Trump Securities v. Setton International Foods
NEW YORK COUNTY
Justice Melvin Schweitzer
Trump Securities subsidiary, Convertible Capital (CC) was retained under an exclusive agreement to secure debt financing for Setton International Foods in this breach of contract action. At issue was whether CC was entitled to the contractually stipulated percentage-based commission fee when Setton renewed previously frozen lines of credit with its already existing banks, receiving no assistance from CC. Setton's primary lenders froze their lines of credit, and CC was approached by Setton to find new avenues of financing to secure capital. CC was expressly forbidden from contacting the existing banks, and told it was hired only for purposes of finding new sources of credit. CC did not find any new sources, and Setton, on its own, reestablished its relationship with the existing banks, terminating CC. The court found the contract between the parties was ambiguous, yet ruled CC failed to sustain its burden, and that the scope of services defined in paragraph 1 of the agreement did not extend to Setton's previously existing types and sources of financing. Thus, it held Setton's choice to renegotiate and extend financing with its existing banks, and not pay CC its commission was not a breach of contract. CC was not entitled to damages.