Hartz Mountain Development Corp. v. Brenner

A-4829-97T5 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: June 28, 1999

CORPORATIONS; SHAREHOLDERS; LIABILITY—Where a landlord knew its tenant was a corporation, a mistake in the name of the corporation on a lease does not permit the landlord to pursue unpaid rents against the tenant’s shareholder.

A tenant signed a lease in the name of Brenner Shoes Secaucus Ltd. The lease was signed by its sole shareholder as president of the corporation. Eventually, the tenant closed its store, stopped paying rent prior to the end of the lease term, and was dissolved as a corporation. The landlord later discovered that the corporation named in the lease documents was a misnomer of the actual corporation that ran the store and that had executed the lease. The actual name was Brenners Florsheim Shoes Limited Secaucus, Inc. The landlord then brought an action against the sole shareholder seeking to hold the shareholder personally liable for the judgment on the unpaid rent. The Appellate Division ruled that there was no basis in fact to hold the individual shareholder personally liable for the corporate debt. All of the lease documents were executed by the shareholder as president of the corporation. The landlord knew that the individual was signing in a corporate capacity. The corporate seal affixed to the lease set forth the company’s proper name. For several years, the landlord received rent checks drawn against the proper corporate account. In essence, the tenant’s sole shareholder simply overlooked the improper name on the lease documents prepared by the landlord. The lower court, with the approval of the Appellate Division, determined that the name stated for the tenant in the lease was a mutual mistake and that dismissal of the action against the individual shareholder was warranted. The Court went on to cite a Georgia Court of Appeals case with favor, saying “[e]rror in the use of the corporate name will not be permitted to frustrate the intent which the name was meant to convey, and to find out the identity of the corporation intended, resort may be had to evidence aliunde.” There was no doubt that the landlord knew it was leasing the store to a corporation and it knew or should have known the identity of that corporation. Subsequently, no personal liability would attach to the individual shareholder.