The New York Law Blog: Those Corporate Records Actually Mean Something
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Monday, June 6, 2016

Those Corporate Records Actually Mean Something

Corporate Records Actually Mean Something
Recently, I discussed a case where I was able to hold JPMorgan Chase to their word with regards to a stipulation made with my client. Well here is how that case went.  

I represented a defunct corporation suing for the return of a substantial amount of funds that the bank allowed a co-owner to withdraw without the two-signature authorization required by the corporate resolution they signed when they opened the account.  

Our theory of recovery was sound.  The relationship between the bank and its depositor being that of debtor and creditor, the bank cannot charge the account of the depositor with moneys paid out without authority. Although research has failed to disclose any New York cases directly in point, it is obvious that a check signed by one of two depositors, where both signatures are required, is not authority for such payment. 

Obviously, significant obstacles remained.  First, we were dealing with pro se parties that barely spoke English and presented us with - literally - suitcases of documents that we had to sift through.

Second, our client had contracted their rights away when they established the account with JPMC. You see, when it signed up for the account, JPMC's Terms & Conditions includes a clause limiting liability that completely shielded it from all actions in torts, including negligence, and limited any contract action to a 2-year statute of limitations (which had come and gone several years prior while the owners squabbled). Things were looking tough.  

What was left?  Equitable remedies. Remedies in court come in two varieties - legal (like getting monetary damages) and equity (some action / prohibition ordered by the Court).  Nothing in New York Law prevents a party from pursuing both legal and equitable remedies. In this case, the equitable remedy I had in mind was an accounting. 

In New York, an accounting is a distinct cause of action rooted in equity. The right to an accounting is premised on the existence of a confidential or fiduciary relationship and a breach of duty imposed by that relationship respecting property in which the party seeking accounting has an interest.  The relief we sought was an adjustment of the accounts of the parties and a  judgment for the balance ascertained to be due.  Courts in New York have the power to state and settle accounts, or to compel an accounting, and it is exercised in a great variety of cases involving fiduciary and trust relationships. 

Accounting got my corporation to the promised land - and to a hard-fought, well-earned settlement.  
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*Gene Berardelli may be contacted at: GeneBerardelli@ipglegal.com.

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.