The opinion of the court was delivered by: LASKER
Bank Saderat Iran ("BSI") is an Iranian corporation with branches in many cities, including Beirut and New York. Amin Beydoun, Inc. ("Beydoun Inc.") is a New York corporation which, until it ceased operating in 1978, was engaged in the textile business, buying textiles in the United States and shipping them overseas. Amin Beydoun is the sole shareholder, officer and director of Amin Beydoun, Inc.
During the period relevant to this action, Beydoun Inc. did regular business with Fouad Beydoun & Fils ("Beydoun & Fils") of Beirut, Lebanon, a textile concern run by Amin Beydoun's father, Fouad Beydoun. Beydoun Inc. sent textile samples to Beydoun & Fils with prices, and Beydoun & Fils ordered merchandise from Beydoun Inc. by telex, letter or telephone. Beydoun & Fils paid for the merchandise by sending money through correspondent banks to Beydoun Inc.'s account at First National City Bank in New York City. Beydoun & Fils' payments, which were sent at irregular intervals, were credited to Beydoun & Fils' account with Beydoun Inc. as they arrived.
On March 3, 1976, BSI, at the direction of Beydoun & Fils, made a payment of $24,950 to Beydoun Inc.'s account at First National City Bank. BSI made two more payments of $24,950 to Beydoun Inc.'s account on March 10, 1976. In this action BSI claims that one of the $24,950 payments made on March 10, 1976 was made by mistake, and that as a matter of law it is entitled to recover the mistaken payment. See Manufacturers Trust Company v. Diamond, 17 Misc.2d 909, 186 N.Y.S.2d 917 (App. Term 1st Dept. 1959). BSI also bases its action upon a theory of unjust enrichment. See Paramount Film Distributing Corp. v. State of New York, 30 N.Y.2d 415, 334 N.Y.S.2d 388, 285 N.E.2d 695 (1972). The defendants dispute that the payment was made by mistake, and also claim that recovery is in any event barred because the defendants have changed their position to their detriment in reliance upon the payment. According to defendants, Beydoun Inc. shipped materials to Beydoun & Fils in exchange for the allegedly mistaken $24,950 payment. It follows, they say, that since Beydoun & Fils has gone out of business and cannot make restitution to the defendants, plaintiffs should not be permitted to recover the allegedly mistaken payments from defendants. Amin Beydoun also asserts that no basis has been established for holding him individually liable for a mistaken payment made to the account of Beydoun Inc.
BSI presented bank records and other documentary evidence in support of its claim of a mistaken payment, along with the testimony of two witnesses: Heidar Hamedani, currently the managing agent of BSI's New York agency, who carried out the bank investigation leading to identification of the allegedly mistaken payment; and Theodore Atsalas, who was employed by BSI at the time during which the payment was made and who was responsible for carrying out the procedures which resulted in the claimed mistaken payment. Both BSI and the defendants called Amin Beydoun as a witness. The defendants called no other witnesses.
The documentary evidence, together with Hamedani's
and Atsalas' testimony, established the following sequence of events leading up to the three $24,950 payments in early March 1976. On March 1, 1976, in accordance with the instructions of Beydoun & Fils, BSI's Beirut branch telexed a payment order for $24,950 to BSI's New York agency (Pl. Ex. 1). The payment order was assigned the number BSI/637/26. Hamedani testified that it was BSI's practice to assign a separate number to each payment order. BSI's New York agency paid the requested amount, minus a $5.00 service charge, to Beydoun Inc.'s account at First National City Bank, by a check drawn on the New York agency's account at Continental Bank International, dated March 3, 1976 (Pl. Ex. 2). The New York agency's ledger shows that payment was made on March 4, 1976 (Pl. Ex. 15).
On March 9th, BSI's Beirut agency sent a telex to the New York agency regarding payment order number BSI/637/26, stating (in effect) that Beydoun & Fils had informed the Beirut agency that Beydoun Inc. had not yet received the $24,950 (Pl. Ex. 5). The telex requested immediate payment of the payment order and inquired about the reasons for the delay. The March 9th telex carries a notation, initialed by Atsalas, indicating that Atsalas had made an investigation on March 10th in response to the telex inquiry and had determined that payment order BSI/637/26 had not yet been paid. Atsalas testified that he would not have come to this conclusion if he had been aware of the New York ledger entry showing payment of order number BSI/637/26 (Pl. Ex. 15). Atsalas, who is no longer employed by BSI, was unable to explain why he had failed to discover the ledger entry.
