Penato v. George

52 A.D.2d 939, 383 N.Y.S.2d 900, 1976 N.Y. App. Div. LEXIS 12806
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 24, 1976
StatusPublished
Cited by129 cases

This text of 52 A.D.2d 939 (Penato v. George) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Penato v. George, 52 A.D.2d 939, 383 N.Y.S.2d 900, 1976 N.Y. App. Div. LEXIS 12806 (N.Y. Ct. App. 1976).

Opinion

In an action for an accounting, plaintiff appeals from an order of the Supreme Court, Queens County, dated August 4, 1975, which, inter alia, (1) granted summary judgment in favor of defendant Eastchester Associates, Inc., and (2) dismissed the complaint as against the other defendants. Order modified by deleting therefrom the fourth, fifth and sixth decretal paragraphs (which dismissed the complaint as against all defendants, except Eastchester Associates, Inc., with leave to replead an action at law against those defendants) and by adding thereto provisions (1) denying the motions to dismiss the complaint as to all defendants except Eastchester Associates, Inc., and (2) granting plaintiff leave to amend her complaint by adding thereto a cause of action for damages for breach of contract. As so modified, order affirmed, without costs or disbursements. Plaintiff’s time to serve an amended complaint is extended until 20 days after entry of the order to be made hereon. The plaintiff, Elma Penato, alleges that in January, 1963 she withdrew $5,000 from her savings account and transferred that money to defendant Stephen George. Robert Penato, the plaintiff’s son, had been acquainted with Stephen George and his brother Thomas George for a number of years, and had even worked for their real estate business, defendant Eastchester Associates, Inc., as a salesman. Plaintiff alleges that the $5,000 was needed by the Georges to help them get certain patent applications filed and underway. She asserts that a pooling of resources was contemplated; the Georges had the patent applications, she had the money and her son would give his time, energy and labors toward the project. After transferring the money, plaintiff received a letter, dated January 24, 1963, from Stephen George and addressed to her son, who lived at home with his parents. The letter recited that in consideration of $5,000, Robert Penato was to receive 2% of the net income earned by five specified patent applications and one trademark. Mrs. Penato asserts that she called Stephen George and requested that the "agreement” be changed to show that she was the true party in interest, and that George said'he would comply with her request. However, he did not comply and the next correspondence from George was a letter, dated July 3, 1963, addressed to Robert Penato. That letter referred to substantially the same five patent applications and to the trademark listed in the January 24 letter, but provided that in consideration of $10, Robert Penato was to receive 1% of all income derived from the sale or development of the specified applications, after the cost of development. The only other provision was to the effect that the cost of development would in no event exceed $100,000. Two subsequent letters, both dated November 14, 1963, from Stephen George to Robert Penato, provided that the latter would receive 3% of all income earned by two additional patent applications, after the cost of development. Consideration of $10 was recited in each of the two letters, and each provided, further, [940]*940that the cost of development should not exceed $50,000. One of those two letters listed a patent application for the "Shedless & Mar Resistant Flock & Manufacturing Process”. Thereafter, in 1965, the defendant Textured Products, Inc., was formed by the Georges, with Thomas George as president and Stephen George as vice-president. By letter dated September 7, 1965 Stephen George informed Robert Penato that negotiations had been completed for the sale of certain patent applications including the "Shedless & Mar-Resistant Flock”. The letter summarized the terms of the sale, which included a minimum annual guarantee of $15,000 to become effective upon completion of a pilot machine. It was estimated that the machine would be completed on or about January 1, 1966. The letter also noted that "if for any reason the patents should not issue, the [purchaser of the patent applications] agrees to continue to pay us for a period of 20 years in consideration of the 'know-how’ that is to be transferred together with the patent applications.” The purchaser was not identified in the letter, but it is undisputed that the purchaser was defendant Textured Products, Inc. Mrs. Penato asserts that in 1966 she asked Stephen George about the "deal” referred to in his letter of September 7, 1965; he replied that "the deal fell through.” She further asserts that in January, 1968 she received a letter from Stephen George advising that a patent on "the phonograph record” had been issued and that "we” are looking forward to profitable licensing arrangements. In March, 1968 Stephen George advised "that the machines would be ready in a few weeks” and, in November, 1968, he made an advance of $500 "against monies on the patent series.” In May, 1969 Mrs. Penato and her husband went to see defendants’ plant in Mt. Vernon at the invitation of the Georges. During a toast at the plant, Thomas George, president of all the corporate defendants, allegedly stated, "we are all going to be millionaires.” In 1970 Mrs. Penato was in need of funds and she approached Stephen George about getting some money pursuant to their agreement. George allegedly told her he had not earned any money but would try to locate someone to take over her interests. No further communications were received along those lines. In 1971 Thomas George allegedly forwarded copies of a Business Week article which told of how the Georges switched production with their flock material from records to textiles. In April, 1971 Mrs. Penato claims she received from defendant Textured Products, Inc., sample materials which were to be used in the production of "Fibercoat”, a fire retardant fabric. Further samples were allegedly mailed in January, 1972. Mrs. Penato contends that she was led to believe by Stephen George that the "Flock” he developed in 1963 was the same item which Textured Products, Inc., is using in its "Fibercoat” product. She asserts the Georges always told her that she had an interest in "Fibercoat”. During the middle of 1972, Mrs. Penato allegedly spoke to Thomas George about selling her interest. She claims Thomas advised her not to sell because "things were about to break open” and he said: "If I let you sell now, you’ll never forgive me.” Mrs. Penato said she would wait. Robert Penato died in April, 1973. It is alleged that in June, 1973, Mrs. Penato and her husband again went to defendants’ plant in Mt. Vernon, with the intent of getting the January, 1963 agreement corrected. It is claimed that they made an appointment for Stephen and Thomas George to come to their home the next day for that purpose. The Georges appeared the next day but offered to return the $5,000 instead. Stephen George allegedly told her that the factory was "going down” and that there was no future in the company. Mrs. Penato states she indicated she would be willing to accept her money back with interest. Thomas George allegedly figured that amount to be [941]*941$10,000 and stated that he would come up with that sum and pay her back. Mrs. Penato asserts that was the last time she saw or heard from the Georges. In its decision Special Term observed that plaintiff’s pleadings and affidavit failed to make out any fiduciary, or even contractual, relationship between plaintiff, or her son, and Eastchester Associates, Inc. That corporation’s motion to dismiss the complaint was deemed to be one for summary judgment, and the motion was granted.

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Cite This Page — Counsel Stack

Bluebook (online)
52 A.D.2d 939, 383 N.Y.S.2d 900, 1976 N.Y. App. Div. LEXIS 12806, Counsel Stack Legal Research, https://law.counselstack.com/opinion/penato-v-george-nyappdiv-1976.