850 F. Supp. 1199 (1994) BANQUE ARABE ET INTERNATIONALE D'INVESTISSEMENT, Plaintiff, v. MARYLAND NATIONAL BANK, Defendant. No. 90 Civ. 6433 (RJW). United States District Court, S.D. New York. May 4, 1994. *1200 *1201 Joseph H. Levie, John K. Carroll, Mark Holland, Donald E. Griffith, Rogers & Wells, New York City, for plaintiff. Harvey S. Feuerstein, James A. Moss, Susan L. Meekins, Herrick, Feinstein, New York City, for defendant. *1202 ROBERT J. WARD, District Judge. On April 23, 1993, this Court issued an opinion granting in part and denying in part defendant Maryland National Bank's ("MNB") motion for summary judgment against plaintiff Banque Arabe et Internationale d'Investissement ("Banque Arabe"). 819 F. Supp. 1282 (S.D.N.Y.1993) ("Banque Arabe I"). As a result of that decision, only claims for breach of contract and fraudulent inducement remained for trial.[1] Following discovery, however, plaintiff abandoned the breach of contract claim and sought only damages for rescission under the fraud claim. Plaintiff alleges that defendant fraudulently induced BAII Banking Corp. ("BAII"), a former subsidiary of Banque Arabe, into purchasing a participation interest in a real estate loan by failing to disclose material information and by making material misrepresentations prior to execution of a participation agreement. MNB denies the allegations of fraud and counters that plaintiff is procedurally barred from bringing a fraud claim. In particular, MNB argues that Banque Arabe is not the real party in interest and, therefore, lacks standing. It also asserts that plaintiff ratified the participation agreement by failing to assert the fraud claim in a timely fashion and by accepting benefits under the agreement after being put on notice of facts sufficient to inquire about the fraud. The Court conducted a bench trial on November 3-10, 1993. Upon a review of the evidence and testimony offered at trial, the parties' pre and post-trial submissions and the applicable law, the Court issues this opinion, which constitutes its findings of fact and conclusions of law, pursuant to Rule 52, Fed. R.Civ.P. For the following reasons, the Court finds that Banque Arabe lacks standing to assert a fraud claim in this action but that it raised its rescission claim in a timely fashion and it did not ratify the participation agreement. The Court also finds that Banque Arabe has failed to prove intent to defraud on the part of MNB by clear and convincing evidence. BACKGROUND The factual background of this case has already been recited in Banque Arabe I, with which familiarity is presumed. However, Banque Arabe I was based on stipulated facts submitted exclusively for the purposes of the summary judgment motion. Subsequent to discovery, the parties revised the stipulated facts and submitted the newer version together with their pre-trial order. Therefore, the Court deems it necessary to restate those facts pertinent to the issues huffjacob@example.org. A. The Marceca Loans and the Participation Agreement The loan at issue was a mortgage loan arranged by MNB's merchant banking affiliate, MNC International Bank ("MNCIB"), in June 1988 for real estate developer Robert K. Marceca ("Marceca") and partnerships owned or controlled by him (the "Marceca borrowers"). Referred to as the Marceca II loan, it was divided into two portions with the first having an original principal amount of $35 million and the second an original principal amount of $12.5 million. The loan's purpose was to provide the Marceca borrowers with the funds necessary to refinance, renovate and convert to condominium or cooperative use eight rent-controlled or rent-stabilized apartment buildings in Manhattan. Marceca personally guaranteed payment of principal and interest on the first mortgage component but only payment of interest on the second mortgage component. Before the Marceca II loan was made, the gross retail sellout value of the properties collateralizing the loan after conversion to cooperative ownership was estimated at $59,345,000 (the "appraisal"). The appraisal was based upon various factual assumptions, including that one hundred percent of the units would be sold at "outsider" prices. In December 1987, prior to Marceca II, MNB had acquired a first Marceca loan, known as the Marceca I loan, from London Interstate Bank. Marceca I had an original principal amount of $50 million on which Marceca personally guaranteed payment of *1203 interest. The loan was secured by sixteen rent-controlled or rent-stabilized Manhattan apartment buildings. While MNB did not seek participation in the Marceca I loan, it did intend to seek the participation of other banks under the first portion of Marceca II to other banks. Toward the end of May 1988, MNCIB officials had contacted prospective participants, including BAII, and requested commitments by mid-June.[2] Almost immediately, BAII engaged in arm's length negotiations with MNCIB and BAII vice president Maurice Nhan ("Nhan") drafted a credit analysis of the Marceca II loan, based on documents supplied to it by MNCIB officials. Included in these documents were schedules of projected principal prepayments which had been prepared by the Marceca II borrowers in June 1988 (the "June projections" or the "paydown schedules"). The Marceca borrowers advised MNB that they expected to make the projected prepayments from the conversion proceeds. The June projections were based on a number of assumptions, including, inter alia, that (a) the first projected repayment allocable to each building would be made at the time of the closing of the building to cooperative ownership, and (b) the closing of the conversion of each building would occur ninety days after an offering plan for the conversion of the building was accepted for filing by the New York State Department of Law (the "AG" or the "Department of Law"). In June 1988, BAII recognized that the paydown schedules were projected prepayments of the Marceca II loan, but they also understood the projections to be realistic. In addition, to its documentary analysis of the Marceca II loan, BAII conducted a due diligence investigation. Nhan, in particular, met with Marceca at the developer's office and inquired about the eight properties collateralizing the Marceca II loan. Although an MNCIB official was present for the first ten to fifteen