Callanan Industries, Inc. v. Micheli Contracting Corp.

• Decision Date: 26 November 1986
• Citation: Callanan Industries, Inc. v. Micheli Contracting Corp., 508 N.Y.S.2d 711, 124 A.D.2d 960 (N.Y. App. Div. 1986)
• Parties: CALLANAN INDUSTRIES, INC., Appellant, v. MICHELI CONTRACTING CORPORATION, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 711

508 N.Y.S.2d 711

124 A.D.2d 960

CALLANAN INDUSTRIES, INC., Appellant, v. MICHELI CONTRACTING CORPORATION, Respondent.

Supreme Court, Appellate Division Third Department.

Nov. 26, 1986.

Hayes & Hayes (Harry R. Hayes, III, Albany, of counsel), for appellant.

Tobin & Dempf (Michael L. Costello, Albany, of counsel), for respondent.

Before KANE, J.P., and MAIN, YESAWICH, LEVINE and HARVEY, JJ.

MAIN, Justice.

Appeal from an order of the Supreme Court (Brown, J.), entered April 23, 1986 in Albany County, which granted defendant's motion for summary judgment dismissing the complaint.

In 1973 and 1974, plaintiff performed paving work for defendant at an apartment complex construction project for which defendant was the site utility contractor and Carleton Construction Company (Carleton) was the developer. After completion of the paving work, plaintiff submitted a bill to defendant in the amount of $83,569.45, an amount subsequently reduced to $63,569.45. In October 1974, Carleton executed a promissory note to plaintiff's order in that amount. The note contained the notation "Payment approved Micheli Contracting Corp" which was signed by defendant's president. The note was personally guaranteed by two of Carleton's principals. In July 1975, the note remaining unpaid, plaintiff commenced an action against Carleton and the two personal guarantors. Although plaintiff obtained a default judgment, the judgment was never satisfied.

The present action was commenced in September 1975, although activity in the matter was stayed pending resolution of an action taken against Carleton by defendant. After activity resumed, defendant moved for summary judgment on the ground that the promissory note executed in favor of plaintiff constituted a novation, thus absolving defendant of liability. Plaintiff opposed the motion, contending that there was an issue of fact as to whether it intended to relieve defendant of liability. Finding that plaintiff had submitted nothing more than general denials of defendant's allegations, Supreme Court granted the motion. Plaintiff has appealed.

A novation has four elements, each of which must be present in order to demonstrate novation: (1) a previously valid obligation; (2) agreement of all parties to a new contract; (3) extinguishment of the old contract; and (4) a valid new contract (see, Wasserstrom v. Interstate Litho Corp., 114 A.D.2d 952, 954, 495 N.Y.S.2d 217; Town & Country Linoleum & Carpet Co. v. Welch, 56 A.D.2d 708, 392 N.Y.S.2d 517). Here, plaintiff contests the existence of the third element, extinguishment of the old contract. According to plaintiff, the execution of the promissory note is consistent with an attempt by plaintiff to gain additional security for the obligation, and there is thus an issue of fact as to whether it intended to extinguish the old contract. We are of the opinion that plaintiff has presented insufficient evidence to defeat defendant's motion for summary judgment.

In order to defeat summary...