REGAL SHOE SHOPS, A DIVISION OF WOHL SHOE COMPANY, A MISSOURI CORPORATION, APPELLANT,
v.
MARTIN G. KLEINMAN, APPELLEE

Fla. 3d DCA | 1978-07-11
No. 77-120
Before PEARSON, HUBBART and KE-HOE, JJ.
361 So. 2d 765 Florida District Court of Appeal, Third District (1978) Positive Treatment
Cited by 5 cases

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Synopsis

Regal Shoe Shops appealed a summary judgment in favor of guarantor Martin Kleinman, who claimed modifications to a commercial lease discharged his guarantee. The Florida District Court of Appeal reversed, holding that under New York law, a guarantor may be estopped from asserting lease modifications as a defense if those modifications were brought about through the guarantor's own actions or conduct disclosing consent.


Holding

The court held that under New York law, a corporation officer acting as a guarantor is not automatically discharged by lease modifications made without individual consent. Instead, if the variation was brought about through the guarantor's actions, or his conduct discloses consent to the change, he is estopped from asserting the variation to avoid his guarantee. The summary judgment was therefore erroneous because there exists a genuine issue of material fact whether Kleinman's actions disclosed consent to the modifications.


Headnotes

[1] A contract and its guarantee are governed by the law of the state where the lease, guarantee, and subsequent dealings occurred.

[2] A corporation officer who individually guarantees a lease is not discharged from his guarantee by modifications to the lease made through his actions as an officer, even…

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Key Quotes

“a corporation officer is not discharged in his capacity as an individual guarantor by an alteration or modification of the contract of guarantee where the variation in the contract was brought about through the guarantor's actions”

Establishes the exception to the general rule that guarantors are discharged by contract modifications; the guarantor may be estopped if his actions brought about the modifications.

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Facts & Procedural History

Regal Shoe Shops leased office space in New York City to Snelling & Snelling Lower Manhattan, East, Inc., with Kleinman (the corporation's president, …

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Opinion of the Court
PEARSON, Judge.

PEARSON, Judge.

The appellant, Regal Shoe Shops, was the plaintiff in the trial court. The appellee, Martin G. Kleinman, was the defendant. This appeal is from a summary final judgment for Kleinman upon Regal’s action against Kleinman in Kleinman’s capacity as guarantor of a lease agreement for real property in the State of New York. The lease and the guarantee of the lease, as well as the dealings between the parties subsequently mentioned, all took place in the State of New York. It is our conclusion that the construction of the lease, the guarantee and the effect of the subsequent dealings between the parties were all governed by the law of the State of New York. See Connor v. Elliott, 79 Fla. 513, 85 So. 164 (1920); and Quintana v. Ordono, 195 So. 2d 577 (Fla.3d DCA 1967).

Regal entered into a written lease whereby it leased office space in New York City to a corporation known as Snelling & Snell-ing Lower Manhattan, East, Inc. Defendant Kleinman was the president, a director and the sole shareholder of Snelling. He executed a written guarantee whereby he guaranteed the full performance of the terms and conditions of the lease. Several modifications of the lease were made. First, the landlord consented to the subleasing of a portion of the leased premises. Second, Snelling released its rights to the blockage of a display window in a subway arcade entrance. Third, Regal agreed to accept a lump sum arrearages payment and to extend the monthly payment to thirty days, to change the rental due date from the first of the month to the tenth and to allow Snelling the right to sublet the premises. All of these modifications were made with Kleinman’s knowledge and through him as the corporation officer. Kleinman did not individually agree to the changes made.

After Snelling abandoned the premises, Regal sued Snelling in New York State and received a judgment for rent arrearages. The trial court in the present action entered summary judgment for Kleinman on the ground that the modification of the lease agreement without Kleinman’s consent discharged the guarantee.1 See Becker v. Faber, 280 N.Y. 146, 19 N.E. 2d 997 (1939). The appellee urges as an additional ground for affirmance that the record shows, without genuine issue of material fact, the establishment of his defense of constructive eviction. We do not set forth the facts related to this condition because the record reveals that the entry of the summary judgment was on the basis set forth above and the record clearly shows a genuine issue of material fact of whether there was a constructive eviction.

We hold that it was error to enter the summary judgment for the defendant because the New York cases support the legal proposition that despite the general rule to the contrary, a corporation officer is not discharged in his capacity as an individual guarantor by an alteration or modification of the contract of guarantee where the variation in the contract was brought about through the guarantor’s actions. See Bollinger v. Rheem Manufacturing Company, 381 F. 2d 182 (10th Cir. 1967); and M. H. Metal Product Corporation v. April, 251 N.Y. 146, 167 N.E. 201 (1929). The reasoning of the New York court is that if the variation in the contract is brought about through the guarantor’s action, or his conduct discloses his consent to the change, he is estopped to assert the variation to avoid his guarantee. Cf. Bass v. Span East Airlines, Inc., 289 So. 2d 466, 468 (Fla. 3d DCA 1974). The facts of this case viewed in light of the New York law which recognizes the exception to the general rule presents a genuine issue of material fact of whether Kleinman’s actions disclose his consent to the changes and whether he is thereby es- topped to assert the variations to avoid this action on his guarantee.

Reversed and remanded for further proceedings according to the views herein expressed.

. “THE COURT: You’re suing Kleinman right now?

“MR. GUNDLACH: That’s right. They have raised an affirmative defense that there were all sorts of problems with the heating system and—

“THE COURT: That’s not the issue.

“The issue is how are you going to go against a guarantor without a guarantor. “MR. GUNDLACH: Very simply, Judge.

“THE COURT: That’s your issue. All the rest of this is surplus.”


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Citator

Cited By

  • Jemco, Inc. v. United Parcel Serv., Inc., 400 So. 2d 499 (Fla. 3d DCA 1981)
    …gencies, Inc. v. [*501] Petersen, 123 So. 2d 251 (Fla. 1960); Brown v. Case, 80 Fla. 703, 86 So. 684 (1920); Boat Town U.S.A., Inc. v. Mercury Marine Division of Brunswick Corporation, 364 So. 2d 15 (Fla. 4th DCA 1978); Regal Shoe Shops v. Kleinman, 361 So. 2d 765 (Fla. 3d DCA 1978); Carriers Insurance Company v. LeRoy, 309 So. 2d 35 (Fla. 3d DCA 1975). It is also well settled in Florida that matters bearing on the validity and substantive obligations of contracts are determined by the law of the place where…
  • …938). It is clear that Florida law will apply in this case. Charles L. Bowman Co. v. Erwin, 468 F. 2d 1293 (5th Cir. 1972); Boat Town U.S.A., Inc. v. Mercury Marine Div. of Brunswick Corp., 364 So. 2d 15 (Fla.App.1978); Regal Shoe Shops v. Kleinman, 361 So. 2d 765 (Fla.App.1978). See also Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Although we approach this case in a slightly different manner, on consideration of Florida law and the record before us, we…
  • Citibank, N.A. v. Benkoczy, 561 F. Supp. 184 (S.D. Fla. 1983)
    …2. 4 . The court notes that the same result would be obtained if Florida conflicts of law rules were applied. See Jemco, Inc. v. United Parcel Service, Inc., 400 So.2d 499, 500-501 (Fla.3d DCA 1981); Regal Shoe Shops v. Kleinman, 361 So.2d 765 (Fla.3d DCA 1978), cert. denied, 368 So.2d 1369 (1979). 5 . The court as of this time expresses no view as to the actual state of Haitian law or the particular provisions applicable to the case at hand. The court refers to Articles 91,…

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