Opinion
November 30, 1998
Appeal from the Supreme Court, Suffolk County (Seidell, J.).
Ordered that the order is reversed insofar as appealed from, on the law, and the defendants' motion for summary judgment is granted; and it is further,
Ordered that the order is affirmed insofar as cross-appealed from; and it is further,
Ordered that the matter is remitted to the Supreme Court, Suffolk County, for the entry of a judgment declaring that the plaintiffs, are not entitled to the disputed assets; and it is further,
Ordered that the defendants are awarded one bill of costs. The individual plaintiff, Richard T. Blake, is the president and sole shareholder of the plaintiff insurance agency, Richard T. Blake Associates, Inc. (hereinafter the Blake Agency). In 1989 the Blake Agency sold its assets to Joseph Annunziata Associates, Inc. (hereinafter JAA). The Blake Agency and JAA executed several documents in connection with the sale, including a security agreement. The unpaid portion of the purchase price was secured by tangible and intangible property, including a life insurance policy, several mortgages, the JAA office lease, and JAA stock.
The Blake Agency contends that it also acquired a security interest in the insurance accounts known as "expirations" that JAA obtained on behalf of the defendant Aetna Casualty and Surety Company (hereinafter Aetna). The term "expirations" is understood in the insurance industry to mean an agency's records or copies of its insurance policies, which contain the date of the policy, name of the insured, date of expiration, amount of insurance, premiums, property covered, and terms of insurance ( see, 4 Couch, Insurance § 57:59, at 57-113 [3d ed]; Barrow v. Lawrence United Corp., 146 A.D.2d 15, 18). Expirations are recognized as valuable assets because they provide leads for soliciting new business and renewals.
The ownership and use of the expirations that JAA obtained on behalf of Aetna (hereinafter the expirations) were governed by the terms of an agency agreement, which expressly provided that if JAA did not promptly pay the premiums to Aetna, the ownership of the expirations would revert to Aetna. When JAA defaulted in the payment of the premiums in 1992, Aetna terminated the agency agreement and transferred the expirations to MRW Group, Inc. (hereinafter MRW). When JAA defaulted on its obligations to the Blake Agency, the Blake Agency seized certain assets that had been pledged as collateral but was unable to get the transferred expirations. The Blake Agency commenced this action against Aetna and MRW, contending that it was entitled to immediate possession of the expirations because it had acquired a security interest in the expirations that was prior to and superior to Aetna's ownership interest.
The parties dispute whether the security agreement between the Blake Agency and JAA adequately described the collateral to include the expirations. Even assuming that the Blake Agency acquired a valid and enforceable security interest in the expirations, the security interest was limited to the same extent that JAA's rights were limited by the agency agreement. It is well established that an assignee stands in the shoes of the assignor and takes the assignment subject to any pre-existing liabilities ( Matter of International Ribbon Mills [Arjan Ribbons], 36 N.Y.2d 121, 126). Here, any security interest that the Blake Agency may have acquired in the expirations was limited by the agency agreement, which unequivocally provided that the expirations would revert to Aetna in the event of JAA's default ( see, Septembertide Publ. v. Stein Day, 884 F.2d 675; Tigue v. Commercial Life Ins. Co., 219 A.D.2d 820). Inasmuch as the agency agreement was clear and unambiguous on its face, the defendants are entitled to summary judgment ( see, Hartford Acc. Indem. Co. v. Wesolowski, 33 N.Y.2d 169, 172).
Since this was an action, inter alia, for a declaratory judgment, we remit the matter to the Supreme Court for the entry of a judgment declaring that the plaintiffs are not entitled to the expirations ( see, Lanza v. Wagner, 11 N.Y.2d 317, 334, cert denied 371 U.S. 901).
O'Brien, J. P., Joy, Friedmann and Krausman, JJ., concur.