## Facts

- Mark Weissman and five other individuals were the shareholders of Sinorm Deli, Inc., a New York corporation.
- Due to disputes among the shareholders, Sinorm agreed to buy out Weissman’s 25% interest under a March 5, 1992 stock purchase agreement.
- The $250,000 purchase price consisted of $50,000 at closing and a $200,000 promissory note with 7% interest payable in installments through January 2003.
- The transaction included security arrangements, including a first security interest in corporate assets and an assignment of the corporate lease held in escrow, with a related sublease structure.
- Sinorm agreed not to transfer or encumber assets in a way that would or might impair its obligations under the stock purchase agreement without Weissman’s consent.
- The agreements included default terms allowing acceleration of the note after nonpayment and a cure period.
- The individual shareholders executed an indemnification agreement, and the stock purchase agreement included additional handwritten indemnity language covering certain corporate “liabilities or obligations” incurred as of a specified date.
- Sinorm later defaulted on the note, and Weissman sought to recover from the individual shareholders, asserting the indemnification functioned as a personal guaranty of the corporation’s note obligation.

## Issues

1. Whether the indemnification sued upon qualifies as an “instrument for the payment of money only” permitting summary judgment in lieu of complaint under CPLR 3213.
2. Whether the shareholders’ indemnification constitutes a guaranty of the corporation’s obligation to pay the promissory note.

## Decision

- The New York Court of Appeals reversed the order granting Weissman summary judgment against the individual shareholders.
- The court held the indemnification was not an “instrument for the payment of money only” within CPLR 3213.
- The court held the indemnification did not constitute a personal guaranty by the individual shareholders of the corporation’s note obligation.
- The court directed dismissal of the CPLR 3213 action against the individual shareholders.

## Legal Principles

- CPLR 3213 applies narrowly to instruments that contain an unconditional, written obligation to pay a sum certain, where the right to payment is established from the instrument itself without resort to extrinsic proof.
- An indemnification agreement that requires fact-finding about the existence, scope, or amount of covered liabilities is not an “instrument for the payment of money only” under CPLR 3213.
- A guaranty requires clear and unequivocal language by which the guarantor undertakes to answer for another’s debt or default; courts will not convert an indemnity against specified liabilities into a guaranty absent explicit undertaking to pay the underlying debt.
- Indemnity obligations protecting a party against defined categories of liabilities are conceptually and legally distinct from promises to pay a debtor’s note upon default.

## Conclusion

The court held that a shareholder indemnification tied to specified corporate liabilities did not support CPLR 3213’s accelerated procedure and could not be treated as a personal guaranty of the corporation’s promissory note, requiring dismissal of the claim against the individual shareholders.


Weissman v. Sinorm Deli, Inc., 88 N.Y.2d 437 (N.Y. 1996)