Matsko v. Dally

• Decision Date: 27 September 1956
• Docket Number: No. 33572,33572
• Court: Washington Supreme Court
• Parties: Steve A. MATSKO, Respondent and Cross-Appellant, v. Fred DALLY, Individually, and the marital community, composed of Fred Dally and Jane Doe Dally, husband and wife; and Dally Construction & Engineering Co., Inc., a Washington Corporation, Appellants.

Page 370

49 Wn.2d 370

301 P.2d 1074

Steve A. MATSKO, Respondent and Cross-Appellant, v. Fred DALLY, Individually, and the marital community composed of Fred Dally and Jane Doe Dally, husband and wife; and Dally Construction &amp Engineering Co., Inc., a Washington Corporation Appellants.

No. 33572.

Supreme Court of Washington, Department 2.

Sept. 27, 1956.

Erik Froberg, Seattle, for respondent and cross-appellant.

Gerald D. Hile and Alvin J. Ziontz, Seattle, for appellant and cross-respondent.

DONWORTH, Chief Justice.

This action was instituted by plaintiff, Steve A. Matsko, against defendants, Fred Dally and his marital community, and Dally Construction & Engineering Company, Inc., to recover the sum of $911.85 alleged to be due for materials furnished and for the performance of certain services rendered under an oral contract.

The defendants filed a joint answer and cross-complaint. Defendant Fred Dally denied liability under the contract and alleged, by way of affirmative defense, that the services performed by plaintiff were inferior, poor, and unworkmanlike, and that material furnished by plaintiff was of inferior quality and grade. Defendant Dally Construction & Engineering Company, Inc. admitted execution of the contract, and by way of cross-complaint alleged it had suffered damages in the sum of $2,650 as a result of plaintiff's poor workmanship and defective materials furnished under the contract. This amount of damages was subsequently corrected by a bill of particulars to be $1,683.60.

At the conclusion of the case, the trial court made findings of fact, conclusions of law, and entered judgment against Fred Dally individually, and the marital community, in the sum of $913.85, with interest at six per cent until paid. The judgment dismissed the action, with prejudice, as to Dally Construction & Engineering Company, Inc.

Defendants Fred Dally and his wife appeal from that portion of the judgment as entered against them, and Steve A. Matsko cross-appeals from that portion of the judgment dismissing the action as to Dally Construction & Engineering Company, Inc.

We shall first consider the appeal, and for purposes of clarity, we shall hereinafter refer to Fred Dally as appellant, Steve A. Matsko as respondent, and to Dally Construction & Engineering Company, Inc. as Dally Corporation or by name.

Appellant is president of Dally Corporation and owns the controlling interest therein. He also owns and manages other business enterprises, one of which is a corporation. On April 16, 1952, appellant entered into an oral contract with respondent whereby the latter was to install plasterboard in ten houses which were being constructed by Dally Corporation at Bridgeport, Washington, for the Columbia River Constructors. The total contract price was approximately $2,400. Respondent completed the work about May 15, 1952, and on June 24, 1952, $1,500 of this sum was paid to respondent by check.

In his complaint, respondent alleged that appellant claimed he had entered into the contract solely as agent for Dally Corporation, and that respondent was not certain whether his right of recovery was against appellant individually (and his marital community), or against Dally Corporation. Respondent prayed that this issue be determined by the court. As stated above, the question was resolved against appellant individually (and his marital community).

Appellant's first argument discusses assignments of error Nos. 1, 2, 6, and 9 together, under a heading which reads as follows:

'The plaintiff, Steve A. Matsko, has failed to sustain the burden of proving that his contract was made with Fred Dally, the president of Dally Construction & Engineering Co., Inc., in Mr. Dally's individual capacity, rather than with the corporation.' (Italics ours.)

The italicized portion of appellant's statement concerning the burden of proof is erroneous. It is true that he who seeks recovery on a contract has the burden of proving that the defendant was a party to that contract, but once this initial determination has been established, the burden shifts to the defendant, who, in order to escape liability, must show his promise was made solely in the capacity of agent for a disclosed principal. 2 Restatement, Agency, § 320(b); see, also, 1 Mecham on Agency (2d ed.) 1044, § 1413.

In the case at bar, it is not disputed that at the time the parties entered into the oral contract, appellant was, in fact, acting as agent for the Dally Corporation. The issue is whether these circumstances were sufficiently disclosed to respondent at the time the contract was made to put him on notice of the agency relationship, or whether respondent was entitled to believe appellant was acting solely for himself.

On previous occasions, respondent had dealt with the Dally Construction and Engineering Co., a partnership, in which appellant and a Mr. Beslow were associated. Respondent's previous dealings with Mr. Beslow had not been entirely satisfactory, and therefore respondent made a special point of asking appellant whether or not Mr. Beslow was also associated in the present transaction.

Respondent's testimony was:

'Q. The Court: You say you didn't want anything to do with Dally Construction & Engineering Co.? What did he say? A. He [appellant] said this job here was strictly his job, and Mr. Beslow, who was his partner on the other job, wasn't in on this. * * *'

On cross examination respondent testified:

'Q. * * * Mr. Dally told you that you would be doing this job for the corporation, which Beslow wasn't interested in? A. He told me it was one of the companies Mr. Beslow wasn't interested in. Q. And a corporation, didn't he? A. No, there was no mention of a corporation. * * *'

Hence, respondent contends he did not know that he was dealing with a corporation rather than with appellant personally.

Appellant testified as follows:

'Q. [By Mr. Hile] Did you tell him for whom it [the contract] was? A. Yes, because he had had a big rumpus with Mr. Beslow of this partnership and so he didn't want anything else to do with Beslow. I told him this was a separate corporation, had nothing to do with the partnership.' (Italics ours.)

Hence, appellant contends respondent was advised that appellant was acting as agent for Dally Corporation.

The trial court found that respondent dealt with appellant personally and in his individual capacity, and the findings negative appellant's contention of disclosure of agency. This court has frequently said that the trial court's findings of fact will not be set aside unless this court determines that they are contrary to the preponderance of the eivdence. Paxport Mills, Inc., v. Stohr, 45 Wash.2d 667, 277 P.2d 332, and cases cited. We have reviewed the record and conclude that the evidence does not preponderate against the findings.

Based upon these findings, the rule to be applied is that an agent who acts for an undisclosed principal will be personally bound by the obligations of the contract as principal if the name of the principal is not disclosed. Vinye v. American Automobile Co., 165 Wash. 161, 4 P.2d 851; 2 Am.Jur. 316, § 404; 2 Restatement, Agency, § 322.

Appellant's second argument combines assignments of error Nos. 6, 7, 9, and 10, and states, in substance, that respondent has elected to hold the principal, Dally Corporation, and he is now bound by his election. In support of this theory, appellant relies upon the fact that respondent accepted a check, in the amount of...