith.

 On five occasions between September 19, 1975 and May 6, 1977, Barclays loaned money to DDIL, totalling $ 105,000, secured by DDIL's inventory and promissory notes given to DDIL by its customers. On each occasion, Gordon executed a demand note on DDIL's behalf. In addition, Ruhama signed the first demand note, dated September 19, 1975, and Yoram signed the fifth demand note, dated May 6, 1977, both acting on DDIL's behalf. *fn5" The demand notes are identical; each provides that Barclays may (1) sell all or part of the collateral "whenever in its discretion (it) considers such sale necessary for its protection," and (2) apply the proceeds from such disposition of the collateral "to the payment, in whole or in part, in such order as (the) Bank may elect, of one or more of (the) (obligations), whether due or not due, absolute or contingent." *fn6" Each note defines "obligations" to include "any and all liabilities and obligations of (DDIL) to (the) Bank and claims of every nature and description of (the) Bank against (DDIL) (including this note and any renewals, extensions or modifications thereof), whether now existing or hereafter incurred ...." Each loan carried an interest rate of two percent above the prime rate.

 In July 1977, apparently without the Goldmans' knowledge, DDIL issued several checks in the total amount of $ 82,841.27, which the Bank honored and paid despite the fact that at the time no funds remained in DDIL's checking account with the Bank. Barclays then liquidated the collateral it held to secure the DDIL loans, receiving approximately $ 120,000 in proceeds. The Bank applied these proceeds first to cover the overdrafts and used the remainder to reduce the loan balance to $ 63,500. To date, this amount, plus interest, has not been paid either by ...


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