On March 10th, after Atsalas had concluded that payment order BSI/637/26 had not been paid, the New York agency made a payment of $24,950 in federal funds to Beydoun Inc.'s account at First National City Bank, by debiting the New York agency's account at the Irving Trust Company in New York. Hamedani explained that transfers are made in federal funds when the bank wishes to complete a transfer on a same-day basis. The debit advice issued to the New York agency by the Irving Trust Company refers to payment order number BSI/637/26 and shows a debit of $24,950 (Pl. Ex. 7). The March 10th payment was recorded in the New York agency's ledger on March 11th (Pl. Ex. 15).
At approximately the same time the New York agency was investigating whether payment order BSI/637/26 had been paid, BSI's Beirut branch, at Beydoun & Fils' request, telexed a second payment order, numbered BSI/637/42, to BSI's New York agency, for payment to the account of Beydoun Inc. This payment, again of $24,950, was also made in federal funds by debiting the New York agency's account at Irving Trust (Pl. Ex. 8). This payment, like the second payment on payment order BSI/637/26, was entered on the New York agency's ledger on March 11th (Pl. Ex. 15). Hamedani testified that, upon completing an investigation of the documents summarized above, he concluded that two $24,950 payments were correctly made to Beydoun Inc.'s account between March 3rd and March 11th, pursuant to payment orders BSI/637/26 and BSI/637/42, and that a mistaken duplicate payment was made on payment order BSI/637/26. Hamedani stated that, when he called Amin Beydoun about the mistake in early August 1976, Beydoun was "friendly" and said that he would check his records and check with Fouad Beydoun, and would rectify the matter if any mistake had been made. A few days later, Beydoun said that he had checked with Fouad Beydoun but would be unable to clarify the matter further because Fouad's records had been destroyed during the Lebanese Civil War. Apparently, Hamedani and Beydoun did not discuss whether Beydoun's records alone revealed whether or not the payment was a mistake. According to Hamedani, Amin Beydoun reported that Fouad Beydoun had stated that he thought he had made three transfers to Amin Beydoun during the period in question. Shortly following this conversation, BSI commenced the instant lawsuit.
Amin Beydoun testified that, at the time of the contested payment, Beydoun & Fils accounted for about 25 to 35 percent of Beydoun Inc.'s business. Beydoun & Fils maintained a revolving account with Beydoun Inc.: that is, Beydoun Inc. shipped merchandise to Beydoun & Fils continuously, debiting Beydoun & Fils' account, and Beydoun & Fils made periodic payments which were credited to its account by Beydoun Inc. Beydoun Inc. did not require payment in advance nor a letter of credit before shipping material to Beydoun & Fils.
Indeed, Beydoun often was forced to make repeated requests for payments when Beydoun & Fils had accumulated a large debit balance.
Beydoun testified that he kept careful records of all shipments and payments relating to Beydoun Inc.'s business, and his ledgers in fact reflect three $24,950 payments in early March (Def. Ex. B). Nevertheless, according to Beydoun, because of the credit arrangement described above and the substantial volume of transactions between Beydoun & Fils and Beydoun Inc., it was and is impossible to trace any particular payment by Beydoun & Fils to any particular shipment of merchandise. Beydoun testified that he was expecting several payments from Beydoun & Fils in late February and early March,
and that it was his practice to contact the bank if he was expecting a payment from Beydoun & Fils and had not yet received it. Beydoun had no specific recollection of the inquiry that he made in connection with the payment at issue here.
Although Beydoun was unable to point to specific merchandise that was shipped to Beydoun & Fils as a result of the contested payment, Beydoun testified that because his accounts balanced when he wound down his corporation in 1978, he is certain that he shipped merchandise to Beydoun & Fils in return for whatever payments he received for their account.
Beydoun testified that, throughout Beydoun Inc.'s operation, he kept Beydoun Inc.'s finances strictly separate from his own, and withdrew money from the corporation only for his salary and for repayment of loans that he made to the corporation from time ...