Standard Oil Co. of New York v. Koch

• Decision Date: 22 November 1932
• Citation: 183 N.E. 278,260 N.Y. 150
• Parties: STANDARD OIL CO. OF NEW YORK v. KOCH.
• Court: New York Court of Appeals Court of Appeals

260 N.Y. 150

183 N.E. 278

STANDARD OIL CO. OF NEW YORK

v.KOCH.

Court of Appeals of New York.

Nov. 22, 1932.

Action by the Standard Oil Company of New York against George J. Koch. From a judgment of the Appellate Division (235 App. Div. 809, 256 N. Y. S. 623), affirming a judgment of the Trial Term entered on a verdict directed by the court in favor of plaintiff, defendant appeals by permission of the Court of Appeals.

Judgment reversed, and complaint dismissed.

Appeal from Supreme Court, Appellate Division, Second department.

Herman B. Forman, of Brooklyn, for appellant.

Edward A. Fay, of Yonkers, for respondent.

CRANE, J.

On September 27, 1926, George J. Koch and Peter Caron were copartners doing business under the name of ‘Franklin's' in the conduct of a gas service station at Mamaroneck, N. Y. On that day the defendant, Koch, gave to the plaintiff his written guaranty of payment up to the sum of $3,000 for merchandise ‘as may be sold to ‘Franklin’ (Service Station) George J. Koch and Peter Caron, Proprietors,' by the defendant. This partnership guaranty was recorded by the plaintiff in the Queens county register's office as a mortgage against the defendant's property.

On March 14, 1927, this partnership transferred its business to a corporation called ‘Koch & Caron, Inc.,’ which continued to do business at the same place, but under a different trade-name-‘Bus Terminal.’ The plaintiff continued to deliver merchandise to Koch & Caron, Inc., for which it became indebted in an amount in excess of $3,582.11, bills for which were sent to the corporation and remained unpaid. Whether or not the liability of Koch on his guaranty was in any way affected by the incorporation of the partnership is not here in question. The plaintiff refused to sell and deliver any more gasoline to the company. Thereupon other arrangements were made which have resulted in this action. Koch, the defendant, who was president of the business known as ‘Bus Terminal,’ called at the office of the plaintiff and took up with its assistant credit manager this matter of the overdue accounts. The credit manager testified regarding this meeting with Koch. He said: ‘Consistent with my work I made a demand of payment for what was then a long past due balance and I told Koch if he substantially could not pay me and make satisfactory arrangements for future payments, we would have to start legal action. Koch stated, ‘Why must you do that? You have security.’ I went up to our file and took that paper out and found that we had had a $3,000 guarantee on Franklins. * * * During the conversation it had developed that they had incorporated, although I had no knowledge of it. When I saw the guarantee, I told him, ‘Since we have received this guarantee, you have become incorporated, and we feel if you are to receive consideration of us holding back and not suing you, you must give us a guarantee to cover this account which we now discover to be a corporation.’ He was willing to do that, and I made out the guarantee and he signed it.'

This action is brought upon this new guaranty. It reads:

‘I, George J. Koch, * * * do hereby guarantee to the Standard Oil Company of New York, the payment of any sums due or that may become due up to the sum of Three thousand and 00-100 Dollars ($3,000.00) on such goods, wares and merchandise as the Bus Terminal (Koch & Caron, Inc.), Sunnyside Avenue & Boston Post Road, Mamaroneck, N.Y., may have bought or shall buy of it.

‘This guarantee is unconditional and continuous and applies to all sales until terminated by written notice served by the undersigned upon the Standard Oil Company of New York, at 370 Seventh Avenue, New York, N. Y.’

No future deliveries were made by the plaintiff. The action upon this new guaranty of March 19, 1928, is for the past indebtedness of the corporation, and the question is whether the consideration, not expressed in the writing, may be proved orally. Beyond question, Koch would be liable on the guaranty for all future deliveries and indebtedness, as an agreement to make such deliveries would be the plain meaning and implication of the written words. Sun Oil Co. v. Heller, 248 N. Y. 28, 161 N. E. 319. Under the statute of frauds, now section 31, subdivision 2, of the Personal Property Law (Consol. Laws, c. 41), every agreement to answer for the debt of another person is void, unless it or some note or memorandum thereof be in writing and subscribed by the party to be charged therewith. Must this guaranty express the the contract, including the consideration? That there was a consideration is evident; action against Koch was to be held back; his property was to be released from the lien of the first guaranty; and...