Maxwell's Elec., Inc. v. Hegeman-Harris Co. of Canada, Ltd.

• Decision Date: 12 August 1977
• Docket Number: HEGEMAN-HARRIS,No. 1930-III,1930-III
• Citation: 18 Wn.App. 358,567 P.2d 1149
• Court: Washington Court of Appeals
• Parties: MAXWELL'S ELECTRIC, INC., Respondent, v.COMPANY OF CANADA, LTD., and Washington Sportservice, Inc., Appellant.

Page 358

18 Wn.App. 358

567 P.2d 1149

MAXWELL'S ELECTRIC, INC., Respondent, v. HEGEMAN-HARRIS COMPANY OF CANADA, LTD., and Washington Sportservice, Inc., Appellant.

No. 1930-III.

Court of Appeals of Washington, Division III.

Aug. 12, 1977.

Patrick A. Sullivan, Winston, Cashatt, Repsold, McNichols, Connelly & Driscoll, Spokane, for appellant.

Alphus R. Christensen, Randall & Danskin, Spokane, for respondent.

MUNSON, Chief Judge.

This appeal arises out of construction activities connected with the 1974 International Environmental Exposition held in Spokane, Washington (EXPO '74). The respondent, Maxwell's Electric, Inc. brought this action against Hegeman-Harris Company and Washington Sportservice, Inc., because it was not paid for performing two portions of work: (1) the electrical hookup of specific rides in the amusement area; and (2) electrical work in connection with the hot water tank in the toilet of building 38.

Appellant, Washington Sportservice, and Maxwell's Electric, entered into a contract whereby Maxwell's Electric was to perform certain construction work for Washington Sportservice at the EXPO site. The contract specified that Hegeman-Harris was the construction consultant for Washington Sportservice. Hegeman-Harris acted as construction consultant for other companies and also as a general contractor in its own right at the EXPO site.

Initially, Maxwell's Electric required any variations from the contract (change orders or extras) to be approved in writing by its electrical contractor, Mr. Collins. As the opening of EXPO approached and the atmosphere became more hectic, Mr. Collins told the foreman for Maxwell's Electric to perform any work requested of him by Mr. Sternberg, Hegeman-Harris's president. Mr. Sternberg then informed the foreman for Maxwell's Electric that Mr. Dubois had the authority to order any work in the amusement park area. Mr. Dubois subsequently orally ordered the electrical hookup of the rides under dispute here.

On June 12, 1974, Mr. Sternberg and the office manager for Maxwell's Electric, Mr. Pinter, met to determine the amount of money still owed Maxwell's Electric by all the companies for which Hegeman-Harris acted as construction consultant. On work performed at EXPO, Maxwell's Electric was usually paid 90 percent of the amount due when the work was billed out, and the 10 percent retainage was paid at the completion of all the work. After considerable discussion, Mr. Sternberg and Mr. Pinter agreed upon the amounts to be paid Maxwell's Electric. Mr. Sternberg gave Mr. Pinter several partially completed forms which Maxwell's Electric was to complete in order to obtain the retained money. Apparently Mr. Sternberg had expected Mr. Pinter to use one form for each company which still owed money to Maxwell's Electric. However, on work to be paid for by Washington Sportservice, Mr. Pinter completed a different form for each specific unit or units of work, rather than one form for all work to be paid for by Washington Sportservice.

This dispute arises because Maxwell's Electric thought the amounts agreed upon at the June meeting did not include money owed Maxwell's Electric for the work in the hookup of the rides and the electrical work in building 38. In contrast, Mr. Sternberg and Hegeman-Harris thought that these amounts included all work performed by Maxwell's Electric. After the forms were completed, Maxwell's Electric was paid the amounts reflected on the forms. Later, when Hegeman-Harris refused to pay the additional money, Maxwell's Electric brought this action. The trial court rendered judgment for Maxwell's Electric; Hegeman-Harris and Washington Sportservice appeal.

The appeal involves 2 basic issues: (1) whether, in ordering the hookup of specific amusement rides, Hegeman-Harris acted as an agent for an undisclosed principal, Washington Sportservice, and (2) whether the trial court properly construed documents executed by the respondent as receipts, rather than releases affording full accord and satisfaction.

Appellants contend the trial court's conclusion of law No. 3.6, ¹ holding Hegeman-Harris an agent for an undisclosed principal, is not supported either by substantial evidence or by the law.

