Alsco Iowa, Inc. v. Jackson

• Decision Date: 11 December 1962
• Docket Number: No. 50805,50805
• Citation: 254 Iowa 837,118 N.W.2d 565
• Parties: ALSCO IOWA, INC., Appellant, v. Archie JACKSON, d/b/a American Insulation & Supply Company, Appellee.
• Court: Iowa Supreme Court

Page 565

118 N.W.2d 565

254 Iowa 837

ALSCO IOWA, INC., Appellant, v. Archie JACKSON, d/b/a American Insulation & Supply Company, Appellee.

No. 50805.

Supreme Court of Iowa.

Dec. 11, 1962.

Rehearing Denied Feb. 12, 1963.

Abramson, Myers & Hockenberg, Des Moines, for appellant.

Kindig, Beebe, McCluhan & Rawlings, Sioux City, for appellee.

LARSON, Justice.

This action was brought against Archie Jackson , d/b/a American Insulation & Supply Company, hereafter referred to as American, for an amount due on the account of American. Jackson filed an answer in which he alleged that he was the president and principal stockholder of the Soo Premium Construction Company, hereafter referred to as Soo corporation; that American, which was prior to 1960 an individual enterprise, merged into the Soo corporation prior to the time defendant took over the assets of the company; 'that the items sued upon were not purchased by the defendant in his individual capacity, but were purchased by the corporation'; and that if there was any liability for the account, 'it is the sole liability of the corporation and not the liability of this defendant.'

In reply plaintiff Alsco Iowa, Inc. alleged at all material times that it dealt with defendant who represented himself to be the owner of American, an individual proprietorship, and that defendant is estopped from now claiming the merchandise was actually purchased by the Soo corporation.

At the close of the evidence the trial court found plaintiff had failed to prove the defendant 'was acting as an undisclosed agent of the corporation', that defendant did not mislead the plaintiff in his conversation and manner of doing business, but showed he was acting for the corporation, and that defendant Jackson 'made full disclosure to the plaintiff of the capacity in which he was operating and his relationship to the business.' Judgment was rendered for defendant and plaintiff appeals, contending there was no substantial support in the evidence to justify the court's findings of fact and that its findings of fact and conclusions of law drawn therefrom were erroneous.

I. In this jurisdiction, as in most others, an agent who enters into a contract or purchases merchandise from another without disclosing his principal is held personally liable for it. Fritz v. Kennedy, 119 Iowa 628, 93 N.W. 603; Amans v. Campbell, 70 Minn. 493, 73 N.W. 506, 68 Am.St.Rep. 547; Saco Dairy Co. v. Norton, 140 Me. 204, 35 A.2d 857, 150 A.L.R. 1299; Givner v. United States Hoffman Machinery Corp., 49 Ohio App. 410, 197 N.E. 354. Furthermore, he does not escape liability by purporting to act for a fictitious or non-existent principal. Restatement of the Law, Agency 2d, § 321.

On the other hand, when his principal is fully disclosed, the agent ordinarily does not incur personal liability. International Trading Corp. v. Edison, 71 App.D.C. 210, 109 F.2d 825. Also see 3 Am.Jur.2d, Agency, § 317, p. 674, and 3 C.J.S. Agency § 216a; Mechem on Agency, 2d Ed., Vol. 1, § 1413.

Thus liability of defendant Jackson in the case at bar depends upon whether a principal existed and, if so, upon the extent to which such principal was disclosed. In determining this issue we must be guided not only by the pleadings but by the evidence produced upon the factual issue relating to a full and complete disclosure.

II. As the action is at law, the findings of fact by the trial court, in so far as they have any substantial support in the evidence, are to be given the effect of a jury verdict. But like a jury verdict, such findings are not immune against review on appeal, if it appears that they are without substantial support in testimony. Nor does this rule exclude inquiry into the question whether, conceding the truth of a finding of fact, a conclusion of law drawn therefrom by the trial court is justified and correct. Artificial Ice Co. v. Reciprocal Exch., 192 Iowa 1133, 1139, 184 N.W. 756; Dysart Savings Bank v. Weinstein, 152 Iowa 260, 132 N.W. 18; 3 Am.Jur., Appeal and Error, § 899, p. 464.

III. The crux of this case, then, is whether there was a full and complete disclosure of the principal's identity shown by the record evidence and permissible inferences to justify the court's findings and judgment herein.

As we view the record in a light most favorable to the defendant, it discloses that plaintiff's general manager Joe Barksdale and its salesman Howard Lafferty called at the office of the American company in October, 1960, for the purpose of collecting a past due account. While there they met defendant, who told them that he was going to pay the account, that he had just 'acquired the business', that he had 'acquired all the stock from Spencer Day and that we are going to try to make this business go.' The past due bill was then paid, and further orders for merchandise from American were received and filled by plaintiff between February 1, 1961, and April 15, 1961, including a large written order of February 16, 1961, which was entitled 'Sold to American Ins.' and signed 'By Archie A. Jackson'.

However, at no time material herein does it appear that defendant ever advised plaintiff that American was a style and trade name for Soo Premium Construction Company, a corporation now alleged by defendant to be the real principal involved.

While the amount originally sued upon was $5,167.69 by stipulation of the parties this amount was reduced to the figure of $2,040.33 by virtue of certain credits.

It is plaintiff's contention the evidence did no more than disclose that defendant was the owner of American and operated it as an individual business, and even though it appears he signed the order, Exhibit '6', by Archie A. Jackson, it did not disclose the real principal which was the Soo corporation.

The trial court was persuaded by the fact that when plaintiff sold merchandise to American and accepted an order signed by defendant Jackson, it was aware he acted as American's representative. It concluded such evidence proved plaintiff was not relying upon defendant individually. The other evidence which the court believed persuasive was that defendant ordered some siding for his own building and asked plaintiff to take that item off the American account and accept his check for it.

However true, we can find in such testimony no more than substantial evidence that defendant was acting for American and did not disclose he was in truth and in fact acting for Soo corporation, the real principal. It would, therefore, appear that credit was actually being extended to defendant, and that actual ownership of American was never clearly or sufficiently disclosed. Furthermore, it appears defendant's reference of acquiring 'stock' from Day was just as consistent with ownership of the stock of goods and merchandise as it was to stock in a corporation. Since no reference to Soo corporation was ever made to plaintiff at any time, it seems defendant's representative capacity at best would only amount to a partial disclosure of his principal.

IV. It is stated in section 321, Restatement of Agency, 2d, 'Unless otherwise agreed, a person purporting to make a contract with another for a partially disclosed principal is a party to the contract.' In comment (a) it is stated, 'A principal is a partially disclosed principal when, at the time of making the contract in question, the other party thereto has notice that the agent is acting...