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March 4, 1983

PROMOVOYAGE, S.A.R.L., Plaintiff,

The opinion of the court was delivered by: WEINFELD



 The plaintiff, Promovoyage, S.A.R.L. ("Promovoyage"), is a French corporation engaged in booking airplane and hotel reservations for large groups. Promovoyage was under contract with one of its customers, the French National Gas Company ("Gaz de France"), to book passage for 125 of the customer's employees to travel from France to the United States, where they were to attend a convention on solar energy. Patrick Cartier is the principal officer of Promovoyage.

 The defendant, Your Airline Connection ("Your Airline"), is a New York corporation and is engaged in the business of organizing and marketing wholesale group travel package tours. The defendants, Sergio Bosco ("Bosco") and Francis Crispo ("Crispo"), *fn1" are the sole shareholders and are officers of Your Airline. Also named as defendants are other officers, Lia Bosco and Josephine Bosco, respectively secretary and treasurer. In addition, plaintiff has named Romanda Senior Tours, *fn2" a New York corporation, also known as Medi Tours and Medi Travel ("Medi"), and Jamie Wolfe, *fn3" counsel to Your Airline.

 Commencing in June, and continuing through July 1980, *fn4" Cartier, in Paris, through telex communications with Bosco in New York and in several personal conferences in New York, negotiated and agreed upon the terms for the Gaz de France trip to the United States. Your Airline was to submit to Promovoyage in Paris both a formal contract embodying the terms of their agreement and an invoice for the amount of the tour, which were required under French exchange control regulations in order to transfer funds out of France. With the date of departure approaching and Cartier not having received the agreed upon formal contract, he returned to New York City on October 6, where he met with Bosco and Crispo, and a written agreement was executed which provided that upon payment by Promovoyage of $100,062.50 Your Airline would provide air and land arrangements for the Gaz de France group. The arrangements included round trip air transportation between Paris, France, and Orlando, Florida, on TWA flight 803, leaving Paris November 4 and returning November 11; hotel accommodations with meals in Orlando and Miami; private motor coach transportation between airports and hotels; specified excursions; various tourist attractions in Orlando; conference room facilities at hotels and a professional English/French speaking tour escort for the group.

 After the written contract had been executed, Cartier, based upon some incidents during the course of negotiations with Bosco and Crispo, and also upon information derived from other sources, was apprehensive that they and Your Airline would faithfully carry out the terms of the agreement. Concerned with Promovoyage's own reputation in the group air travel field, and also because Gaz de France was a good customer, Cartier again came to New York with two French bank checks drawn on Bankers Trust Company payable to Your Airline in the amounts of $50,462.50 and $49,600. Cartier met with Bosco on October 20 and tendered the two checks for the tickets on the TWA flight pursuant to the October 6 agreement, but Bosco failed to deliver the required tickets. Thereupon, Cartier retained a New York attorney, Mark Skolnick. They met the next day, October 21, with Bosco, Crispo and Norman Harlow, an attorney who represented Your Airline. The parties executed a second agreement dated that day, which provided that the check of $50,462.50 was to be deposited into a new account in the name of Your Airline at Bankers Trust Company, New York City, the funds to be used solely in payment of the airline tickets specified in the contract. It also provided that the $49,600 check was to be deposited in a pre-existing bank account of the defendant, Your Airline, the funds to be used solely in furtherance of the other provisions of the October 6 contract. The agreement required that the funds in both accounts could not be disbursed except by checks signed by Skolnick and either Bosco or Crispo.

 Despite this express provision for Skolnick's signature, checks were drawn against the accounts without his signature and the amounts thereof diverted, as noted hereafter. With respect to the pre-existing account at Bankers Trust, Bosco or Crispo never filed a corporate resolution with the bank for Skolnick's signature for withdrawals. As to the new account, although a proper resolution had been filed when it was opened, the requirement of Skolnick's signature on all checks was unilaterally eliminated. This was effected on October 28 by a corporate resolution of Your Airline signed by Crispo and "confirmed" by Bosco which changed the two signature requirement so that checks could be drawn on that account signed either by Bosco or Crispo. Skolnick never agreed to this change. In fact, neither he nor the plaintiff learned of it until several months after the event. Meanwhile, of the proceeds of plaintiff's checks that were deposited in the two accounts, considerable amounts were withdrawn to pay various obligations of Your Airline that were unrelated to the tour and personal expenses of individual defendants. One check, however, of which the payee was Air New England, was properly drawn with Skolnick's signature. Skolnick signed it upon the representation that the TWA tickets were being purchased through Air New England, which subsequent events show was false.

