In Sakow v. 633 Seafood Restaurant. Inc., 227 AD2d 249, 642 N.Y.S.2d 652 [1st Dept. 1996], plaintiffs sought to recover money which they alleged had been loaned to defendant for the construction of a restaurant.
Defendant argued that one-third of the funds was payment for stock in the restaurant and that the remaining two-thirds was a loan which was not repayable until defendant's financial condition permitted repayment.
There was no formal written agreement. There, both parties moved for summary judgment. The trial Court determined that one-third of the funds was an equity investment, but that the remaining funds constituted a loan which was immediately payable.
On appeal by both parties, the Appellate Division reversed, finding, inter alia, that substantial issues of fact existed with respect to whether any of the funds were an investment.