The opinion of the court was delivered by: Leisure, District Judge.
This is an action to collect sums allegedly owed in
connection with furs purchased at two auctions in Vantaa,
Finland. Plaintiff Finnish Fur Sales Co., Ltd. ("FFS"),
asserts its claim of failure to pay for and clear 2,469 fox
pelts against defendants Juliette Shulof Furs, Inc. ("JSF"),
and George Shulof. Plaintiff Okobank Osuuspankkien
Keskuspankki Oy ("Okobank") asserts its claim of failure to
honor a bill of exchange against defendants JSF and Juliette
Defendants George and Juliette Shulof now move the Court for
summary judgment dismissing the individual claims against each
of them. Plaintiffs oppose defendants' motion and cross-move
for summary judgment against all defendants.
FFS is a limited company organized under Finnish law, which
sells fur pelts raised by Finnish breeders at public auctions
held several times each year. The auctions are conducted under
certain Conditions of Sale ("Conditions"), which are listed in
the auction catalogue, a copy of which is given to each
prospective bidder in advance of the auction. A one-page
English translation of the Conditions appears on the inside
front cover of the catalogue.
JSF is a New York corporation that has conducted a fur
dealing business for approximately 15 years. George Shulof, an
officer of JSF, has been in the fur business since 1935. Mr.
Shulof attended the FFS auctions held in Vantaa, Finland, in
January and May 1987. He purchased over $500,000 worth of
skins at the January auction, and some $700,000 worth of skins
at the May auction. It is undisputed that at each auction he
was the actual bidder. JSF had not sent a bidder to the FFS
auctions during the twenty-five-year period from 1959 to 1984,
but Mr. Shulof had personally attended the FFS auction in
The parties apparently do not dispute the fact that JSF paid
for and cleared the majority of the skins purchased at the two
1987 auctions, with the exception of 2,469 fox pelts worth
$290,048.17. The parties also do not dispute that JSF made
certain payments against the uncleared skins, leaving an
unpaid balance of $202,416.85, plus interest.
Between December 1987 and December 1988, JSF gave FFS resale
instructions regarding a number of the uncleared skins. FFS
asserts that it was unable to sell the skins at the minimum
resale prices set by JSF. Thereafter, FFS decided to liquidate
JSF's account, to which JSF agreed in March 1989. FFS sold the
remaining uncleared skins at its May and September 1989
auctions. FFS alleges damages of $153,502.39.
FFS claims that, in addition to the liability of JSF, Mr.
Shulof is personally liable for this debt, based on Finnish
law, the custom and practice of the fur trade, and the
provisions of section 4 of the Conditions. Section 4 provides:
Any person biding at the auction shall stand
surety as for his own debt until full payment is
made for purchased merchandise. If he has made
the bid on behalf of another person, he is
jointly and severally liable with the person for
Conditions § 4 ¶ 2. George Shulof denies any personal liability
on the grounds, inter alia, that the provision is unenforceable
under both New York and Finnish law.
Okobank's claim arises from a line of credit arranged by FFS
in November 1988 to allow JSF to clear some of the remaining
skins. JSF made a cash down payment and accepted a bill of
exchange (the "Bill of Exchange") for $30,328.39, due February
7, 1989. JSF also executed an agreement entitled "Confirmation
in Case of Delayed Payment" ("Confirmation"), dated December
16, 1988, which called for interest at an annual rate of 16%
subsequent to the due date.
According to plaintiffs, in January 1989, Okobank became
holder in due course of the Bill of Exchange, which was
presented for collection on or about February 7, 1989, at Bank
Leumi in New York, but was dishonored. As of July 31, 1990,
Okobank claimed principal and interest due amounting to
The Bill of Exchange was signed "Juliette A. Shulof" above
the printed name "Juliette Shulof Furs Inc." Okobank contends,
and Mrs. Shulof denies, that this signature renders Mrs.
Shulof liable in her individual capacity.
