Allied Financial Corp. v. Duo Factors, Inc.

Judgment awarding plaintiff $49,323.57, with interest, on the first cause of action, unanimously modified, on the law and the facts, so as to dismiss the first cause of action, and otherwise the judgment appealed from is affirmed, with $50 costs and disbursements to the defendant. This suit is brought by one party to a joint venture against its coventurer. The gravamen of the 'first cause of action is the improper handling of the factoring account by the defendant, which under the joint venture agreement it was obliged to prudently manage. The first cause of action is brought in contract. The contract provides that “ Duo [defendant] agrees that it will use normal prudence and judgment in the servicing and collection of the Advances and Receivables and in carrying out the terms and provisions of the Financing Agreement ”. However, that provision goes further and states that the defendant “ shall not be liable to Participant [plaintiff] for any act taken or omitted in good faith in connection with any transactions covered by the Financing Agreement.” The record does not support a finding that the defendant acted in anything but good faith and, accordingly, the judgment may not stand. In reaching this conclusion we need not decide the question as to whether, on the facts here presented, this action was properly brought at law. We believe that the second cause of action sounding in fraud was properly dismissed. The plaintiff was an experienced factor. It failed to sustain its burden of proving 539 one of the essentials in an action in fraud — namely, reliance. The facts do not justify disturbing the trial court’s finding that no cause of action in fraud has been established and, accordingly, its judgment dismissing the second cause of action is affirmed. Concur — Botein, P. J., Rabin, Stevens and Eager, JJ.