GEM SOURCE INTERNATIONAL LTD v. GEM WORKS

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Supreme Court, Appellate Division, First Department, New York.

GEM SOURCE INTERNATIONAL, LTD., Plaintiff-Appellant, v. GEM WORKS N.S. L. L. C., etc., Defendant-Respondent.

Decided: February 23, 1999

WALLACH, J.P., LERNER, TOM and ANDRIAS, JJ. Kenneth G. Schwarz, for Plaintiff-Appellant. Michael Katz, for Defendant-Respondent.

Order, Supreme Court, New York County (Herman Cahn, J.), entered May 7, 1998, which denied plaintiff's motion for summary judgment, unanimously reversed, on the law, with costs, the motion granted, awarding plaintiff the contract price of $323,557.75, plus interest from June 1, 1997, and the matter remanded for a hearing to determine attorney's fees and late fees.

Plaintiff is entitled to summary judgment in this action for goods sold and delivered.   The parties negotiated a series of consignment contracts whereby plaintiff supplier would deliver diamonds to defendant jewelry manufacturer, on a “gentlemen's agreement” that payment need not be made until the jewelry was ultimately sold to a buyer.   Admittedly, Tiffany & Co. was the ultimate wholesale purchaser of all of this jewelry from the defendant consignee.

 Defendant's resale of the diamonds was inconsistent with the consignor's “ownership” of the goods, thus constituting acceptance under UCC 2-606(1)(c) (Sunkyong America v. Beta Sound of Music Corp., 199 A.D.2d 100, 101, 605 N.Y.S.2d 62).   The act of resale extinguished any objection defendant might have had to its receipt of the diamonds based upon inferior quality (Maggio Importato v. Cimitron Inc., 189 A.D.2d 654, 592 N.Y.S.2d 325, lv. denied 82 N.Y.2d 652, 601 N.Y.S.2d 582, 619 N.E.2d 660) or fraudulent inducement (Seiko Time Corp. v. Video Assocs., 99 A.D.2d 941, 472 N.Y.S.2d 633, appeal withdrawn 62 N.Y.2d 977) by reason of the divided loyalty of one of its principals.

MEMORANDUM DECISION.