minutes, the balance of the hour-long meeting was a "broad conversation" between Nhan and Marceca. Nhan Dep. at 76-77. While they discussed the real estate market in New York, the Marceca properties and Marceca's experience, Nhan did not make specific inquiry regarding renovations at any of the buildings nor did he review with Marceca any of the documents he had received from MNB. Nhan also spoke with others in the real estate business in order to familiarize himself with the cooperative and condominium conversion process in general. Based upon its credit analysis and due diligence investigation, BAII decided to purchase a $10 million participation interest in the Marceca II loan. BAII indicated in a letter dated July 13, 1988 that it was committed to participating in the loan (the "Commitment Letter"). As a condition to its purchase of the participation interest, BAII required that the Marceca II loan be "cross collateralized," such that a portion of the proceeds from sales of units in each of the Marceca II properties be applied to pay down portions of the loan allocable to the other properties. It took approximately six weeks for MNB to obtain the Marceca borrowers' agreement to this condition. On September 29, 1988, BAII executed a participation agreement with MNB, which became effective on October 3, 1988, when the participant paid $10 million to the lead bank and, in return, received a fee of $200,000 (the "Participation Agreement"). In the Participation Agreement, BAII warranted that its participation was based on independent investigation and not as the result of documents and information supplied by the lead bank. B. The Co-Sponsorship Issue Repayment of the Marceca II loan depended on the Marceca borrowers successfully converting the properties to cooperative ownership. As was explained in Banque Arabe I, in New York, a closing cannot occur until the sponsor completes a three stage process that results in the plan being declared effective by the Department of Law. The three *1204 stages include: (1) the "red herring" stage during which a draft plan is submitted by the sponsor to the Department of Law and to the existing tenants in the building; (2) the "black book" stage when a final plan is allowed to be filed because the Department of Law has determined there to be full and fair disclosure in the plan as well as complete regulatory and statutory approval; and (3) the "post effective" stage at which time the sponsor enters into subscription agreements with the tenants and files an amendment to the plan declaring it effective. Typically, the closing does not take place until at least ninety days after the Department of Law accepts the plan, and usually occurs later. Conversion of the Marceca properties, in fact, was delayed, because the Department of Law raised questions concerning the sponsorship of the Marceca loans as disclosed in some of the offering documents (the "co-sponsorship issue"). In particular, MNB had not been identified as a co-sponsor, even though it had a right under the Marceca mortgages to approve the terms of the offering plans. The co-sponsorship issue was raised prior to the execution of the Participation Agreement but subsequent to the issuance of the Commitment Letter. On August 9, 1988, the Department of Law notified Marceca of sponsorship problems in the offering plans for some of the properties and indicated that it was referring the matter to the Enforcement Division. Marceca informed MNCIB officials of the co-sponsorship issue in mid-August 1988. On August 18, R.B. Diffenderfer ("Diffenderfer"), one of the MNCIB officials administering the Marceca loans, signed a letter for submission to the Department of Law explaining that MNB was a lender and not actively involved with the conversion of the Marceca properties (the "to whom it may concern letter"). Subsequently, Diffenderfer followed the status of the co-sponsorship issue through correspondence both in writing and on the telephone with Marceca's attorney, Myron Beldock ("Beldock"). In mid-September 1988, Beldock informed Diffenderfer during a telephone call that the AG would be considering the co-sponsorship issue at a hearing scheduled for September 22 but that he expected imminent resolution. Diffenderfer memorialized this conversation in a memorandum he drafted for the Marceca file ("the September 12 memo"). In the memo, Diffenderfer related that Beldock had minimized the significance of the co-sponsorship issue. Between July 13 and October 3, 1988, BAII did not request information regarding the status of the proposed conversions from Marceca and the Marceca borrowers because it viewed such a request as inappropriate banking practice. BAII also refrained from seeking information from the Department of Law. While it could not have discovered the existence of the co-sponsorship issue from the Department of Law, BAII could have learned about the status of the offering plans for the Marceca I and Marceca II properties. Had BAII asked the Department of Law about the status of the offering plans, the Department of Law (a) would have advised BAII whether red herrings had been submitted and for which buildings; (b) advised BAII whether red herrings submitted to the Department of Law had been accepted or rejected; and (c) made available for review and copying by BAII the red herrings submitted by the Marceca borrowers, any revised versions thereof, any supporting documentation submitted by the Marceca borrowers to the Department of Law, and any deficiency letters and other correspondence between the borrowers or their counsel and the Department of Law concerning any plans that had been rejected. Prior to funding its participation interest, BAII had not been advised of the co-sponsorship issue by MNB. On November 10, 1988, Cynthia Buescher [Allner] ("Allner"), another MNCIB official assigned to the Marceca loans, sent a revised repayment schedule to Nhan. She indicated that payments would not begin until March 1989 instead of November 1988 because the Department of Law had failed to complete its review of one of the red herrings within the statutorily required period of six months. On January 19, 1989, Allner wrote Nhan again, disclosed the existence of the co-sponsorship issue, and explained that the co-sponsorship problem had been resolved by a modification made to the *1205 mortgage