Griffin v. Ellinger
| Decision Date | 09 June 1976 |
| Docket Number | No. B--5746,B--5746 |
| Citation | 538 S.W.2d 97,97 A.L.R.3d 791,19 UCCRep.Serv. 587 |
| Parties | , 19 UCC Rep.Serv. 587 Percy E. GRIFFIN, Petitioner, v. O. B. ELLINGER d/b/a Ellinger Paint and Drywall, Respondent. |
| Court | Texas Supreme Court |
Goggan & Cain, Thomas S. Goggan, Austin, for petitioner.
Mary Ellen Felps, Joel B. Mitchell Austin, for respondent.
The question presented by this case is whether a corporate officer who signs a check on a corporate account without designating the capacity in which he signs is personally liable as the drawer of the check. We hold that, under the circumstances of the present case, the corporate officer is personally liable, and we therefore affirm the judgment of the Court of Civil Appeals.
Respondent O. B. Ellinger, doing business as Ellinger Paint and Drywall, sued Percy Griffin on three drafts signed by Griffin and drawn on the account of Greenway Building Company at the Northeast Bank of Houston. These drafts, totalling $3,950.00, were issued to Ellinger in payment for labor and materials furnished to Greenway for a construction project at Lakeway in Travis County. Greenway was prime contractor for the project, and Griffin was authorized to sign the drafts as president of the company. Northeast Bank had refused payment on the drafts because of insufficient funds in the Greenway account. Trial was to the court, which rendered judgment for Ellinger for $3,950.00. The Court of Civil Appeals affirmed. 530 S.W.2d 329.
Petitioner complains of the judgments below by two points of error: first, petitioner contends that the drafts show conclusively on their face that he was signing in a representative capacity only. Second, petitioner contends that extrinsic evidence establishes as a matter of law that the parties understood his signature to be in a representative capacity.
Section 3.413(b) of Texas Business and Commerce Code defines the obligation of the drawer of a draft as follows:
The drawer engages that upon dishonor of the draft and any necessary notice of dishonor or protest he will pay the amount of the draft to the holder or to any indorser who takes it up.
Griffin is liable under this section as a drawer unless his signature was only as president of Greenway. To determine whether an authorized representative is personally liable on an instrument which he signs on behalf of his principal, we must look to Section 3.403 of the Code, which provides:
(a) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority.
(b) An authorized representative who signs his own name to an instrument
(1) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity;
(2) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.
(c) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity.
Each of the three drafts signed by Griffin were in essentially the same form. A copy of one of the drafts is reproduced below.
The first question is whether the draft shows on its face that Griffin signed in a representative capacity only. Although the draft clearly names the person represented, it does not show that Griffin signed only in his capacity as president of Greenway. Griffin contends, however, that considering the instrument as a whole, and taking into account the normal business usage of personalized checks, it should be apparent from the instrument itself that Griffin signed only as an authorized agent of Greenway. We disagree. We recognize that it is unusual to demand the individual obligation of a corporate officer on checks drawn on the corporate account, and that the more usual way of obtaining the personal obligation of an officer on such a check would be by endorsement. Business practice and usage are proper factors to be considered in construing the particular instrument under consideration. We also recognize that an instrument may disclose on its face that a signature was executed only in a representative capacity even though the particular office or position of the signer is not disclosed thereon. Pollin v. Mindy Manufacturing Co., 211 Pa.Super. 87, 236 A.2d 542 (1967), cited by petitioner, is such a case. In Pollin, the plaintiff, a holder in due course of checks drawn on a corporate account, sued the signer of the checks, an agent of the corporation, asserting his personal liability as drawer. The checks, issued to pay employees of the corporation, were stamped with the name of the company and the designation 'Payroll Checks'; the company name was also printed above the two signature lines in the lower right-hand corner. The defendant had signed under this printed name without designating his office or capacity. The court held, nevertheless, that the instrument considered as a whole showed that the signer was signing only in a representative capacity:
In the present instance the checks clearly showed that they were payable from a special account set up by the corporate defendant for the purpose of paying its employees. This information disclosed by the instrument itself would refute any contention that the appellant intended to make the instrument his own order on the named bank to pay money to the payee.
Unlike the checks in Pollin, we can find nothing on the face of the checks in the present case to show that Griffin intended to sign only in a representative capacity. Petitioner points out that each check is stamped by a 'check protector,' which imprinted not only the amount of the draft but also the company's name. Although the stamp clearly reveals the name of the principal, it does not aid petitioner because it gives...
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