On January 31, 2022, Justice Ruchelsman of the Kings County Commercial Division issued a decision in SMG Auto. Holdings LLC v. Kings Auto. Holdings, LLC, 2022 NY Slip Op. 30389(U), holding that misnaming a guarantor does not make a guaranty unenforceable, explaining:
In J.N.K. Machine Corp., v. TBW Ltd, a corporate agent signed a contract on behalf of TBW Inc., instead of TBW Ltd. The other party . sought to hold the director individually liable. The court noted that generally a corporate office signs a contract on behalf of the corporation, however, if the corporation does not exist the agent can be personally liable on the contract. The court explained that rule was designed to protect parties who enter into contracts with individuals misrepresenting corporate entities. However, as long as the identity of the corporation can be reasonably established from the evidence an error in the use of the corporate name will not be permitted to frustrate the intent which the name was meant to convey. While that case concerned the imposition of personal or corporate liability, the logic of that holding controls the guaranty in this case as well.
The third party defendant argues that pursuant to Duffy Co., v. Todebush, 157 AD 688, 142 NYS 790 [1st Dept,, 1913] surrounding circumstances nor parole evidence maybe examined to determine the correct party to a guaranty where there are allegations the wrong party was inadvertently included. In that case a guaranty mistakenly stated it was guaranteeing payment for A.W. Todebush & Company instead of A.W. Todebush Company. The court held that the guaranty is perfectly clear and plain as it stands. It undertakes to guarantee A. W. Todebush & Co. To so read it as to turn it into a guaranty of A. W. Todebush Company would be, not to construe it, but to change its tenor. This cannot be done. The third party defendant argues that based upon that authority there can be no question of fact the guaranty in this case cannot provide any guaranty for the note in question. The Court of Appeals affirmed the conclusion reached in Duffy Co., but observed that the plaintiff did not prevail not upon the proper application of the rule against changing the plain terms of written guaranties by extrinsic evidence of intention or surrounding circumstances, but upon a total failure of proof, competent or incompetent, from which it could be inferred that defendant knew that plaintiff’s contract was with A. W. Todebush Company and not with A. W. Todebush & Co., or that he intended to guarantee a debt of the corporation and not of the partnership. Therefore, when proof that a mere mistake occurred the harshness of the rule enunciated in Duffy Co. is relaxed thereby. Indeed, in Spanierman Gallery, PSP v. Love, 320 F. Supp 2d 108 [S.D.N.Y. 2D04] the court held that a contract will be enforced where a misnomer occurs since the misnomer is held unimportant. In that case an officer signed on behalf of R.H. Love Galleries instead of R.H. Love Galleries Inc. The court explained that plaintiffs have not alleged that, at the time of the contract, they were under any actual misapprehension that there was some other, unincorporated group with virtually the same name as R.H. Love Galleries, Inc. Absent such an allegation, the Court will not permit the Plaintiffs to capitalize on that technical naming error in contravention of the parties’ evident intentions. Further, Fletcher Cyclopedia of the. Law of Corporations, § 3014: Effect of Misnomer or Assumed Name states that a mistake in setting out the name of a corporation in an instrument is not fatal where the identity of the corporation is apparent. It is well-settled that if the identity of the corporation otherwise appears, the failure to properly designate its proper residence, or the naming of one that is wrong, does not in any way affect the validity or authenticity of the instrument. Thus, notwithstanding Duffy Co., v. Todebush, which has not been cited by a New York case in over one hundred years, there is sufficient evidence the parties were clearly aware the guaranty referred to the correct entity despite the misnomer.
(Internal quotations and citations omitted).