documents (the "January 19 letter"). The modification removed Section 2.17, which had granted MNB the right to approve the terms of the offering plans submitted by the Marceca borrowers. Between January and November 1989, BAII received monthly status reports from MNB. None of these, however, revealed that MNB had knowledge of the co-sponsorship issue prior to execution of the Participation Agreement. C. The Loan Default By the end of 1989, as a consequence of the delay caused by the co-sponsorship issue, none of the Marceca properties were converted to cooperative ownership, and the Marceca borrowers were in default on their obligations under the loan documents. The interest reserves had been exhausted and BAII received its last interest payment on December 1, 1989. During December 1989 and January 1990, MNB apprised the participants of Marceca's deteriorating financial status and began considering ways to work out the loan. Simultaneously, BAII vice president, William Waller ("Waller"), conducted a review of the Marceca transaction and requested permission to visit MNB's offices. Waller and an attorney visited BAII's offices at the end of February 1990, where they reviewed the Marceca file and discovered Diffenderfer's September 12 memo. On March 26, 1990, MNB and Marceca executed a settlement agreement (the "Consensual Foreclosure Agreement"). It provided, among other things, that while the Marceca properties would be surrendered to MNB, the bank would make payments to the Marceca borrowers and would release Marceca from liability on his personal guarantee. MNB eventually made payments to the Marceca borrowers and charged BAII for its pro rata share of these payments. In April 1990, MNB brought an action to foreclose the mortgages securing the Marceca II loan. A Judgment of Foreclosure and Sale was entered in favor of MNB and against the Marceca II borrowers directing that the mortgaged properties be sold to satisfy the mortgage indebtedness plus interest, costs, and disbursements. In May 1991, the Marceca II properties were sold at a public auction at which MNB was the successful bidder. MNB then entered into an agreement with a real estate investor who purchased the Marceca II properties at the closing of the foreclosure sale in June 1991. The proceeds of this sale totalled $11,337,500 in the aggregate, before payment of tax and other liens entitled to priority, and costs. In July 1991, Banque Arabe received $1,843,140 from MNB as its share of the net foreclosure sale proceeds. Banque Arabe also received $176,697 from MNB as its pro rata share of the net rental income collected from the Marceca II properties during the pendency of the foreclosure action. Marceca filed a petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court, Southern District of New York, in August 1990. On May 29, 1991, Banque Arabe filed a claim in Marceca's Chapter 7 case for $10,000,000. D. The Assignment In the early part of 1990, Banque Arabe, BAII's French parent company, decided to sell the American subsidiary and dissolve it as an entity.[3] At that time, Waller conferred with the bank's attorneys and explained that BAII sought to dispose of the vast majority of its assets by transferring them to Banque Arabe. In a memorandum dated April 27, 1990 (the "April 27 memo"), Waller identified the Marceca transaction as one of three real estate loans he would transfer first as part of his overall task of "transfer[ring] all loans and letters of credit off the books in New York and onto the books of Banque Arabe in Paris." Defendant's Ex. AA. Waller conferred with BAII's attorneys and directed them to draft an assignment for the purpose of carrying out the instructions referenced in the memorandum. On May 31, 1990, BAII executed an assignment in which it "assigned, transferred, and conveyed ... all ... rights, title and interest" in the Participation Agreement and BAII's participation in the *1206 Marceca II loan (the "Assignment"). Plaintiff's Ex. 81.[4] In the middle of 1990, Waller engaged in settlement discussions with MNB. Although the other participants accepted MNB's offer to be bought out at thirty cents on the dollar, Banque Arabe determined that this offer and other settlement offers were unacceptable. On October 4, 1990, in an effort to try and recover its loss on the Marceca II loan, Banque Arabe instituted this action against MNB. DISCUSSION I. Standing Before addressing the substantive fraud allegations, the Court must first consider whether Banque Arabe is a real party in interest and has standing to assert its claims against MNB. Banque Arabe I noted that, while the Assignment unquestionably transferred contract claims from BAII to Banque Arabe, it was unclear whether tort claims were transferred as well. Because the parties offered differing readings of the Assignment, the Court reserved judgment on the standing question until it received extrinsic evidence at trial concerning whether BAII intended to transfer the fraud claims to Banque Arabe.[5] MNB has the burden to prove Banque Arabe's lack of standing by a preponderance of the evidence. Brignoli v. Balch, Hardy & Scheinman, Inc., 178 A.D.2d 290, 577 N.Y.S.2d 375 (1991); Hansen v. Cauldwell-Wingate Co., 25 Misc. 2d 857, 201 N.Y.S.2d 827, 831 (1960). A. New York Law Concerning the Assignment of Fraud Claims Banque Arabe I explained that in New York, "an assignment of the right to assert contract claims does not automatically carry with it an assignment of the right to assert tort claims relating to the transaction which established the contract. The assignor must also transfer the cause of action for tort claims to the assignee." Banque Arabe I, 819 F.Supp. at 1289 (citing Nearpark Realty Corp. v. City Investing Co., 112 N.Y.S.2d 816 (Sup.Ct.1952)). The Court qualified, however, that "it is not necessary for an assignment to contain specific `boilerplate' language in order to transfer a cause of action. `[A]ny act or words are sufficient which "show an intention of transferring the chose in action to the assignee...."'" Id. (quoting Miller v. Wells Fargo Bank Int'l Corp., 540 F.2d 548 (2d Cir.1976) (quoting Advance Trading Corp. v. Nydegger & Co., 127 N.Y.S.2d 800, 801 (Sup.Ct.1953))). At trial, MNB characterized the explicit assignment of fraud claims as a well-established principle of New York law that dates back