Salzman Sign Co. v. Beck

• Decision Date: 01 June 1961
• Citation: 217 N.Y.S.2d 55,176 N.E.2d 74,10 N.Y.2d 63
• Parties: , 176 N.E.2d 74 SALZMAN SIGN CO., Inc., Apellant, v. Elsa BECK, as Administratrix of the Estate of Irving Beck, Deceased, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 55

217 N.Y.S.2d 55

10 N.Y.2d 63, 176 N.E.2d 74

SALZMAN SIGN CO., Inc., Apellant, v. Elsa BECK, as Administratrix of the Estate of Irving Beck Deceased, Respondent.

Court of Appeals of New York.

June 1, 1961.

David L. Delman, New York City, for appellant.

Benjamin Weintraub and Theodore D. Stuzin, New York City, for respondent.

DESMOND, Chief Judge.

In May, 1959 plaintiff made a contract with Leslie 575 Corp., of which defendant's intestate was then president, for the sale by plaintiff to the Leslie corporation of an advertising sign at a price of $2,850. In December, 1959, $1,260 of the price remained unpaid and plaintiff brought this suit therefor in Municipal Court against Irving Beck, who was president of the Leslie corporation at the time of the contract. The theory of the suit, as hereafter explained, was that Irving Beck had not only made the contract on behalf of the corporation but had individually guaranteed payment. The printed form contract is set out in full in the record. The signing for the purchaser Leslie 575 Corp. was in this form:

'Leslie 575 Corp. L.S.

Irving Beck pres L.S.'

This, of course, was a corporate and not an individual signature.

However, in paragraph numbered 5 of the contract this appears:

'Where the Purchaser is a corporation, in consideration of extending credit to it, the officer or officers signing on behalf of such corporation, hereby personally guarantee the payments hereinabove provided for.'

In the Municipal Court plaintiff moved for summary judgment which was denied with a brief opinion in which the court said that there was not a sufficiently clear indication that Irving Beck had intended to bind himself individually. Plaintiff then appealed to the Appellate Term from the order denying summary judgment but Appellate Term, without opinion, unanimously modified by granting summary judgment in favor of defendant dismissing the complaint. Plaintiff then appealed to the Appellate Division, Second Department, which unanimously affirmed the summary judgment for defendant but granted leave to plaintiff to appeal to this court. The Appellate Division wrote a Per Curiam opinion in which it stated that the court's affirmance was on the authority of Warren-Connolly Co. v. Saphin, 283 App.Div. 391, 128 N.Y.S.2d 272. The Appellate Division said this: 'The decedent, as an agent for a disclosed principal, acting within the scope of his authority, is not liable for a breach of the contract unless the intent to bind himself personally clearly appears. (Keskal v. Modrakowski, 249 N.Y. 406, 164 N.E. 333; Mencher v. Weiss, 306 N.Y. 1, 114 N.E.2d 177.)' (11 A.D.2d 1068, 206 N.Y.S.2d 526.) Thus, all the Judges in all three of the courts below held that the contract clause although purporting to bind the purchaser's officers individually was not sufficient to charge the signing officer as a guarantor when his signature was not an individual one but as president.

A plausible argument may be made that a corporate officer who signs his name to such a contract is presumed to have read and understood it and so should be considered bound by its plain language. The opposing policy argument, however, is strong and seems to have the support of precedents. The First Department had an almost identical case in Warren-Connolly Co. v. Saphin, 283 App.Div. 391, 128 N.Y.S.2d 272, supra, which is cited in the Second Department's opinion in the present case. The opinion in Warren-Connolly points out that the Statute of Frauds (Personal Property Law, Consol.Laws, c. 41, § 31, subd. 2) says that a promise to answer for a debt to another is void unless subscribed by the party to be charged and that the signature of the party to be bound is thus indispensable, the court noting that the contract in the Warren-Connolly case, like the contract in the present case, was between two corporations and that the individual was neither named in the contract as a party thereto nor did he sign as such. Justice Bastow's opinion in Warren-Connolly says that to allow recovery against the individual officer would thwart the purposes of the Statute of Frauds.

The nearest case in this court is Mencher v. Weiss, 306 N.Y. 1, 114 N.E.2d 177, where corporate officers were held individually liable for the nonperformance of a...