The opinion of the court was delivered by: DENIS R. HURLEY
Based on the proof adduced at a bench trial before the undersigned, Airlines Reporting Corporation ("ARC") seeks to recover $ 202,877.64, plus interest and costs, from Inter Transit Travel, Inc. ("Inter Transit") and from Luis R. Fuksman ("Fuksman"), individually.
The gravamen of the complaint involves an agreement under which ARC furnished blank airline tickets to Inter Transit which, in turn, completed and sold the tickets to its customers. The resulting net proceeds were to be deposited in the corporate defendant's bank account for the benefit of plaintiff.
There is no question that the corporate defendant breached the agreement, inter alia by not depositing $ 202,877.64 realized from ticket sales. The sole area of legitimate controversy is whether that delinquency is also chargeable against Fuksman individually.
By way of a brief synopsis, the following testimony was presented to the Court:
1. Testimony of Lloyd South
Lloyd South, a manager of plaintiff ARC, testified that he administers the plan involved in the present litigation. Pursuant to the plan, plaintiff issues blank airline ticket stock of participating carriers to licensed travel agencies with which it has "Agent Reporting Agreement[s]." Using that stock, the agent sells airline tickets to its customers. The sales proceeds are then placed in a designated bank account of the agent who notifies plaintiff of the amount involved. Once a week plaintiff submits a draft against that account for that amount, minus commission and other minor charges.
The witness explained that the "Agent Reporting Agreement" and "Memorandum of Agreement" both dated September 26, 1989, constitute the contract between ARC and Inter Transit. (Pl.'s Ex. 1 and Ex. 2.) He also referred to a form received from Inter Transit entitled "Change of Agency Location." (Pl.'s Ex. 3.) That document indicated that as of February 4, 1991, the business would be moving from 68 Avenue A, New York, New York to 53-06 108th Street, Corona, New York.
Mr. South explained an ARC computer print-out reflecting the airline tickets sold by the corporate defendant through May 20, 1994 for which payment was never made to ARC. The amount involved was $ 222,877.64. From that sum, $ 20,000 was collected by plaintiff under a letter of credit which the corporate defendant provided at the time the agency agreement was signed, leaving a balance of $ 202,877.64.
Under the contract, a change in ownership of Inter Transit of 30% or more had to be approved by plaintiff as a condition to continue participation in the program. Although such a change in ownership did occur, as will be detailed in reviewing Fuksman's testimony, South indicated that permission was never obtained, nor even sought for the transfer.
During cross-examination, South testified that sales proceeds need not be placed in a segregated bank account but could be commingled with other funds. However, the travel agent must provide the number for the bank account into which such sums will be deposited, so that the plaintiff may draw a weekly draft for the net sales reported for that period of time.
During the course of defense counsel's examination of South, the following defendants' exhibits were received into evidence:
a) letter dated August 21, 1991, from ARC to Inter Transit indicating that its records would henceforth list the new address in Corona (Defs.' Ex. A);
b) what appears to be an internal ARC memorandum dated October 5, 1991, which reflects that one of its employees purchased an airline ticket from Festival Travel at 57-03 Catalpa Avenue, Ridgewood, New York, which ticket was stamped with an airline ...