Anti-Hydro Co., Inc. v. Castiglia, ANTI-HYDRO

• Decision Date: 28 February 1983
• Docket Number: ANTI-HYDRO
• Citation: 461 N.Y.S.2d 87,92 A.D.2d 741
• Parties: COMPANY, INC., Respondent, v. Anthony CASTIGLIA, Individually as Guarantor, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 87

461 N.Y.S.2d 87

92 A.D.2d 741

ANTI-HYDRO COMPANY, INC., Respondent, v. Anthony CASTIGLIA, Individually as Guarantor, Appellant.

Supreme Court, Appellate Division Fourth Department.

Feb. 28, 1983.

Collesano, Sommer & Michalak by Donald Michalak, Fredonia, for appellant.

Brandt & Laughlin, P.C. by Gerald Wahl, Fredonia, for respondent.

Before DILLON, P.J., and CALLAHAN, DOERR, BOOMER and MOULE, JJ.

MEMORANDUM:

Defendant established T.C. Supply & Rentals, a sole proprietorship, by filing a business certificate in the Chautauqua County Clerk's Office on December 4, 1975. Thereafter he commenced purchasing certain materials from plaintiff. On March 29, 1976, at the request of plaintiff, defendant forwarded to plaintiff a letter signed by him, and duly notarized, stating the following:

In consideration of the agreement by the Anti-Hydro Company to ship merchandise on open account, at their request to:

T.C. Supply and Rentals, 156 Newton Street, Fredonia, NY, 14063, the Undersigned Parties do hereby agree that they will personally guarantee the payment of all Anti-Hydro invoices by due date, and if the above named purchaser, T.C. Supply and Rentals fails to make payment of such invoices, the Parties Undersigned will individually or collectively make payment of same.

This guarantee will be continued until the Undersigned Parties shall notify the Anti-Hydro Company in writing of its termination, when and after full payment of account has been made.

In December 1976 defendant's wife formed a corporation named Fredonia T.C. Supply and Rentals, Inc. Defendant was not an incorporator, director or stockholder of the corporation, but he acknowledged serving as "part-time manager." Thereafter plaintiff sold materials on credit to the corporation. All purchases made by the sole proprietorship prior to January 1, 1977 were paid for in full and all purchases thereafter were made by the newly formed corporation. In this brief trial, plaintiff's bookkeeper at least twice acknowledged that plaintiff was aware from and after January 1977 that its credit transactions were with the corporation. The purchases for which judgment was first recovered against the corporation were made between June 30, 1978 and August 29, 1978. That judgment was not paid and plaintiff then brought this action premised upon defendant's purported "guaranty."

The Trial Court held that it would be inequitable to relieve the defendant of his obligation under the "guaranty" because: 1. the change from sole proprietorship to a corporation was de minimis; 2. there was no significant change in the operations and management of the company; and 3. defendant failed to fulfill his obligation to give plaintiff written notice of termination of the guaranty. We reverse.

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