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LANCASTER v. ZUFLE

July 29, 1996

EDWIN W. LANCASTER, Plaintiff, -v.- ELODIE C. ZUFLE, Defendant.


The opinion of the court was delivered by: RAKOFF

 JED S. RAKOFF, U.S.D.J.

 Silent Partner Body Armor, Inc., a New York corporation with its principal place of business in Louisiana, is a manufacturer of bulletproof vests and other protective "armor." *fn1" In 1990, plaintiff Edwin W. Lancaster pledged $ 330,000 in collateral to the Chemical Bank of New York in order to secure loans for the benefit of Silent Partner. Chemical then made an initial loan for $ 250,000 to Silent Partner on April 2, 1990, evidenced by a note of that date that was signed by, among others, defendant Elodie C. Zufle, Secretary-Treasurer of Silent Partner and the mother of Silent Partner's President, T. Tyler Zufle. After the principal balance due on that loan had been reduced to $ 150,000, the original note was surrendered and a new note executed on January 3, 1991 in the amount of the remaining $ 150,000, secured by the same Lancaster collateral. Ms. Zufle's name and signature, however, did not appear on the new note. Thereafter, further loans (in the amounts of $ 120,000 and $ 5,000, respectively) were also obtained for the benefit of Silent Partner, again secured by the Lancaster collateral and again evidenced by notes not bearing Ms. Zufle's name or signature.

 Ultimately, Silent Partner defaulted, and Chemical Bank foreclosed on the Lancaster collateral in order to satisfy payment. Mr. Lancaster then commenced this lawsuit against Ms. Zufle, contending that her signature on the original note evidenced her personal liability for the loan. After her motion to dismiss for lack of personal jurisdiction was denied by Judge Parker, see Lancaster v. Zufle, 165 F.R.D. 38 (S.D.N.Y. 1996), Ms. Zufle moved for summary judgment, the resolution of which was held in abeyance while plaintiff conducted discovery of Chemical Bank. Thereafter, following written submissions by both parties, this Court held oral argument on June 19, 1996. Having now carefully reviewed the entire record, and bearing in mind the applicable legal standards governing summary judgment, see, e.g., Celotex Corporation v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Goenaga v. March of Dimes Birth Defects Foundation, 51 F.3d 14, 18 (2d Cir. 1995), the Court hereby grants summary judgment in favor of the defendant, for two, independent reasons.

 First, certain undisputed facts conclusively establish that Ms. Zufle never assumed any personal liability on the original note. As a basis for his claim that Ms. Zufle is personally liable on the original note, Mr. Lancaster relies primarily on the fact that at the bottom of this standard-form note, there appears, on the lower left, "SILENT PARTNER BODY ARMOR, INC., T. Tyler Zufle, President, by Tammy Schwartz, Attorney in Fact," and on the lower right, "Elodie C. Zufle." (Def.Ex.D to Motion for Summary Judgment). Plaintiff contends that this evidences that both Silent Partner and Ms. Zufle are obligors on the note or at least supplies a sufficient factual predicate for a jury to so infer.

 Other undisputed facts of record, however, totally demolish this contention. To begin with, every other document in the Chemical Bank file relating to these loans, save arguably one (discussed below), identifies Silent Partner as the sole borrower and obligor on the original loan (as on the subsequent loans). For example, the nine separate pledge agreements executed by plaintiff Lancaster in April, 1990 in order to secure the original loan all identify Silent Partner as the sole borrower. The subsequent loan notes, secured by the same collateral, likewise identify Silent Partner as the sole borrower, and, as mentioned, do not include Ms. Zufle's name or signature. The Chemical loan file also confirms, as the undisputed testimony attests, that the entire proceeds of the original loan (as those of the subsequent loans) all went to Silent Partner. Conversely, it is undisputed that Ms. Zufle did not receive any proceeds of the original (or of any subsequent) loan, nor did she sign any guarantee agreement on any of the loans. Finally, the Closing Statement on the original loan, which purports to summarize both the terms of the loan agreement and the circumstances of its closing, unequivocally states that the sole borrower is Silent Partner. (Def.Ex.E to Motion for Summary Judgment).

 Further, defendant has, through sworn affidavits from persons with direct knowledge, adduced uncontradicted evidence as to why Ms. Zufle's signature appears on the original note and why it must be taken as appearing there in a representative capacity on behalf of Silent Partner. In particular, it appears from these affidavits that T. Tyler Zufle, the then President of Silent Partner, was in the Philippines in early April, 1990, when the original loan was due to close. In Mr. Zufle's absence, Tammy Schwartz, an employee of the law firm representing Silent Partner in connection with the loan, was authorized to sign for Mr. Zufle as "Attorney in Fact." A day or so before the closing, however, Ms. Schwartz informed Silent Partner that in order for the loan to close in Mr. Zufle's absence, Chemical Bank would also need the guaranteed signature of the Secretary-Treasurer of the company, who happened to be Ms. Zufle. Ms. Schwartz then sent the requisite documents to Ms. Zufle by express courier, asking her to simply sign in those places where she (Ms. Schwartz) had placed an "X," and Ms. Zufle did so. (Affidavit of T. Tyler Zufle, PP2-4; Affidavit of Diane R. Zufle, PP1-3).

 Further still, there is the sworn testimony of Michael Suarez, the Chemical Bank loan officer in charge of the loan, whose deposition was taken by plaintiff on June 6, 1996. Defendant's counsel did not even appear for this deposition, so plaintiff's counsel had a free hand to elicit his very best case from Mr. Suarez. Nonetheless, Mr. Suarez was clear, unequivocal, and adamant in testifying that the sole borrower on the original loan (as on the subsequent loans) was Silent Partner, and that Ms. Zufle never signed in any but a representative capacity.

 For example, when confronted with the original note itself, and asked about the signatures at the bottom, Mr. Suarez testified as follows:

 
However, what I do see, at the very bottom, is the borrower's name indicated, Silent Partner Body Armor, Inc. I see the signature of Elodie Zufle, but she would be signing as or on behalf of Silent Partner Body Armor. She couldn't sign this loan individually. It wouldn't work. (Deposition of Michael Suarez at 28; see also Suarez Dep. at 44).

 Similarly, with reference to a collateral hypothecation statement signed by Ms. Zufle in connection with the original loan, Mr. Suarez, in response to the question "Did she sign it in an individual capacity?," answered as follows:

 
No. You want to know why? Because the borrower is Silent Partner Body Armor and that's it. Nowhere on this form is Elodie Zufle a borrower. She signed the document on behalf of. It's very clear Silent Partner Body Armor, Inc. -- she couldn't have signed it as an individual. It would have required a separate form. Every form has this, 'Silent Partner Body Armor.' You could sign this, but all it would indicate is that you are signing on behalf of Silent Partner Body Armor, right there. (Suarez Dep. at 27).

 Against this overwhelming and undisputed evidence, both documentary and testimonial, that Ms. Zufle signed the original note only on behalf of Silent Partner and not as an independent obligor, plaintiff points only to one other item beside the facially ambiguous note itself, and that is a document entitled "Loan Collateral Agreement" (Pl.Ex.D to Complaint) signed by Ms. Zufle on April 2, 1990 in connection with the original loan. Although executed in the same manner as the other documents that bear Ms. Zufle's signature, this document differs from all those other documents (including the note) in that underneath Ms. Zufle's signature is a small handwritten notation: "(Borrower)". Plaintiff has produced no evidence indicating that it was Ms. Zufle who added this notation or, more ...


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