Smith v. Rothman

5 Citing cases

  1. MTB Bank v. Federal Armored Express, Inc.

    949 F. Supp. 226 (S.D.N.Y. 1997)   Cited 5 times

    By contrast, Federal contends that there is a question of fact as to the extent to which payments made by MGH to MTB should be allocated to the May 14 and May 18 shipments, as opposed to the general account between MTB and MGH. Federal contends that the Texas settlement is therefore not binding in the instant action. Under the well-settled law of payments, when a debtor owes multiple obligations to a creditor, and the debtor makes a payment, the debtor has the initial right to specify which obligation he wishes the payment to be applied to. Bank of California v. Webb, 94 N.Y. 467, 472 (1884); Beyer Bros. of Long Island Corp. v. Kowalevich, 89 A.D.2d 1005, 454 N.Y.S.2d 444, 445 (1982); Smith v. Rothman, 6 A.D.2d 859, 175 N.Y.S.2d 956, 957 (1958), aff'd, 6 N.Y.2d 793, 188 N.Y.S.2d 187, 159 N.E.2d 679 (1959). In the absence of such a designation by the debtor, the creditor may specify which obligation to allocate the payment to. Bank of California, 94 N.Y. at 472; Beyer Bros., 454 N.Y.S.2d at 445.

  2. Walther v. Bank of New York

    772 F. Supp. 754 (S.D.N.Y. 1991)   Cited 18 times
    Recognizing a creditor's continuing right to specify allocation of payments, despite the fact that an action had been filed by a guarantor for declaratory judgment as to allocation of payments

    Under the law of payment, regrettably overlooked by both sides, when a debtor has multiple debts to a creditor, some of which are guarantied, the creditor may apply the debtor's voluntary payments to those debts which are not guarantied, despite the guarantor's objection. Smith v. Rothman, 6 A.D.2d 859, 175 N.Y.S.2d 956, 957 (1st Dep't 1958), aff'd, 6 N.Y.2d 793, 188 N.Y.S.2d 187, 159 N.E.2d 679 (1959); Wanamaker v. Powers, 102 A.D. 485, 93 N.Y.S. 19, 21-22 (2d Dep't 1905), aff'd, 186 N.Y. 562, 79 N.E. 1118 (1906); N.Y.Jur.2d, Guaranty and Suretyship § 269 at 367 (1987). Significantly, New York has long treated proceeds from the nonjudicial sale of collateral securing more than one debt as voluntary payments which the creditor may apply in the way it sees fit. National Bank of Newburgh v. Bigler, 83 N.Y. 51, 64 (1880) ("If property is assigned as collateral security for several debts without direction at that time by the assignor as to the application of its proceeds, the creditor may apply the money realized to any of the notes that are due at the time the money is received."); Commercial Trading Co. v. Freidus, 114 A.D.2d 292, 499 N.Y.S.2d 43, 45 (1st Dep't 1986) (rejecting guarantors' objection to application of proceeds because "[p]ayment in the form of proceeds from a collateral mortgage is clearly a voluntary paymen

  3. General Stencils v. Chiappa

    18 N.Y.2d 125 (N.Y. 1966)   Cited 206 times   1 Legal Analyses
    Holding that the defendant bookkeeper who had stolen from the plaintiff over many years and concealed the theft by misrepresenting the plaintiff's accounts was estopped from asserting a statute of limitations defense because her ongoing, active concealment had prevented the plaintiff from discovering the fraud

    In such a case, it is the creditor's option to allocate the payment as he sees fit and, if he fails to do so, the courts must equitably determine the proper allocation. ( Smith v. Rothman, 6 A.D.2d 859 [1st Dept., 1958], affd. without opn. 6 N.Y.2d 793; Shahmoon Ind. v. Peerless Ins. Co., 16 A.D.2d 716 [3d Dept., 1962]; Lichtenstein v. Grossman Constr. Corp., 248 N.Y. 390.) The creditor, plaintiff herein, wishes it applied to the debt outstanding prior to 1961, and in our opinion this is the only equitable determination allowed by the circumstances.

  4. Trading Co. v. Freidus

    114 A.D.2d 292 (N.Y. App. Div. 1986)   Cited 8 times
    Rejecting guarantors' objection to application of proceeds because "[p]ayment in the form of proceeds from a collateral mortgage is clearly a voluntary payment which a creditor may apply in the manner most advantageous to it."

    Payment in the form of proceeds from a collateral mortgage is clearly a voluntary payment which a creditor may apply in the manner most advantageous to it. (Smith v Rothman, 6 A.D.2d 859, affd 6 N.Y.2d 793.) The trial court also incorrectly construed the cross collateral agreement.

  5. Long Island Trust Co. v. Vendall, Inc.

    35 Misc. 2d 464 (N.Y. Sup. Ct. 1962)   Cited 2 times

    The main issue in this cause is the right of the Bank to determine the application of the amount on deposit in the checking account of Vendall, Inc., when it suffered its default on February 1, 1962. The basic, long-established rule is that a creditor having two demands against a debtor may apply a payment received from the debtor to either of the demands, at his election, provided no direction is given by the debtor ( Harding v. Tifft, 75 N.Y. 461, 464-465; Smith v. Rothman, 6 A.D.2d 859, affd. 6 N.Y.2d 793). And the mere fact that there is a surety for one of the debts does not preclude the creditor from applying a payment to the debt for which he has no security or less security ( id.).