60 N.Y.2d 262 | NY | 1983
OPINION OF THE COURT
Plaintiff seeks to recover $11,000 for materials and services. The sum represents an agreed price of $12,000,
The statute provides that a “special promise to answer for the debt, default or miscarriage of another” may not be enforced unless it is in writing (General Obligations Law, § 5-701, subd a, par 2). Generally, the statute applies to circumstances in which the promisor has acted as surety of another (see 3 Williston, Contracts [3d ed], § 475; Restatement, Contracts 2d, § 112). There are surety situations in which no writing is required, however, e.g., if the promisee had no reason to know that the promisor was acting as a surety, when the duties of the principal and surety are joint or where the promise is made to the principal. We deal here with plaintiff’s claim that defendant’s promise is not within the statute because the promisor owed plaintiff an independent duty to pay. As to such promises, it has been stated that “[i]f, as between the promisor and the original debtor, the promisor is bound to pay, the debt is his own and not within the statute. ‘Contrariwise if as between them the original debtor still ought to pay, the debt cannot be the promisor’s own and he is undertaking to answer for the debt of another.’ ” (Witschard v Brody & Sons, 257 NY 97, 99, quoting 1 Williston, Contracts, § 472.) In the latter case the promise is unenforceable in the absence of some memorandum.
Plaintiff’s evidence established that it was hired by Bon-Aire Construction Corporation in the fall of 1973 or 1974 when its president and sole stockholder, William Martin, was asked to do some roofing work on low income houses the corporation was building in Rockland County. While working on that job, a company official asked Martin to look at the leaking roofs of houses in a nearby project, Lake View Village, and on November 13,1974 plaintiff executed a contract with Bon-Aire Construction Corporation, through Marvin Lifschitz, its treasurer, agreeing to make the repairs on the Lake View Village houses for $12,000. On December 26, 1974 plaintiff sent a bill to the corporation for $6,000 to pay for the work performed and received in return the corporation’s check for $4,000 on account. Subsequently the corporation’s bookkeeper advised Martin that only $1,000 should be credited to the Lake View
Plaintiff was paid by the corporation for other jobs performed for it during 1975 and for subsequent jobs done for it in later years. It was not paid the $11,000 due on the Lake View Village job although the corporation offered to compromise the claim when it subsequently got into financial difficulties. Martin also testified that he received a partial payment from defendant personally on the Eastchester Savings Bank job in April, 1975 although the contract for work was with the corporation.
To prevail plaintiff was required first to establish consideration for defendant’s promise. It recognizes that the required consideration may not rest upon plaintiff’s return to work. That was legal consideration but the rule requires that the consideration must be beneficial to the promisor. Nor may a benefit to defendant be inferred solely because of defendant’s stock holdings in Bon-Aire Industries (see Bulkley v Shaw, 289 NY 133, supra; Richardson Press v
Plaintiff maintains, however, that the beneficial consideration to defendant for his promise is to be found in defendant’s need to complete the job and free up the Urban Development Funds and his need of plaintiff to work on future jobs. Neither is legally sufficient. The benefit accruing from the Urban Development Funds was a benefit to the corporation and benefited defendant as a minority stockholder of the parent corporation only indirectly. The speculation that defendant wished to retain plaintiff’s goodwill for the future was also insufficient because the evidence does not establish what pecuniary advantage, if any, flowed to defendant from that employment and any benefit to him was neither immediate nor direct.
More to the point, under New York law, when the original debt subsists and was antecedently contracted, an oral promise to pay it is enforceable only when there is consideration for the promise which is beneficial to the promisor and the promisor comes under a duty to pay irrespective of the liability of the original debtor (White v Rintoul, 108 NY 222, 227, supra; and see Richardson Press v Albright, 224 NY 497, supra; cf. Rosenkranz v Schreiber Brewing Co., 287 NY 322; see, generally, Calamari and Perillo, Contracts [2d ed], § 19-8, p 687). Thus, even if there was sufficient consideration to defendant, he could not be liable if he was acting as a surety of the corporation.
There are several recognized tests for determining whether the promise created an independent duty to pay irrespective of the original debtor’s liability which may be applied here (see 3 Williston, Contracts [3d ed], § 462).
First, as noted, there was no beneficial consideration to defendant. Second, it is said that presumptively the new promise is unenforceable unless the corporation was discharged from its underlying obligation. Obviously the corporation’s debt was not discharged by the promise here
Plaintiff contends alternatively that it may recover under the “main purpose rule” which permits defendant’s oral promise to be enforced even though he acted as surety of the corporation. The “main purpose rule” rests upon a recognition that in many cases the purpose underlying the statute may be satisfied if the evidence establishes that the promisor’s main purpose (or leading object, as it is also called) is a benefit which he did not enjoy before the
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer and Kaye concur.
Order affirmed, with costs.