to Fox v. Hirschfeld, 157 A.D. 364, 142 N.Y.S. 261 (1913). In Fox, an assignment transferring "all my right, title, and interest in and to the within contract" was held not to cover a claim for fraudulent misrepresentation because "the language employed in the assignment of the contract was not appropriate *1207 to assign a cause of action arising, not under the contract, but for the fraudulent representations of the defendant." Id. 142 N.Y.S. at 263. As analyzed by later New York case law, Fox stands for the principle that when an assignment of a contract does not explicitly assign a cause of action based upon fraud, "only the plaintiff's assignor may rescind or sue for damages for fraud and deceit; the representations were made to it and it alone had the right to rely upon them." Nearpark Realty Corp. v. City Investing Co., 112 huffjacob@example.org. When the Court questioned defendant's counsel at trial whether there was any more recent precedent for this principle, he cited Fund of Funds v. King, No. 74 Civ.1981, Fed.Sec.L.Rep. (CCH) P95,640, 1976 WL 799 (S.D.N.Y. June 29, 1976) in which an assignment of "any and all interests" was held not to have transferred a fraud claim on account of lack of specificity. In response, plaintiff's counsel questioned whether this principle is still good law. He asserted that it appeared to have been overruled by N.Y.Gen.Oblig.Law  13-107, which reads in pertinent part: Unless expressly reserved in writing, a transfer of any bond shall vest in the transferee all claims or demands of the transferrer [sic], whether or not such claims or demands are known to exist, (a) for damages or rescission against the obligor on such bond .... Id. (emphasis added). Claiming that the statute literally covered the Participation Agreement, plaintiff argued that, the Court would have to find that the Assignment included tort claims and dismiss defendant's affirmative defense of lack of standing. During the defense's summation, however, defendant's counsel correctly pointed out that the Participation Agreement is not covered by  13-107 for two reasons. First, because the participation Agreement is not a "bond" as defined by the statute. Section 13-107(2) reads: "As used in this section, `bond' shall mean and include any and all shares and interests in an issue of bonds, notes, debentures and other evidences of indebtedness...." Second, because under the provision, rescission claims must exist against the obligor, and on the Marceca loan that would be the Marceca borrowers and not MNB. B. Judge Sofaer's Approach: Freely Assignable Fraud Claims In a post-trial submission, plaintiff reasserted its statutory argument by referring to Judge Sofaer's decision in ACLI Intern. Commodity Servs., Inc. v. Banque Populaire Suisse, 609 F. Supp. 434 (S.D.N.Y.1984). According to Judge Sofaer, because "[t]he law has moved away from the limitations on free assignability ... New York law now permits the assignment of most types of claims, including claims of fraud, and ... the assignee of a claim should be deemed to have received the right to enforce any claim assigned." Id. at 441-42. As a result, ACLI held that even where  13-107 could not be relied on as actual authority that any claim can be assigned, it could be used as guiding authority inasmuch as "[t]he statute reflects the legislature's willingness to presume the assignment of all claims in order to enhance felt commercial needs." Id. at 444. On the facts in ACLI, Judge Sofaer reasoned that even though "accounts receivable" were not bonds and even though the defendant bank was not an obligor, the fraud claim could be assignable under  13-107 because "the statute should be seen to teach by example, rather than to exclude by implication." Id. at 443. ACLI acknowledged that, while it was reading  13-107 broadly, the statute was enacted in order to overrule New York case law involving the assignment of bonds and other forms of commercial paper. Judge Sofaer wrote: The change made in New York law by  13-107 was designed to enable the assignee of a bond or other similar instrument to take all the assignor's rights in the paper assigned, and to sue the obligor directly. The operative paragraph of  13-107 refers specifically to "bonds," not to "evidences of indebtedness." ... The legislature apparently concluded that assignees of bonds, notes and other forms of commercial paper should be entitled to protect the value of such forms of paper by being entitled, absent an express limitation, *1208 to sue the debtor, obligor, trustee, or depository on any theory available to the assignor. The statutory rule thereby simplified the assignee's task of collection and protected the value of certain forms of highly negotiable commercial paper. Id. (emphasis added) (citations omitted). Indeed, the Historical Note following  13-107 states clearly that the statute reverses the holdings in Smith v. Continental Bank & Trust Co., 292 N.Y. 275, 54 N.E.2d 823 (1944) (absent express assignment, transferor of corporate bonds retains accrued causes of action for damages against trustee) and Elias v. Clarke, 143 F.2d 640, 644 (2d Cir.) ("under the governing New York law a claim for fraud or misrepresentation in connection with an obligation evidencing a debt, whether for damages or for rescission, does not pass merely with the transfer of the obligation itself, where there are lacking special words of assignment of the claim."), cert. denied, 323 U.S. 778, 65 S. Ct. 191, 89 L. Ed. 622 (1944). See, N.Y.Gen.Oblig.Law  13-107 Historical Note. Judge Sofaer rejects the view, however, that  13-107 is a narrow exception to the general rule that a fraud claim must be explicitly assigned. ACLI maintains that this perceived. "long-standing rule" never really existed. Judge Sofaer acknowledges that there are New York cases which cite Fox for the principle "that in the absence of an assignment of a cause of action based upon the fraud, as distinguished from an assignment of the contract ... the cause of action belongs to the assignor." Nearpark Realty Corp. v. City Investing Co., 112 N.Y.S.2d at 817 (citing Fox v. Hirschfeld, 142 N.Y.S. at 262). Nevertheless, Judge Sofaer declares: "the `long-standing rule' that ACLI claims was implicitly affirmed by the `statutory exception' is in fact represented by a mere handful of cases, which fail to establish