In Rotuba Extruders, Inc. v. Ceppos, 46 NY2d 223, 385 N.E.2d 1068, 413 N.Y.S.2d 141 (1978), a plaintiff-corporation which sold goods to a defendant-corporation required the defendant to provide seven promissory notes to guarantee payment of the goods.
The defendant provided the notes, which were personally signed by the CEO without any indication that the CEO was signing in his corporate capacity.
The Court of Appeals, in reversing the order of the Appellate Division and granting Plaintiff's motion for summary judgment, stated, in relevant part:
The pertinent subdivision of section 3-403 of the New York Uniform Commercial code provides:
"An authorized representative who signs his own name to an instrument
(a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity...;"
Section 3-403 aims to foster certainty and definiteness in the law of commercial paper, requirements deriving from the necessity for takers of negotiable instruments to tell at a glance whose obligation they hold'.... To make commercial paper freely negotiable without undue risk'..., the basic law is that resort to extrinsic proof is impermissible when the face of the instrument itself does not serve to put its holder on notice of the limited liability of a signer. 46 NY2d at 228 .
... [the individual defendant] pointed to nothing that would tend to show that the parties regarded the obligation as a corporate one alone....The nature of the transaction here gives no indication that regardless of the faces of the notes, corporate liability and none other was intended by the parties.... 46 NY2d at 231.