Martin Roofing, Inc. v. Martin, 452 N.E.2d 1308 (N.Y. 1983)
An oral promise to answer for the debt of another is unenforceable under the Statute of Frauds unless the promisor receives a direct, immediate, and pecuniary benefit, and undertakes a duty to pay irrespective of the original debtor’s liability.
Summary
Martin Roofing sought to recover payment for services from Martin, a former officer of Bon-Aire Construction. Martin allegedly promised to pay Bon-Aire’s debt to Martin Roofing. The court considered whether this oral promise was enforceable under the Statute of Frauds. The Court of Appeals held that the promise was unenforceable because Martin did not receive a direct benefit, and the corporation’s debt was not discharged. The court emphasized that the Statute of Frauds requires a writing or a new consideration beneficial to the promisor, establishing them as the primary debtor.
Facts
Martin Roofing contracted with Bon-Aire Construction to repair roofs. After partial payment, Martin Roofing became concerned about outstanding balances. An employee of Bon-Aire Construction told Martin Roofing that Martin (the defendant) would ensure payment. Martin, then a director/stockholder of Bon-Aire Industries (parent company), allegedly promised Martin Roofing he would guarantee payment to ensure the work was completed, which was necessary for Bon-Aire to receive funds from the Urban Development Corporation. Martin Roofing continued working, but Bon-Aire Construction failed to pay the remaining $11,000. Martin Roofing later received payment for other jobs completed for Bon-Aire.
Procedural History
Martin Roofing sued Bon-Aire Construction, securing a default judgment. Unable to recover from Bon-Aire Construction, Martin Roofing sued Martin based on his alleged oral promise. The trial court found for Martin Roofing. The Appellate Division reversed, dismissing the complaint, holding the oral promise unenforceable under the Statute of Frauds. Martin Roofing appealed to the New York Court of Appeals.
Issue(s)
Whether Martin’s oral promise to pay the debt of Bon-Aire Construction is enforceable under the Statute of Frauds, specifically considering if the promise was supported by new consideration moving to Martin and beneficial to him, making him a primary debtor.
Holding
No, because Martin’s promise lacked sufficient consideration that was directly and immediately beneficial to him, and the evidence showed the parties intended Bon-Aire Construction to remain primarily liable for the debt.
Court’s Reasoning
The Court of Appeals affirmed the Appellate Division’s decision, holding the oral promise unenforceable. The court reasoned that the Statute of Frauds requires a written agreement for a promise to answer for the debt of another, unless an exception applies. The court stated that a beneficial consideration must move to the promisor, and the promisor must become the primary debtor. The court found that the benefit to Martin as a minority shareholder in the parent company was too indirect. The court stated that 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.” The court emphasized that the benefit must be “immediate, personal, pecuniary and direct.” The fact that Martin Roofing sued Bon-Aire Construction first, and only amended the complaint against Martin five years later, suggested that Martin was intended to be a surety, not the primary obligor. The court also noted that Martin’s use of the word “guarantee” indicated a surety relationship. The court rejected the “main purpose rule,” stating that even if it applied, the evidence did not demonstrate consideration beneficial to Martin. The court concluded, “Plaintiff’s evidence failed to establish a prima facie case to take defendant’s promise out of the Statute of Frauds.”