any such rule." ACLI Intern. Commodity Servs., Inc. v. Banque Populaire Suisse, 609 F.Supp. at 443. According to ACLI, Fox cannot be considered a landmark case because it "was a 3-2 decision based on very special circumstances." Id. Under ACLI's interpretation of Fox, the assignor retained the fraud claim because the assignee was the assignor's wife and she paid nothing to her husband for the house, which was the subject of the contract. Therefore, Judge Sofaer inferred from Fox that: Had the assignee paid for the contract in an arms-length transaction before discovery of the fraud, the same court would likely have found that the cause of action passed to the assignee, absent evidence of an intention that it be retained by the assignor. In such circumstances the accrued action for fraud would be "essential to a complete and adequate enforcement of the contract, [and therefore] it passes with an assignment of the contract as an incident thereof." Id. (quoting 6A C.J.S. Assignments,  77, at 721 (1975)). Absent a rule requiring explicit assignment of fraud claims, Judge Sofaer suggests that courts rely exclusively on modern contract principles in determining the scope of an assignment. Id. at 442. "The parties to an assignment are now free to agree by contract to virtually any form of assignment, subject to such general limitations as the principle that an assignee can receive no greater rights than the assignor possessed." Id. Freely assignable claims means that a fraud claim is presumptively assignable and is restricted only by "a manifestation of a different intention." Id. at 444. C. ACLI's Approach Criticized 1. ACLI's Erie Problem: Based upon principles of comity and federalism, this Court cannot adopt ACLI's refusal to adhere to a principle of New York law. Under the Erie doctrine, federal courts considering an issue of state law are bound to respect a state court judgment concerning that issue. See, Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S. Ct. 817, 822-23, 82 L. Ed. 1188 (1938). Erie recognized that there should not be two conflicting systems of law controlling the primary activity of citizens, for such alternative governing authority must necessarily give rise to a debilitating uncertainty in the planning of everyday affairs.... Thus, in diversity cases Erie *1209 commands that it be the state law governing primary private activity which prevails. Hanna v. Plumer, 380 U.S. 460, 474-75, 85 S. Ct. 1136, 1145-46, 14 L. Ed. 2d 8 (1965) (Harlan, J., concurring) (footnote omitted). Indeed, in a diversity action, a federal district court acts in the role of a state court and is required to uphold the law of the state. "[S]ince a federal court adjudicating a State-created right solely because of the diversity of citizenship of the parties is for that purpose, in effect, only another court of the State, it cannot afford recovery if the right to recover is made unavailable by the State nor can it substantially affect the enforcement of the right as given by the State." Guaranty Trust Co. v. York, 326 U.S. 99, 108-09, 65 S. Ct. 1464, 1469-70, 89 L. Ed. 2079 (1945). As such, this Court will follow New York State case law, that has never been overruled, in determining the method for assigning fraud claims. 2. ACLI's Broad Reading of Section 13-107 ACLI admittedly sweeps broadly in defining the parameters of  13-107. However, this statute specifically refers in precise language to claims transferred with a bond, and it explicitly encompasses definitions of the operative terms including what is meant by a "bond." Section 13-107 is not a vague, general provision, from which a court could infer a legislative determination, or in ACLI's terminology "the legislature's willingness," to codify the free assignability of all claims. This Court sees no reason to look into legislative intent in any case. As the Second Circuit has recently emphasized: Analysis of [a] provision must commence with the language of the statute itself because, when looking at its language, a court should presume that the statute says what it means.... If the words of a statute are unambiguous, judicial inquiry should end, and the law interpreted according to the plain meaning of its words.... Only where doubt or ambiguity resides in a Congressional enactmentÔÇö i.e., the legislature's finished product ÔÇö may legislative history and other tools of interpretation beyond a plain reading of the statute's words be utilized to shed light on verbiage that is unclear. Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072-73 (2d Cir.1993) (citations omitted); see also, Motor Vehicle Mfrs. Ass'n v. New York State Dep't of Envtl. Conservation, 17 F.3d 521, 531 (2d Cir.1994). Moreover, an examination of the legislative history only confirms that  13-107 was intended to have limited applicability. The legislative history states: "[Section 13-107] provides that such causes of action pass with a transfer of the bond.... The provision for automatic transfer is limited to claims against the obligor, an indenture trustee or depositary, or a grantor." N.Y.Gen. Oblig.Law  13-107 Historical Note (citing 1950 Leg.Doc. 65(D)). Accordingly, the Court finds that  13-107 does not cover the automatic assignability of claims relating to the Participation Agreement, even in the guise of "guiding authority." 3. ACLI's Misinterpretation of Fox v. Hirschfeld This Court also disagrees with ACLI's interpretation of Fox v. Hirschfeld and the contention that New York law no longer holds that fraud claims must be specifically assigned. Fox makes clear that it was not the circumstances surrounding the contract, "but the language employed in the assignment of the contract," which made the fraud claim not assignable. Fox v. Hirschfeld, 142 N.Y.S. at 264 (emphasis added). No subsequent New York case law has understood Fox any differently. See, e.g., Weylin Hotel Corp. v. Ritter, 114 N.Y.S.2d 158, 159 (Sup.Ct.1952) ("The rule seems well established that the assignee of the original contract ... may not sue the vendor for fraud [for] allegedly inducing the contract."). In short, this Court adopts the holding of Fox v. Hirschfeld and its progeny that the assignment of a contract does not automatically transfer related tort claims. D. Analysis of the BAII Assignment The Court now examines whether the language of the assignment