Case Name: Jonathan Ogden Bulkley and Franklin A. Stone, as Surviving Partners of the Firm of Bulkley, Dunton & Company, 1939, in Liquidation, Appellants, v. Albert Shaw and Albert Shaw, Jr., Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1941-06-27
Citations: 262 A.D. 196
Docket Number: 
Parties: Jonathan Ogden Bulkley and Franklin A. Stone, as Surviving Partners of the Firm of Bulkley, Dunton & Company, 1939, in Liquidation, Appellants, v. Albert Shaw and Albert Shaw, Jr., Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 262
Pages: 196–202

Head Matter:
Jonathan Ogden Bulkley and Franklin A. Stone, as Surviving Partners of the Firm of Bulkley, Dunton & Company, 1939, in Liquidation, Appellants, v. Albert Shaw and Albert Shaw, Jr., Respondents.
First Department,
June 27, 1941.
Sherman Baldwin of counsel [Thomas F. Daly and Sidney S. Coggan with him on the brief; Lord, Day & Lord, attorneys], for the appellants.
William C. Scott of counsel [Barham R. Gary and Donald W. Smith with him on the brief; Satterlee & Canfield, attorneys], for the respondents.

Opinion:
Martin, P. J.
The defendants contend that the cause of action alleged in the complaint, being based upon an agreement to answer for the debt of another, is barred by the Statute of Frauds. The promise of the defendants was not to answer for the debt or default of the Review of Reviews Corporation. The defendants agreed to advance moneys to the corporation to enable it to finance the anticipated deficit for the six months' period, and, in consideration of the defendants' agreement, the plaintiffs agreed to supply the corporation with paper as needed and to extend credit for a period not to exceed ninety days. Thus, defendants' promise was to advance moneys to the corporation. The corporation had not undertaken to advance moneys to itself. The object of the agreement was to enable the defendants to have time to consider the mode of financing their corporation.
Assuming that defendants' promise is to be construed as a promise to answer for the debt of the corporation, we are of the opinion that the Statute of Frauds is not applicable. The defendants wholly owned and controlled the corporation and would primarily benefit by performance on the part of the plaintiffs. In making the promise, defendants were selfishly concerned with promotion of their own interests. In such a situation the statute is inapplicable. (Davis v. Patrick, 141 U. S. 479; Gotham National Bank v. Sharood Co., 23 F. [2d] 567.) In White v. Rintoul (108 N. Y. 222, 227) it was said: " Where the primary debt subsists and was antecedently contracted, the promise to pay it is original when it is founded on a new consideration moving to the promisor and beneficial to him, and such that the promisor thereby comes under an independent duty of payment irrespective of the liability of the principal debtor."
In dismissing the complaint, the court at Special Term cited, and the dissenting opinion relied upon, Richardson Press v. Albright (224 N. Y. 497) and Witschard v. Brody & Sons, Inc. (257 id. 97). The Witschard case is readily distinguishable. There the defendant Brody & Sons, Inc., was the owner of real property upon which the defendant Buckley contracted to do certain construction work. Westbury Lumber Company furnished materials for the work contracted to be done by Buckley. Buckley became financially involved and Westbury Lumber Companyrefusedtofurnish materials necessary to complete the job. Thereupon a member of the Brody firm stated to officers of the Westbury Lumber Company that if they " continued to deliver the balance of materials needed on that job he would guarantee payment of what had already been delivered, and what was to be delivered in the future." The Westbury Lumber Company resumed deliveries. Brody & Sons, Inc., while paying for substantially the value of materials furnished subsequent to the promise, did not pay for materials furnished prior thereto. The Court of Appeals held that the Statute of Frauds rendered the oral guaranty of Brody & Sons, Inc., unenforcible. In that case there was no identity of interest whatsoever between Brody & Sons, Inc., and Buckley, whose account was guaranteed, and the agreement was to pay only upon Buckley's default.
There are aspects of the Richardson case which resemble the case at bar. The fact situation is discussed at length in the dissenting opinion. We believe that case is distinguishable. The promise there was made to pay the Richardson Press; here there is no promise to pay the plaintiffs. There the promisor, while a large stockholder of the publishing company, was not the sole stockholder; here the promisors wholly own the corporation. In the Richardson case the court said, speaking of the promisor: "It was his desire to have the plaintiff continue to issue ' Dogs in America ' and perhaps it was a benefit to him to have the periodical appear regularly without a change of publishers. Thus the element of a new consideration moving to him was present. But his beneficial interest was at best remote."
In the case at bar there is no question as to the primary, proximate interest of the promisors. Furthermore, it appeared in the Richardson case that the plaintiff there continued to supply the publishing company for six months after the promisor repudiated liability, making it clear that the plaintiff considered that the primary duty remained with the publishing company. The complaint in the case at bar alleges that the plaintiffs supplied the corporation, relying on the defendants' agreement. As the court said in the Richardson case: " The tenor of the entire transaction was that defendant purposed to help out the Oceanic [Pubhsbing] Company and verbally promised to pay its debts." In the case at bar, as we read the complaint, the object of the agreement was to aid the defendants by giving them time to work out a method of financing one of their wholly-owned creatures.
We do not doubt that the corporation could have sued to enforce the benefit accruing to it under the contract between the plaintiffs and the defendants, as alleged in the complaint. It is thus evident that the defendants' promise was independent of and not collateral to any debt of the corporation.
Should the defendants be permitted to repudiate their promise, they will have been enabled to perpetrate a fraud on the plaintiffs.
For the reasons indicated we think the complaint sets forth a good cause of action not barred by the Statute of Frauds, and the plaintiffs should be permitted to develop the factual situation.
The order appealed from should be reversed, with twenty dollars costs and disbursements, and the motion to dismiss the complaint denied, with leave to the defendants to answer within twenty days from service of order with notice of entry thereof, upon payment of said costs.
O'Malley and Untermyer, JJ., concur; Townley and Glennon, JJ., dissent and vote to affirm.