Kasper v. Roberts

• Decision Date: 07 June 1983
• Citation: 119 Misc.2d 829,464 N.Y.S.2d 642
• Parties: Bruce KASPER, Plaintiff, v. Bart ROBERTS, David Rubinstein and Worldly Possessions, Inc., Defendants.
• Court: New York City Court

Page 642

464 N.Y.S.2d 642

119 Misc.2d 829

Bruce KASPER, Plaintiff, v. Bart ROBERTS, David Rubinstein and Worldly Possessions Inc., Defendants.

Civil Court of the City of New York Queens County.

June 7, 1983.

Feigen, Loecher & Holm, New York City, for plaintiff.

Golieb & Golieb, New York City, for defendant, Bart Roberts.

OPINION OF THE COURT

WILLIAM D. FRIEDMANN, Judge.

Plaintiff, an independent sales representative, under an oral agreement with the defendant Worldly Possessions, Inc., seeks recovery of commissions, from defendant Bart Roberts.

The evidence at trial, puts in focus, whether one who issues his personal check, in partial payment of a corporate obligation, assumes personal liability of that obligation, and others, thereafter to the payee of the check?

That question is presented in the context of essentially undisputed facts.

Defendant Roberts, newly associated, in some vague way, with defendant Worldly Possessions, Inc., executed and delivered to plaintiff his personal check, dated April 21, 1976, in the amount of One Thousand Seven Hundred Sixty Three Dollars and 68/100 ($1,763.68), for sales commissions due to the plaintiff by the defendant Worldly Possessions, Inc. The personal check had the following legend written on its face: "Comm. Worldly Possessions--Jan., Feb., Mar. '76.". It was endorsed on the rear by plaintiff, "Pd. partial Bal Due $1,659.15 For Deposit only". Thereafter, Roberts with no designation of title or authority, signed a check dated June 4, 1976, drawn upon Worldly's account, payable to the order of the plaintiff, in the amount of Four Thousand Eight Hundred Twenty Nine and 54/100 ($4,829.54). That check bore the legend "Commission" on its face. Both checks failed to clear the collection process. Subsequently plaintiff brought this action against Roberts, David Rubinstein (the Corporate Defendant's president, director and shareholder), and Worldly Possessions, Inc. (only Roberts was served). It was undisputed at trial, that both checks were tendered to cover sales commissions due and owing to plaintiff by Worldly Possessions, Inc. The testimony of Roberts, that he was only an employee and at no time was a shareholder, officer or director of Worldly Possessions, Inc. was uncontroverted.

At the conclusion of trial, memoranda was requested concerning plaintiffs position, that Roberts was personally responsible for what appeared to be a corporate obligation owed to plaintiff.

POST TRIAL--CONTENTIONS OF THE PARTIES

In seeking to establish Roberts' personal liability, plaintiff contends, 1. That Roberts' personal check supported by other facts and circumstances created a new contractual duty (novation), rendering Roberts liable for his checks dishonor; 2. The previously existing consideration by plaintiff to Worldly Possessions, Inc. was sufficient to hold Roberts liable for the dishonored personal check; and 3. Roberts was criminally liable for violation of Section 198-a of Article 6 of the New York State Labor Law. (Payment of Wages).

In denying personal liability Roberts contends, 1. The acceptance of his personal check by Plaintiff did not immediately discharge the previously existing contractual obligation of the corporate defendant; 2. That there was no intention to substitute a new personal, for an old corporate obligation, in as much as the holder of the negotiable instrument (here plaintiff) knew the actual status of Roberts, as an individual party signing on behalf of and in payment of a corporate obligation. That in such circumstances, the individual maker of the check may not be held liable on the instrument; 3. That failure of consideration for the making of a negotiable instrument is a defense, where the underlying obligation remains unextinguished; and, 4. Section 198-a of the New York State Labor Law does not apply to "non" employees. Plaintiff was an independent Sales Representative.

NOVATION

Whether the tender and acceptance of Roberts personal check and a second corporate check signed by Roberts, in the context of the circumstances existing constituted a valid novation is the issue under consideration.

A "Novation" is a contract which works as an immediate discharge of previously existing contractual duty. It creates a new contractual duty, and includes as a party to the new contract, one who was not entitled to receive, nor obliged to perform the previous contractual duty.

Component parts of a novation are (1) Mutual Assent; (2) Immediate Discharge of the Old Obligation; (3) Consideration; and (4) Presence of a New Party. (See 42 N.Y.Jur. Novation, Sections 7-16).

When examining the contentions of the parties, and novation requirements, with the evidence at trial, this court concludes that the only novation requisite which was clearly demonstrated was (4) Presence of a new party (Roberts). The other requisites, were not so clearly presented and must be examined further (1) Mutual Assent: Like in all contracts, a contract of novation requires the real or reasonably apparent consent of, or subsequent ratification by, the parties involved, in the substitution of the subsequent agreement for the old. Assent is a factual determination to be drawn from an examination of the intentions of the parties, as expressed by the testimony and existing documentation. (Goldbard v. Empire State Mutual Life Insurance Co., 5 A.D.2d 230, 171 N.Y.S.2d 194; Kinsella v. Merchants Nat. Bank & Trust Company, 34 A.D.2d 730, 311 N.Y.S.2d 759).

Examination into this aspect, leaves no doubt that both Roberts and plaintiff knew and intended that Roberts was only covering part of a corporate obligation, as a temporary accommodation by tendering his...