J.N.K. MACHINE CORPORATION, PLAINTIFF-RESPONDENT,
TBW, LTD., WOOLSCHLAGER, INC., AND BERNARD C. WOOLSCHLAGER, DEFENDANTS-APPELLANTS. TBW, LTD., WOOLSCHLAGER, INC., AND BERNARD C. WOOLSCHLAGER, THIRD-PARTY PLAINTIFFS,
PAMELA LODESTRO, AS EXECUTOR OF THE ESTATE OF G. MARV SCHUVER AND BART SCHUVER, THIRD-PARTY DEFENDANTS. SCHUVER'S TRUCK & TRAILER LLC AND G. BARTON SCHUVER, PLAINTIFFS,
BERNARD C. WOOLSCHLAGER, TBW, LTD., DOING BUSINESS AS JAMESTOWN UNIT PARTS AND WOOLSCHLAGER, INC., DEFENDANTS.
ERICKSON WEBB SCOLTON & HAJDU, LAKEWOOD (PAUL V. WEBB,
JR., OF COUNSEL), FOR DEFENDANTS-APPELLANTS AND THIRD-PARTY
OVIATT GILMAN LLP, BUFFALO (BRIAN D. GWITT OF COUNSEL), FOR
PRESENT: WHALEN, P.J., PERADOTTO, LINDLEY, NEMOYER, AND
from a judgment of the Supreme Court, Chautauqua County
(Frank A. Sedita, III, J.), entered August 23, 2016. The
judgment, among other things, awarded plaintiff J.N.K.
Machine Corporation damages as against defendants-third-party
hereby ORDERED that the judgment so appealed from is
unanimously modified on the law by granting that part of the
posttrial motion to set aside the verdict against
defendant-third-party plaintiff Bernard C. Woolschlager and
dismissing the complaint against him, and as modified the
judgment is affirmed without costs.
In this breach of contract action, defendants-third-party
plaintiffs, TBW, LTD., Woolschlager, Inc., and Bernard C.
Woolschlager (defendants), appeal from a judgment entered
upon a jury verdict finding that they were liable for the
breach of a contract between plaintiff and "TBW,
INC." Although Woolschlager had executed that contract
as president of TBW, INC., it is undisputed that such a
corporation did not exist. Rather, Woolschlager was the
president of TBW, LTD., a corporation whose name changed to
Woolschlager, Inc. in 2001.
instant action was commenced in 2007, and the parties have
appeared before this Court in three prior appeals (J.N.K.
Mach. Corp. v TBW, Ltd., 134 A.D.3d 1515');">134 A.D.3d 1515 [4th Dept
2015]; J.N.K. Mach. Corp. v TBW, Ltd., 98 A.D.3d
1259 [4th Dept 2012]; J.N.K. Mach. Corp. v TBW,
Ltd., 81 A.D.3d 1438');">81 A.D.3d 1438 [4th Dept 2011]). None of the prior
appeals is relevant to the instant appeal from the final
January 2014, and before our decision in the third appeal,
the note of issue and statement of readiness was filed. Two
years later, defendants filed a CPLR 3211 motion to dismiss
the complaint against Woolschlager, contending that he could
not be individually liable for any alleged breach of the
corporation's contract with plaintiff because he had
signed the agreement as the president of "TBW,
LTD." Plaintiff opposed the motion, contending that it
was an untimely CPLR 3212 motion and that Woolschlager could
be individually liable because he signed the agreement
"as President of TBW, LTD." and, at the time the
agreement between plaintiff and "TBW, LTD." was
executed, "TBW, LTD." did not exist. We note that
the record establishes that TBW, LTD. was dissolved in 1995
for failure to pay taxes and fees, but that dissolution was
annulled in June 2001, i.e., several years before the
agreement was executed. In its opposition to defendants'
motion, plaintiff did not contend that Woolschlager could be
individually liable because "TBW, INC." was a
nonexistent corporation. Supreme Court denied the motion.
