Jamaica Tobacco & Sales Corp. v. Ortner, 398 N.Y.S.2d 865 (1977)

A writing described as a guarantee may actually constitute a primary agreement to pay one’s own debt if the writing reflects an intent to be directly responsible for purchases made on one’s own account.

Summary

Jamaica Tobacco & Sales Corp. sued Ortner to recover payment for goods. Ortner signed a document labeled a “guarantee” for credit extended to 91 East End Corporation. The court held that despite the label, the writing was actually Ortner’s agreement to pay for goods delivered to and used by Ortner. The court emphasized that the plaintiff’s business records showed the materials were delivered to Ortner’s address and credited to its account, and that Ortner admitted the goods were supplied and used at its construction project. Because the goods were supplied to Ortner and used for Ortner’s benefit, Ortner was primarily liable, and the mislabeling of the document did not alter that liability.

Facts

1. Jamaica Tobacco & Sales Corp. agreed to extend credit to Ortner if Ortner signed a “guarantee.”
2. Ortner signed and returned the “guarantee,” which stated that Ortner guaranteed payment for any debt 91 East End Corporation had incurred or would incur.
3. Jamaica Tobacco’s business records showed that materials were delivered to Ortner’s address and credited to Ortner’s account.
4. Ortner admitted that the materials were supplied and used in a construction project at its premises.

Procedural History

The trial court found in favor of Jamaica Tobacco, holding Ortner liable for the debt. The Appellate Division affirmed the trial court’s decision. Ortner appealed to the New York Court of Appeals.

Issue(s)

Whether a document labeled a “guarantee” should be interpreted as a primary agreement to pay one’s own obligation when the evidence demonstrates that the goods were delivered to and used by the purported guarantor.

Holding

Yes, because the evidence established that the materials were delivered to the appellant’s address and credited to its account, and the appellant admitted that the materials were supplied and used in the construction project at its premises.

Court’s Reasoning

The court reasoned that despite being described as a guarantee, the writing was actually an agreement by Ortner to pay its own obligation for purchases made on its own account. The court relied on the case of Deeves & Son v. Manhattan Life Ins. Co., 195 N.Y. 324, 331, which supported the principle that such a writing can constitute an agreement to pay one’s own obligation. The Court emphasized that the plaintiff’s business records established that the materials were delivered to Ortner’s address and credited to its account. Furthermore, Ortner admitted at trial that the materials were supplied and used in the construction project at its premises. The court stated, “On this record we agree with the trial court that the evidence established appellant’s obligation to pay for the goods sold, delivered and credited to its account.” Therefore, the label attached to the document was not determinative; rather, the substance of the transaction established Ortner’s direct liability.