M. Lowenstein & Sons, Inc. v. AustinM. Lowenstein & Sons, Inc. v. Austin
This is а suit on a personal guarantee. Plaintiff, M. Lowenstein & Sons, Inc., is a New York corporation with its principal place of business in New York. Defendant is a citizen of Georgia. The amount in controversy exceeds the minimum required for diversity jurisdiction. A trial has been held and this opinion constitutes findings of fact and conсlusions of law.
I. PERSONAL JURISDICTION
Defendant has raised in his answer, but not by pretrial motion, the issue of whether there is a basis for jurisdiction over his person and whether the service of process was proper. Plaintiff’s threshold argument is that these defenses have been waived by failing to make a pretrial motion.
In order for there to be jurisdiction over the person of the defendant there must be bоth a valid basis for jurisdiction and a proper manner of service. The personal guarantee which I find the defendant did execute and which is the basis of this action, provides as follows:
“It is agreed that this guarantee constitutes a business transaction entered into between the parties in the State of New Yоrk and shall be construed pursuant to the laws of the State of New York. The undersigned hereby consent to and confer personal jurisdiction over the undersigned by the Courts of the State of New York for any action to enforce this guarantee, by personal service of process upon the undersigned eithеr within or without the State of New York . . .
It is settled law that a contractual consent to personal jurisdiction in New York such as this one will be given full force and effect.
See National Equipment Rental, Ltd., v. Szukhent,
The manner in which service was made must next be examined. The proof indicates that the summons and complaint were served by a United States Marshall on the defendant’s 21 year оld daughter at the undisputed residence of the defendant in Myrtle Beach, South Carolina.
“Upon an individual other than an infant or an incompetent persоn, by delivering a copy of the summons and of the complaint to him personally or by leaving copies thereof at his dwelling house or usual place оf abode with some person of suitable age and discretion then residing therein . . .
Defendant argues that his daughter, who was visiting home from school in Memphis, Tennessеe, was not a person “then residing” at his residence.
II. THE MERITS
Austin Lee Corp. was a manufacturer of finished textile products. M. Lowenstein &
The guarantee by its terms is cancellable by giving proper notice to plaintiff:
“2. The guarantee shall be a continuing one and shall remain in full force and effect until such time as written notice, cancelling same shall be sent by us (me) to the creditor by registered mail and received by the creditor at its offices and in thе event of such cancellation, we (I) shall be and remain liable for all goods theretofore shipped or billed by the creditor and for all goods thеretofore ordered by the customer . . . .”
Frank Perrotta, the plaintiff’s credit manager, indicated that he was aware of Austin’s sale of his interest in Austin Lee but nevеr received a cancellation of the guarantee.
On January 14, 1971, Perrotta wrote to Martin Austin seeking to recover on the guarantee. According to the proof at trial, Austin Lee Corp. owed M. Lowenstein approximately $82,000. *
In response to Perrotta’s letter, Austin contacted George Culpepper, who confirmed to him that he had no liability with regard to any of Austin Lee’s transactions. Culpepper wrote to Perrotta on January 25, 1971, as in part follows:
“At the time Mr. Austin severed his connection with Austin Lee Corporation, all indebtedness was assumed by the Corporation; and he was relieved from any liability in cоnnection with Austin Lee Corporation. I would suggest that you take this matter up with Mr. John Tarleton, Attorney at Law, Decatur, Georgia who represents Austin Lee Corрoration and National Factors, Incorporated.”
There was no immediate response from plaintiff but there is evidence that at some latеr point Austin was contacted by representatives of plaintiff seeking collection. Approximately six months after the January 1971 exchange, Georgе Culpepper died. The defendant testified that since Culpepper’s death he has caused a search to be made of the attorney’s files tо uncover a cancellation of the guarantee. None has been found. At trial the defendant did not have a firm recollection of ever sending such a cancellation. I find that none was ever sent.
Plaintiff did not commence this action until December 12¡ 1973, nearly three years after the January 14, 1971 demand. Defendant contends that because of the delay in bringing this action, coupled with the prejudice to him resulting from Culpepper’s death, this action should be bаrred under the doctrine of laches.
The answer short and simple is that laches is a defense only to actions in equity, and is not a defense to an actiоn at law.
See Fuchs & Lang, v. Schenectady Chemicals,
Defendant’s remaining contention that the guarantee should be limited to Austin Lee’s Fort Valley, Georgia plant because the guarantee erroneously gives Fort Valley as the addrеss of the headquarters of the corporation is without merit. It is
Settle judgment for plaintiff on notice.
Notes
The invoices submitted by plaintiff indicate that the $82,000 indebtedness arose from charges which became due no earlier than February 1970, a date after Austin hаd left the corporation. However, there is also proof that at the time Austin did leave the corporation, there . was a substantial sum of money оwed to M. Lowenstein & Sons.