during and immediately following trial, defendants repeatedly
sought to have the action against Woolschlager dismissed by
making a motion for a directed verdict, and a posttrial
motion for a judgment notwithstanding the verdict (JNOV) or,
in the alternative, to set aside the verdict. Even assuming,
arguendo, that the court properly denied the CPLR 3211
motion, the motion for a directed verdict and that part of
the posttrial motion for a JNOV, we nevertheless agree with
defendants that the court erred in denying that part of the
posttrial motion to set aside the verdict against
to the well settled general rule, individual officers or
directors are not personally liable on contracts entered into
on behalf of a corporation if they do not purport to bind
themselves individually'... However, it is also well
established that an agent who acts on behalf of a nonexistent
principal may be held personally liable on the contract"
(BCI Constr., Inc. v Whelan, 67 A.D.3d 1102, 1103
[3d Dept 2009]; see Production Resource Group L.L.C. v
Zanker, 112 A.D.3d 444, 444-445 [1st Dept 2013];
Metro Kitchenworks Sales, LLC v Continental Cabinets,
LLC, 31 A.D.3d 722, 723 [2d Dept 2006]). "The rule
[was] designed to protect a party who enters into a contract
where the other signatory represents that he is signing on
behalf of a business entity that in fact does not exist,
under any name... [Thus, ] as long as the identity
of the corporation can be reasonably established from the
evidence[, ]... [an e]rror in the use of the corporate name
will not be permitted to frustrate the intent which the name
was meant to convey'... In such a situation, ... there is
no need or basis to impose personal liability on the person
who signed the contract as agent for the entity"
(Quebecor World [USA], Inc. v Harsha Assoc., L.L.C.,
455 F.Supp.2d 236, 242-243 [WD NY 2006]). "Accordingly,
absent an allegation that, at the time of the contract, a
plaintiff was under an actual misapprehension that there was
some other, unincorporated group with virtually the same name
as that of the actual business entity, the [c]ourt will not
permit the [plaintiff] to capitalize on [a] technical naming
error in contravention of the parties' evident
intentions' " (id. at 242; see BCI
Constr., Inc., 67 A.D.3d at 1103; cf. Bay Ridge Lbr.
Co. v Groenendaal, 175 A.D.2d 94, 96 [2d Dept 1991]).
courts have determined that the individual who signed the
contract may be liable where there was no existing
corporation under any name because, under those
circumstances, the plaintiff has "no remedy except
against the individuals who acted as agents of those
purported corporations" (Animazing Entertainment,
Inc. v Louis Lofredo Assoc., 88 F.Supp.2d 265, 271 [SD
NY 2000]). Where, as here, there was an existing corporation
and merely a misnomer in the name of the corporation, courts
have declined to impose liability on the individual who
signed the contract because the plaintiff has a remedy
against the existing, albeit misnamed, corporation (see
BCI Constr., Inc., 67 A.D.3d at 1103; Quebecor World
[USA], Inc., 455 F.Supp.2d at 241-243).
we conclude that no one was under an actual misapprehension
that there was an entity with the name TBW, INC. It is clear
that plaintiff was well aware that the contract was with
Woolschlager, Inc. (as renamed from TBW, LTD.) because, one
month after the agreement was executed, plaintiff's own
attorney stated that the contract was between plaintiff and
"Woolschlager, Inc., " and the bill of sale for a
transaction that occurred pursuant to the contract states
that plaintiff sold various items to Woolschlager, Inc.
Moreover, under the circumstances of this case, we conclude
that it would be inconsistent to determine that TBW,
LTD./Woolschlager, Inc. can be liable on a contract between
TBW, INC. and plaintiff while, at the same time, determining
that Woolschlager could be individually liable for that same
contract on the ground that TBW, INC. did not exist.
to plaintiff's contention, the evidence at trial does not
establish that Woolschlager intended to be individually
liable under the contract. All documents generated in
relation to the agreement were addressed to corporate
responsibility and liability. The fact that Woolschlager
provided some of the funds for the initial payment is not
enough to establish that he intended to be individually
liable for the agreement. Moreover, his failure to sign any
note or mortgage related to his personal assets establishes
that he did not intend to have any personal liability on the
contract (cf. Humble Oil & Ref. Co. v Jaybert Esso
Serv. Sta., 30 A.D.2d 952, 952 [1st Dept 1968]). We
therefore modify the judgment by granting that part of the
posttrial motion to set aside the verdict with respect to
Woolschlager and dismissing the complaint against him.
on our determination, we do not address defendants'
remaining contentions concerning ...