In addition to defendants' argument that, as a matter of
law, George and Juliette Shulof cannot be held personally
liable in this action, defendants also contend that fact
issues concerning plaintiffs' alleged failure to mitigate
damages when selling the remaining uncleared skins preclude
the entry of summary judgment against JSF.
I. Standard for Summary Judgment
Federal Rule of Civil Procedure 56(c) provides that summary
judgment "shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law." "Summary
judgment is appropriate if, 'after drawing all reasonable
inferences in favor of the party against whom summary judgment
is sought, no reasonable trier of fact could find in favor of
the non-moving party.'" United States v. All Right, Title &
Interest in Real Property, etc., 901 F.2d 288, 290 (2d Cir.
1990) (quoting Murray v. National Broadcasting Co.,
844 F.2d 988, 992 (2d Cir.), cert. denied, 488 U.S. 955, 109 S.Ct. 391,
102 L.Ed.2d 380 (1988)). Summary judgment may be granted
"against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party's
case." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct.
2548, 2552, 91 L.Ed.2d 265 (1986).
The substantive law governing the case will identify the
facts that are material, and "[o]nly disputes over facts that
might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment. . . .
While the materiality determination rests on the substantive
law, it is the substantive law's identification of which facts
are crucial and which facts are irrelevant that governs."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 2510, 91 L.Ed.2d 202 (1986). "[T]he judge's function is
not himself to weigh the evidence and determine the truth of
the matter but to determine whether there does indeed exist a
genuine issue for trial." Id. at 249, 106 S.Ct. at 2510; see
also R. C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102, 107
(2d Cir.), cert. denied, ___ U.S. ___, 110 S.Ct. 64, 107
L.Ed.2d 31 (1989). The party seeking summary judgment "always
bears the initial responsibility of informing the district
court of the basis for its motion" and identifying which
materials it believes "demonstrate the absence of a genuine
issue of material fact." Celotex, supra, 477 U.S. at 323, 106
S.Ct. at 2552; see also Trebor Sportswear Co. v. Limited
Stores, Inc., 865 F.2d 506, 511 (2d Cir. 1989). "[T]he burden
on the moving party may be discharged by 'showing' — that is,
pointing out to the district court — that there is an absence
of evidence to support the nonmoving party's case." Celotex,
supra, 477 U.S. at 325, 106 S.Ct. at 2554.
Once a motion for summary judgment is properly made, the
burden then shifts to the nonmoving party, which "'must set
forth facts showing that there is a genuine issue for trial.'"
Anderson, supra, 477 U.S. at 250, 106 S.Ct. at 2511 (quoting
Fed.R.Civ.P. 56(e)). "Conclusory allegations will not suffice
to create a genuine issue. There must be more than a 'scintilla
of evidence,' and more than 'some metaphysical doubt as to the
material facts.'" Delaware & H. Ry. v. Consolidated Rail Co.,
902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson, supra, 477
U.S. at 252, 106 S.Ct. at 2512, and Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574,
586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986)).
II. Liability of George Shulof
Federal courts sitting in diversity must apply the choice of
law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In this
case, application of New York choice of law analysis is
Section 15 of the Conditions provides that "[t]hese
conditions are governed by Finnish law." Choice of law clauses
are routinely enforced by the courts of this Circuit, "if
there is a reasonable basis for the choice." Morgan Guaranty
Trust Co. v. Republic of Palau, 693 F. Supp. 1479, 1494
(S.D.N.Y. 1988) (citing Restatement (Second) of Conflict of
Laws § 187 (1971)), vacated on other grounds, 924 F.2d 1237 (2d
Cir. 1991). New York courts also generally defer to choice of
law clauses if the state or country whose law is thus selected
has sufficient contacts with the transaction. See, e.g., Zerman
v. Ball, 735 F.2d 15, 20 (2d Cir. 1984); Walter E. Heller & Co.
v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir. 1984); 600
Grant St. Assocs. Ltd. Partnership v. Leon-Dielmann Inv.
Partnership, 681 F. Supp. 1062, 1064 (S.D.N.Y. 1988). Under
those circumstances, "New York law ...