effectively transferred the fraud claim. In ACLI, the assignment included language that "all rights, *1210 claims and causes of action" would be transferred. The court found that the language reflected an intention to transfer the fraud claim. ACLI Intern. Commodity Servs., Inc. v. Banque Populaire Suisse, 609 F.Supp. at 444. However, because the assignment specified that the transferred claims could only be brought against "debtors" or "owners," the court also found that they could not be brought by the assignee against unspecified third parties, such as the defendant. Id. In addition, the court relied on the testimony of principal officers of the assignor that they did not intend to assign the fraud claims with respect to the defendant. Id. at 445. The instant action provides the reverse situation. While the language itself appears not to cover tort claims, Banque Arabe and BAII officials maintain that they intended to transfer all claims and causes of action associated with the Participation Agreement through the Assignment. Alasdaire Hewett ("Hewett"), a Banque Arabe official, testified that through the assignment Banque Arabe "intended to acquire all the rights, remedies, courses [sic] of action whatsoever that BAII banking Corp. may have had. In other words, which [sic] were putting ourselves in their shoes." Trial Tr. at 704. Waller explained that, in instructing BAII's attorneys on how to draft the assignment, he had made it clear that "our mission was to remove from BAII Banking Corporation the vast majority of its assets and transfer them to ... Banque Arabe, and in particular, we wished to transfer the Marceca transaction ... I asked him to prepare appropriate assignment documents to accomplish that, including any and all rights and remedies that might go with it." Id. at 868. However, neither Waller nor Hewett testified that BAII and Banque Arabe specifically and consciously agreed to a transfer of tort claims. In fact, Waller confirmed that the assignment agreement was simply the transfer document necessary to transfer the Marceca loan to Banque Arabe. Trial Tr. at 297. Waller's April 27 memo evidences that the assignment of the Marceca loan was part of a general transfer of participation agreements and it refrained from specifying that any claims or causes of action were being assigned along with it. Had BAII wished to assign litigation claims associated with the Marceca transaction, it knew how to effectuate such a transfer. On April 10, 1992, BAII entered into an assignment agreement with BAII American Holding Corp. in which it assigned litigation claims arising from the Will Petroleum accounts. This assignment contained a provision which read in pertinent part: "The Liquidating Bank hereby grants, assigns and conveys unto Holding all claims, accounts, actions, debts, causes of action and rights to pursue recovery of all sums...." Defendant's Ex. FF. at 3 (emphasis added). Banque Arabe argues that the Will Petroleum assignment is different than the MNB assignment because it referred to actions already commenced. In the instant case, on the other hand, no actions had been commenced at the time the Assignment was executed. Banque Arabe's argument only confirms that the Assignment did not cover the fraud claim. Similar to the Will Petroleum litigation, once BAII decided to institute an action for fraud against MNB, it could have executed an assignment transferring the claim to Banque Arabe. Moreover, by May 31, 1990, when the Assignment was executed, plaintiff was aware of potential claims later asserted against MNB in this action. Trial Tr. at 778 (citing Plaintiff's Response to Request for Admission No. 118). Therefore, even though New York requires no specific language in order to effectuate a transfer of claims, the language selected by BAII for the Marceca Assignment, as opposed to the language employed for other assignments, clearly demonstrates that it did not intend through the Assignment to explicitly include fraud claims in the transfer. Accordingly, the Court finds that Banque Arabe lacks standing to assert a fraud claim. II. Rescission A. Promptness Over a century ago, the Supreme Court explained that, "[w]here a party desires to rescind upon the ground of mistake or fraud, he must, upon the discovery of the facts, at once announce his purpose, and *1211 adhere to it.... He is not permitted to play fast and loose. Delay and vacillation are fatal to the right which had before subsisted." Grymes v. Sanders, 93 U.S. 55, 62, 23 L. Ed. 798 (1876). As a result, a plaintiff is required to assert his right to rescind without unreasonable delay. Allen v. Westpoint-Pepperell, Inc., 945 F.2d 40, 47 (2nd Cir. 1991). Rescission claims must be instituted "promptly after discovery of the fraud." Gannett Co., Inc. v. Register Pub. Co., 428 F. Supp. 818, 827 (D.Conn.1977). Promptness is an element of a prima facie rescission action and the burden of proof is on plaintiff. Johns Hopkins University v. Hutton, 488 F.2d 912, 916 n. 12 (4th Cir.1973), cert. denied, 416 U.S. 916, 94 S. Ct. 1622, 40 L. Ed. 2d 118 (1974); see also, John M. Friedman, "Delay as a Bar to Rescission," 26 Cornell L. Quarterly 426, 428-29 (April 1941) [hereinafter Friedman] ("in rescission actions, it is incumbent upon the plaintiff to prove that he acted promptly in seeking his rescission.").[6] The principle of promptness is a fairly stringent requirement. Baumel v. Rosen, 412 F.2d 571, 574 (4th Cir.1969), cert. denied, 396 U.S. 1037, 90 S. Ct. 681, 688, 24 L. Ed. 2d 681 (1970). Even where a party does not have full knowledge of fraud, he can be held to have been delinquent in raising the rescission claim. A party must assert his right to rescind after having had notice of the fraud and the opportunity to investigate. "Full and complete knowledge of an alleged fraud or breach of contract is not essential to impose upon a would-be rescinder the necessity of acting promptly and diligently if he wishes to assert a rescission. It is enough that he has such notice of the facts as would impel a reasonable man in his position to make inquiry. Having such notice, he will be chargeable with knowledge of all the facts which inquiry would disclose." Friedman at 432, quoted in Johns Hopkins University v. Hutton, 488 huffjacob@example.org. The Court notes, however, that the party need not raise the