 On November 1 Bosco informed the plaintiff at Paris that he was sending tickets for the group, which would be delivered on a TWA flight arriving in Paris. Although the tickets were carried from New York to Paris aboard a TWA flight, the tickets themselves were not for the TWA flight specified in the contract, but for two separate KLM flights. Moreover, although the KLM flights departed from Paris on the same day as the TWA flight, they left at different times: one several hours before the TWA flight was scheduled to depart, and one several hours later. Both KLM flights did not fly directly to New York, as the TWA flight did, and in order to use the KLM tickets the group would have to be split in two. The tickets only provided transportation to New York and return to Paris: tickets for the domestic leg of the flight (between New York and Florida) were not included. Enclosed with the tickets was a note signed by Crispo requesting an additional $25,000 to cover the costs for the New York to Florida flights.

 Promovoyage, because it was a weekend and Cartier did not have the home telephone numbers of the members of the group, was not able to notify them of the change in plans that required some of the group to arrive at the airport several hours earlier and others to arrive several hours later. Accordingly, Cartier had no choice but to obtain the necessary number of tickets on the contracted for TWA flight. This was fortuitous: when three members of the group were delayed, and it appeared that they would have to take a later plane, Cartier attempted to confirm three seats on the later KLM flight; however, KLM refused to honor or endorse the tickets over to TWA. Thus, Cartier was forced to purchase the TWA tickets outright, for which it paid $82,307.93 in cash, which included airfare between New York and Orlando.

 When the group arrived in the United States, other problems were encountered. Although the contract had specified that the group would lodge at the Orlando Holiday Inn, the group was shifted to the Orlando Marriott, a hotel Cartier deemed inferior to the agreed upon hotel. The contract also required hotel arrangements to be prepaid, but Your Airline failed to do so. Indeed, the failure to prepay was the reason the Holiday Inn cancelled the reservations. While the group was at the Marriott, Crispo tendered a $5,000 check to the manager as a partial payment of the total bill. That check, however, was not covered by sufficient funds. This resulted in the harassment of the group by the hotel management, who at one point threatened to lock some members of the group out of their hotel rooms. After spending one day with the group at the Marriott, and tendering the check described above, Crispo returned to New York, despite the contract provision that he would serve as a guide for the group for the entire tour.

 As previously noted, the contract provided for excursions of the group to specific points of interest while in Florida. Payments for transportation to these sites, admission fees, and other items such as meals were to be made by Your Airline in advance, and group members were given vouchers to use in lieu of cash. Only the transportation fees had been prepaid, however, and the remaining vouchers were not accepted when tendered. Thus, Cartier also had to pay for these contracted for services.

 While the group was still in Florida, Skolnick met with Jamie Wolfe, another attorney for Your Airline in New York, with respect to the problems that had developed in Florida. They reached an agreement on November 6 whereby Skolnick released the unused KLM tickets to Wolfe upon condition that they be held by him in escrow to obtain a cash refund from KLM, the proceeds of which were to be applied to the balance due the Marriott, and to any other outstanding unpaid account.

 At a December 1980 meeting, the parties met again in New York. There Bosco and Crispo presented plaintiff with a final statement claiming that, because of various cancellation fees and other expenses, plaintiff owed defendants $99,549.50. The statement did indicate that plaintiff was owed $500 by defendants in refunds. Rather than effect an offset, Bosco tendered to Cartier a check in that amount. *fn5" Cartier refused the check, and instead brought this lawsuit.

 The issues were sharply contested in a week long trial. The principal litigants testified either in person or by way of deposition. Other witnesses included Skolnick and Patrick Bruneau, who had participated in some of the New York negotiations on behalf of Promovoyage. Based upon the Court's trial notes, which include its contemporaneous appraisal of each witness, a word-by-word study of Bosco's trial testimony, the demeanor of the witnesses and evaluation of their credibility, and the reasonable inferences to be drawn from established facts and surrounding ...

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