by: Peter J. Gallagher (@pjsgallagher)
In a recent unpublished decision, the Appellate Division again reminded us that a personal guaranty cannot be enforced unless the person against whom it is being enforced signed the guaranty. This may sound like an obvious reminder, but the issue comes up from time to time, particularly where a contract is entered into with a corporation and purports to contain a personal guaranty on behalf of an individual officer of the corporation. Unless the officer signs the contract in his or her personal capacity — i.e., not just on behalf of the corporation as an officer of the corporation — the guaranty will not be enforceable. I have blogged about this before.
In Herz v. 141 Bloomfield Avenue Corporation, plaintiffs leased property to the corporate defendant. The lease contained a provision whereby the individual defendant, the corporate defendant's president, agreed to be personally liable for all "obligations, rents (past and future), and damages" due under the lease. The individual defendant signed the lease, but did so only on behalf of the corporate defendant — the lease contained a signature block for the corporate defendant, but did not contain a separate signature block for the individual defendant.
After default, plaintiffs sued both the corporate defendant and the individual defendant. The individual defendant moved for summary judgment, arguing that he only signed the lease on behalf of the corporation and therefore could not be held liable under the personal guaranty. The trial court agreed and plaintiffs appealed. The Appellate Division affirmed.
Pete's Take 