Canterbury Realty & Equip. Corp. v. Poughkeepsie Sav. Bank

In Canterbury Realty & Equip. Corp. v. Poughkeepsie Sav. Bank, 135 AD2d 102 [3rd Dept. 1988], the bank extended a $ 2 Million line of credit to plaintiff as part of a loan transaction. Plaintiff signed a guaranty which stated that payment would become due if plaintiff suspended its business. Thereafter, plaintiff exceeded its credit line with the bank but claims that it did so because it relied on an oral agreement that permitted it to borrow above the stated limit. Plaintiff also stated that a bank officer orally approved checks in advance, despite having exceeded the limit. Because plaintiff exceeded the credit limit, the bank ultimately stopped honoring plaintiff's checks which drove plaintiff into bankruptcy. The court found that it was wrongful and unfair for the bank to permit plaintiff to exceed the debt limit and then precipitously declare a default with little or no notice. The court denied summary judgment as to the bank and found that a triable issue of fact existed "as to whether the bank unfairly brought about the occurrence of the very condition ([plaintiff's] suspension of business . . .) upon which it relied to accelerate the loan against guarantors."