Sunbeam Farms, Inc. v. Troche

110 Misc. 2d 501, 442 N.Y.S.2d 842, 32 U.C.C. Rep. Serv. (West) 733, 1981 N.Y. Misc. LEXIS 3113
CourtCivil Court of the City of New York
DecidedMay 18, 1981
StatusPublished
Cited by1 cases

This text of 110 Misc. 2d 501 (Sunbeam Farms, Inc. v. Troche) is published on Counsel Stack Legal Research, covering Civil Court of the City of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sunbeam Farms, Inc. v. Troche, 110 Misc. 2d 501, 442 N.Y.S.2d 842, 32 U.C.C. Rep. Serv. (West) 733, 1981 N.Y. Misc. LEXIS 3113 (N.Y. Super. Ct. 1981).

Opinion

OPINION OF THE COURT

Benjamin F. Nolan, J.

On August 31, 1978, defendant Efrain Troche signed a rebate contract with plaintiff Hygrade Milk & Cream Co., Inc. (hereinafter Hygrade), pursuant to which defendant Troche promised to purchase milk exclusively from Hygrade for sale in his retail grocery store business — a promise which also bound the defendant My Four Children’s Supermarket, Inc., as the owner of record of the business. In return, defendants were to be paid $12,500, which was to be a loan reducible by rebates on each quart of milk purchased over a stated period. A confession of judgment was to be executed simultaneously as security for the loan.

It appears however that on August 31, 1978, Troche signed two affidavits of confession of judgment, each in [502]*502sum of $12,500; each, set forth on a standard business form containing the affidavit of confession of judgment on one side and the judgment by confession on the reverse side; each, identical in every respect. Each recites that the underlying debt arose from a loan made to Troche in the sum of $12,500 on or about August 31, 1978 to enable Troche to purchase merchandise inventory and otherwise improve the same for a business at 209 East 167 Street, Bronx, New York, in which Troche had a financial interest. Neither affidavit however refers expressly to the rebate contract of August 31, 1978. Yet, in an affidavit sworn to on May 15, 1980, plaintiffs’ attorney identified the rebate agreement of August 31, 1978, between Hygrade and Troche, as the contract from which each loan derived; and, he attached a copy of said contract to his affidavit. But, each affidavit of confession of judgment is captioned: “Sunbeam Farms, Inc. against Efrain Troche and My Four Children’s Supermarket, Inc.” It bears repeating that the rebate contract signed by Troche on August 31, 1978, was with Hygrade and not with Sunbeam.

Immediately, one wonders whether defendants received $12,500 twice. This cannot be ascertained from a review of any of plaintiffs’ papers, unless the answer is presumed to be “yes” solely from the existence of the two separate affidavits of confession of judgment. But, in the copy of a letter of defendants’ attorney, attached to his affidavit of December 15,1980, he indicates that the answer is “yes” — that $12,500 was paid for the location, and $12,500 was paid as a loan to be repaid on the basis of rebates over 18 months. Nowhere, however, is there any indication of who or what entity paid these sums or to which defendant they were paid, or what each payment specifically covered.

Under the rebate contract, defendant Troche agreed to execute a confession of judgment which Hygrade had the express right to “enter and execute upon its option and determination”. The right to enter and execute upon the confession of judgment was in absolute terms. It was not even conditioned upon a breach of the contract.

On April 22,1980, Sunbeam commenced each of the two within actions. Each was based upon a separate confession of judgment signed on August 31, 1978. Each judgment [503]*503reflected that the original obligation had been reduced from $12,500 to $8,635.60 by rebates and credits. In subsequent motion affirmations, counsel for plaintiffs affirmed that each action had been commenced by the filing of a confession of judgment. In other words, without any allegation of a breach of contract or any other basis for the entry of the judgments by confession, and without the service of any process upon the defendants, judgments were entered under the heading of each action on April 22, 1980, and immediately turned over to a Marshal for execution. These procedures, despite their seeming lack of due process, are not necessarily unconscionable under section 2-302 of the Uniform Commercial Code. (CPLR 3215, subd [h], par 1; Architectural Cabinets v Gaster, 291 A2d 298 [Del]; Gimbel Bros. v Swift, 62 Misc 2d 156.) A judgment by confession for money due may be entered “without an action” pursuant to CPLR 3218, as made applicable to the Civil Court by section 1403 of thé New York City Civil Court Act, upon the filing of an affidavit executed by the defendant “stating concisely the facts out of which the debt arose and showing that the sum confessed is justly due”. (CPLR 3218, subd [a], par 2.)

Having been alerted for the first time by the activity of the Marshal, defendants moved for an order vacating the judgments and authorizing them to interpose answers. Subsequently, both actions were consolidated, the judgments were vacated, defendants were authorized to and did interpose answers, and the caption of the consolidated action was amended to add Hygrade as a plaintiff. However, no complaint has ever been served and filed by Hygrade. Alarmed because of the belief that the named defendants sold the business to buyers they claim they cannot identify, plaintiffs included such allegedly unidentified new owners as additional party defendants under fictitious names. And now, they move upon an affidavit of counsel for an order (a) setting aside that sale, (b) allowing re-entry of the judgments entered on April 22, 1980, (c) allowing plaintiffs to execute on said judgments, (d) holding defendant in civil contempt, and (e) directing defendant to cease and desist from any operation of the retail grocery store business. However, no affidavit from a repre[504]*504sentative of either plaintiff was submitted in support of the motion.

Defendants oppose the motion alleging through an affirmation of counsel (1) that the rebate contract and the affidavits of confession of judgment were void because they were signed in blank, (2) that provisions of the underlying rebate contract are unconscionable, (3) that the contract is illegal because it is in restraint of trade, (4) that the confessions of judgment are defective since they are in the name of Sunbeam instead of Hygrade, and (5) that plaintiffs have not availed themselves of the requisite liens under the Uniform Commercial Code to protect whatever interests they claim to be entitled to in the res of the retail grocery store business. Here, too, no affidavit of any party defendant was submitted in opposition to plaintiffs’ motion.

In Jones v Star Credit Corp. (59 Misc 2d 189, 191) Justice Sol Wachtler traced the progress of commercial morality from the time when the common law allowed the shield of caveat emptor to protect the unscrupulous to the enactment of section 2-302 of the Uniform Commercial Code which now warns not only the buyer but also the seller to beware. Section 2-302 of the Uniform Commercial Code is designed to carry equity practice into the sales field by condemning as unconscionable an excessively one-sided oppressive agreement which imposes upon one party a burden which deprives that party of meaningful choice, together with contract terms which are unreasonably favorable to the other party. (American Home Improvement v MacIver, 105 NH 435; Frostifresh Corp. v Reynoso, 52 Misc 2d 26, revd on other grounds 54 Misc 2d 119.)

Defendants complain that their rebate contract with Hygrade was in restraint of trade because it compelled them to buy milk solely from Hygrade or go without milk since no other milk company would sell milk to them. Whether the contract was in restraint of trade, in its inception or in its application, is an. issue which is not factually made out and will have to be resolved in another forum since it appears to be beyond the jurisdiction of this court, and in any event need not be reached here to finally determine this motion.

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Bluebook (online)
110 Misc. 2d 501, 442 N.Y.S.2d 842, 32 U.C.C. Rep. Serv. (West) 733, 1981 N.Y. Misc. LEXIS 3113, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunbeam-farms-inc-v-troche-nycivct-1981.