claim immediately upon notice of the fraud but is afforded a reasonable period after notice of the fraud within which to consider whether or not to rescind. huffjacob@example.org. "`Reasonable time is inceptive from the receipt by the rescinder of wor[d] putting him on notice. It is then incumbent upon him to pick up the scent and nose to the source. If the quest confirms this suspicion, then he must make decision with reasonable dispatch. Failing this, entitlement to rescission disappears.'" Gannett Co., Inc. v. Register Pub. Co., 428 F.Supp. at 828 (quoting Baumel v. Rosen, 412 F.2d at 574). In addition, there are events and excuses which can suspend the delay period. For example, where the parties are seeking settlement or compromise, rescission need not be asserted until the negotiations fail. huffjacob@example.org. MNB alleges that Banque Arabe was not prompt in asserting rescission because it had sufficient knowledge of possible fraud by March of 1990 and it waited until October of that year before filing its claim. Defendant contends that, at the very latest, BAII learned of MNB's pre-funding knowledge in late February 1990 when Waller visited MNB's offices and saw Diffenderfer's September 12 memo. On the other hand, Banque Arabe argues that, even if it did have the requisite amount of knowledge in March 1990, it refrained from asserting its right to rescind until after settlement negotiations finally broke down in September 1990. The Court agrees with defendant that BAII had sufficient notice of fraud by the time Waller discovered Diffenderfer's September 12 memo. The memo states clearly and unambiguously "The bank was first made aware of th[e co-sponsorship] issue by Bob Marceca in mid-August." Plaintiff's Ex. 36. Banque Arabe asserts that upon discovery of this memo, it directly questioned MNB as to time and scope of that bank's knowledge concerning the co-sponsorship issue. Waller wrote MNB on March 23, 1990 requesting information including: What was Maryland National Bank's role in resolving the New York Attorney General's concerns over the Bank's status as a *1212 co-sponsor of the Marceca Offering Plans? When did Maryland National Bank first learn about the Attorney General's concerns? When did the bank first conclude that these schedules would delay the original paydown schedule for the Marceca II loan, as described in R.B. Diffendorfer's [sic] September 12, 1988 memorandum? How was the paydown schedule modified as a result of that conclusion? Plaintiff's Ex. 91. As part of its response, on March 29, 1990, MNB stated that "[t]he Attorney General's purported concern was first learned of in early fall 1988." Id. Ex. 92 (emphasis added). This response, Banque Arabe maintains, was, at best, misleading, and thus, even by the end of March, BAII should still not be viewed as having had notice of the alleged fraud. Banque Arabe's argument fails because it elevates the significance of the "early fall 1988" response and ignores the impact of Waller's discovering the September 12 memo. In the first part of 1990, BAII's relationship with MNB was becoming increasingly more adversarial. Indeed, by the end of January 1990, Waller had been contemplating legal action against MNB. In a memo he drafted on January 25, 1990, Waller wrote: There are aspects of the entire transaction which could perhaps provide BAII with possible causes of action against Maryland National Bank.... In the ideal situation, the attorneys will uncover a clear piece of factual evidence which indicates that Maryland National has behaved improperly. Unfortunately, the more likely outcome is that there is no such clear evidence and that, at best, we have murky evidence of negligence and incompetence on the part of Maryland National Bank rather than actual wrongdoing.... Defendant's Ex. huffjacob@example.org. The September 12 memo was sufficient for what Waller needed. BAII now had an internal memorandum from MNB's files identifying a fairly precise date at which the lead bank had knowledge of the co-sponsorship issue. Such documentary evidence is far more probative than the vague response of a potential adversary. Thus, the Court finds that BAII had notice of facts supporting a fraud claim by, at the latest, the end of February 1990. Its decision to rescind had to be made sometime soon after it conducted its March inquiry. Nevertheless, the Court also finds that Banque Arabe cannot be held to have failed to assert its claim promptly, because of the settlement negotiations. Although the evidence at trial did not pinpoint the exact date at which settlement negotiations ended, it appears that they ceased in or around September 1990. The Court holds that plaintiff's assertion of its rescission claim within a month of the time the promptness requirement commenced was reasonable. B. Ratification Rescission is a remedy through which a party seeks to disaffirm the contract and return to the status that existed before the transaction was executed. Soderberg v. Gens, 652 F. Supp. 560, 565 (N.D.Ill.1987). Where a party engages in acts inconsistent with disaffirmance, such as acceptance of benefits under the contract or the exercise of dominion over the subject matter of the transaction, he will lose the right to rescind. Gannett Co., Inc. v. Register Pub. Co., 428 F.Supp. at 824, 826. Reaffirming acts are frequently characterized as a ratification of the contract. "`Ratification' results where a party to a voidable contract accepts benefits flowing from the contract, or remains silent, or acquiesces in [a] contract for any considerable length of time after he has opportunity to annul or void the contract." Prudential Ins. Co. v. BMC Industries, 630 F. Supp. 1298, 1300 (S.D.N.Y.1986). By ratifying a contract, the party waives the right to rescind. Vista Co. v. Columbia Pictures Industries, Inc., 725 F. Supp. 1286, 1295 (S.D.N.Y.1989). Waiver involves "intentional relinquishment of a known right" and must contain both "knowledge of its existence" as well as the "intention to relinquish it." City of New York v. State, 40 N.Y.2d 659, 389 N.Y.S.2d 332, 340, 357 N.E.2d 988, 995 (1976). Ratification should not be confused with the promptness requirement. "The rule requiring promptness ... must be distinguished from the rule that intentional acts, *1213 performed in recognition of a contract as valid, result in a