PERSONAL GUARANTY WAS NEVER MODIFIED
When she signed a commercial lease for space at 1776 Broadway, in Manhattan, Michelle Corbin-Hillman did so in her capacity as president of her corporate entity. She also executed a personal guaranty which "unconditionally and absolutely" guaranteed the payment of the corporate tenant’s rent and additional rent "and all other sums and charges payable by Tenant under the Lease" (as “modified, extended or renewed”).By letter dated November 30, 2010, Corbin-Hillman notified her landlord that she intended to retire from her company, that her son would “take over as the President and CEO,” and that she wanted him to be substituted in her place and stead as guarantor “at the appropriate time.” While the landlord acknowledged that request, and counter-signed that letter, no additional modifications of the guaranty were ever executed.
In August 2017, Corbin-Hillman retired, and, about a year later, the corporate tenant failed to honor its rent payments. When the landlord then commenced a case in New York County Supreme Court to recoup all unpaid sums from her, the landlord was denied pre-trail relief in its favor, and an appeal ensued.
Upon its review of the record, the Appellate Division, First Department, thought that the parties never effected an actual revocation or transfer of the personal guaranty. At best, the document upon which Corbin-Hillman relied was seen as “an agreement to a future transfer of the guaranty when certain conditions [were] met,” and those conditions were never realized. Among other things, “Corbin-Hillman's son never took over as president and CEO. Additionally, it is undisputed that plaintiff and Corbin-Hillman's son never executed a new guaranty.” Since a revocation and/or transfer never occurred, Corbin-Hillman remained personally responsible for all of the company’s lease-related obligations.
We’re retiring that right there.
# # #
DECISION