ratification of a previously voidable contract and bar rescission." huffjacob@example.org. Unlike plaintiff's burden to demonstrate promptness, ratification is an affirmative defense and the burden of proof belongs to defendant. A party can lose the right to rescind even unintentionally. It could be that "[t]he party has simply sat back after knowledge of the facts, through indifference, negligence, or a speculative desire to see how things will turn out, and then, after what the court finds to be an unreasonable time, manifests his election to rescind." Id. at 430. Ratification, on the other hand, must be intentional. Id. Nevertheless, MNB asserts that the knowledge level for establishing promptness is the same for determining ratification. Defendant simply cites the principle applicable to the promptness requirement, as noted above, that a would-be rescinder need not have full knowledge of the fraud, but notice of facts which, in the exercise of due diligence, would lead to knowledge of the fraud. Banque Arabe counters that full knowledge of the fraud is required before there can be ratification of a contract. Its argument, however, relies on case law relating specifically to the doctrine of ratification under agency law. In agency law, "`[r]atification is a form of subsequent authorization [where].... If a principal[,] with such knowledge that there is an agreement outstanding and with knowledge of what that agreement is, then accepts the benefits of an agent's action, the principal is responsible for agreement of the agent whether originally authorized or not.'" Julien J. Studley, Inc. v. Gulf Oil Corp., 282 F. Supp. 748, 751-52 (S.D.N.Y.1968) (quoting Judge's Charge to the Jury). To ratify the unauthorized act of an agent, a principal must have full and complete knowledge of all the material facts of the transaction. Cooperative Agricole Groupement de Producteurs Bovins de L'Quest v. Banesto Banking Corp., No. 86 Civ. 8921, 1989 WL 82454 at *16-17 (S.D.N.Y.1989) (citing cases) ("ratification requires acceptance by the principal of the benefits of an agent's acts, with full knowledge of the facts, in circumstances indicating an intention to adopt the unauthorized arrangement."), aff'd, 904 F.2d 35 (2d Cir.1990). Actual knowledge is required in the agency context, because the underlying issue is whether the principal has authorized the agent to perform acts or enter into contracts, not whether the agent, himself, assumed those responsibilities. Ratification is a form of retroactive authority. Without knowing ratification, the agent's act is unauthorized and the principal is not obligated to perform. Outside of the agent-principal relationship, in contrast, ratification is not a form of authorization. It is, instead, an expression of willingness on the part of a party to a contract to abide by its terms, even after it has enough information upon which to exercise its right to disaffirm the existence of the contract. Rescission is a radical measure and a would-be rescinder should be careful not to affirm the contract once he had opportunity to consider a suspicion of fraud. Therefore, even though the standards for ratification are not the same as the requirements for asserting a rescission claim promptly, the Court finds that full knowledge is not necessary before there can be ratification. Ratification can occur even after a party has had notice of facts that would invite reasonable inquiry. MNB cites to four acts which, it argues, demonstrate BAII's intention to continue with the Participation Agreement, even after having been put on notice of circumstances giving rise to a fraud claim. These four are as follows: (1) the acceptance of monthly interest payments between February and December 1989; (2) the assignment of the Participation Agreement on May 31, 1990; (3) the acceptance of the proceeds of the foreclosure sale in the summer of 1991; and (4) the assertion of a claim against Marceca in the developer's bankruptcy proceeding on May 29, 1991. Banque Arabe asserts that each of these acts is merely a step that a reasonable participant would take in the course of pursuing a rescission claim, and they do not constitute ratification. 1. The Interest Payments Between October 1988 and December 1989, BAII received interest payments from Marceca through MNB. If the Court determines *1214 that BAII learned of MNB's pre-funding knowledge at any point during this time period, it could find that the participating bank accepted benefits under the Participation Agreement and waived the rescission claim. MNB argues that BAII was on notice of an alleged fraud from the time it received Allner's January 19, 1989 letter disclosing the existence of the co-sponsorship issue. The Court rejects defendant's argument. MNB's pre-funding knowledge could not have been determined by BAII from Allner's January 19 letter. The letter notified BAII of problems associated with the Marceca II loan, but it did not arouse suspicion of possible pre-funding knowledge on the part of MNB. In fact, Waller testified that, because the letter also explained that the problems had been resolved by the mortgage modifications, BAII assumed that MNB had discovered the co-sponsorship issue only after the participation had been funded in the brief period leading up to the modification agreement. Trial Tr. at 270. In addition, the monthly status reports BAII received from MNB, during the period from January through November 1989, contained no information concerning MNB's pre-funding knowledge of the co-sponsorship issue. Defendant's Exs. F-N. According to Waller, BAII "had no reason to suspect or distrust" MNB until early 1990 when it became "[un]happy with how Maryland National was pursuing the workout of its loans," and it "had a growing sense of unease about the entire situation." Trial Tr. at 271-72. Thus, the Court finds that MNB has failed to show by a preponderance of the evidence that BAII had enough information to be on notice of a fraud claim before the interest payments stopped in December 1989. 2. The Assignment MNB relies primarily on Soderberg in arguing that an assignment operates as an affirmance of a contract extinguishing the right to rescission. Soderberg was a securities case, and it concluded, based on the securities context, that rescission claims can virtually never be assigned. The court