Substantial evidence supports the trial court's finding that Hegeman-Harris functioned in numerous capacities at EXPO '74, including construction consultant for Washington Sportservice. Appellants not only fail to challenge this finding, but agree that Hegeman-Harris, in its dealings with Maxwell's Electric, acted as an agent for Washington Sportservice and for other disclosed principals and as an independent contractor. Therefore, the fact that Hegeman-Harris functioned in multiple capacities, including agent for several disclosed principals, is established.

The disputed work was performed just prior to or shortly after the opening of EXPO '74. Apparently in addition to the work originally contracted, there were numerous extras, changes and other last-minute work. It was very hectic with every company wanting its work completed first and everyone putting in long hours. In fact, the foreman for Maxwell's Electric testified that the Saturday after EXPO opened he worked 19 hours, plus he put in several 12, 14, and 16-hour days. Undoubtedly, this frenzied atmosphere was not limited to these parties and the work involved herein, but permeated every aspect of the opening of EXPO. Unfortunately, such an atmosphere acted as a stimulus to the circumstances leading to this suit.

This same atmosphere was reflected by the delegation of supervisory tasks for work performed by Maxwell's Electric. Initially, the foreman for Maxwell's Electric took orders from Mr. Collins, an electrical contractor for Maxwell's Electric. As the opening of EXPO drew closer, Mr. Collins instructed the foreman to also do any work authorized by Mr. Sternberg. Thereafter, Mr. Sternberg informed the foreman of Maxwell's Electric to perform any work in the amusement area authorized by Mr. Dubois.

It is undisputed that Mr. Dubois orally authorized Maxwell's Electric to hook up the amusement rides under dispute here. The question, then, is: when Mr. Dubois gave that authorization, were he and Hegeman-Harris acting as agents for a disclosed principal, i. e., Washington Sportservice?

" If the other party has no notice that the agent is acting for a principal, the one for whom he acts is an undisclosed principal." Restatement (Second) of Agency § 4(3) (1958). Accord, 3 Am.Jur.2d Agency § 307 (1962). See Matsko v. Dally, 49 Wash.2d 370, 301 P.2d 1074 (1956); Chapman v. Ross, 152 Wash. 262, 277 P. 854 (1929). Both the agent and the undisclosed principal are liable on such a contract. Restatement (Second) of Agency §§ 186, 322 (1958); 3 Am.Jur.2d Agency § 307 (1962); cf. Matsko v. Dally, supra ; Gnash v. Saari, 44 Wash.2d 312, 267 P.2d 674 (1954); Chapman v. Ross, supra. However, such liability is in the alternative; the third party must elect whether to hold the agent or the undisclosed principal (once its identity is known) liable for the obligation. Pennsylvania Casualty Co. v. Washington Portland Cement Co., 63 Wash. 689, 116 P. 284 (1911); Turnbull v. Shelton, 47 Wash.2d 70, 286 P.2d 676 (1955); Chapman v. Ross, supra ; Restatement (Second) of Agency §§ 336 and 337 (1958). ²

Granted, this is not the usual case of an undisclosed principal. With the opening of EXPO, construction completion was proceeding at a frantic pace, with everyone involved under pressure to get all the work done so that everything would be operable for the fair. Because of the time limitation and because Hegeman-Harris was acting in different capacities (as agent for several disclosed principals and as independent contractor), the foreman for Maxwell's Electric undoubtedly was not always aware for which principal the work was ordered, and justifiably so.

Even after the work was completed, Maxwell's Electric was unclear as to which company (Hegeman-Harris or Washington Sportservice) was to pay for specific portions of the work. In discussing the billing procedure of Maxwell's Electric for work not within its written contracts with either Washington Sportservice or Hegeman-Harris, Mr. Pinter, office manager for Maxwell's Electric, stated:

Q You got some checks from Sportservice and some from Hegeman, didn't you? A That's correct. Q So what you are telling me is it didn't make any difference to you who paid the check, you put it all on this one ledger, is that right? A That's correct, because I did not know until I got the check who was going to pay for that. I was told to bill everything to Mr. Sternberg and that's what I did, and as to who was going to pay them, I did not know until I received the check from Mr. Sternberg as to whether it was a Hegeman-Harris check or a Washington Sportservice check.

Since Hegeman-Harris, through its different capacities, was responsible for ensuring that the electrical work was completed, Maxwell's Electric had a right to rely upon Hegeman-Harris's agents to coordinate and to designate the work to be performed. Likewise, Maxwell's Electric had a right to rely upon Hegeman-Harris to be certain that Maxwell's Electric was paid for all work performed by the appropriate principal.

Granted, Maxwell's Electric undoubtedly knew that much of the work performed was for one of several disclosed principals, rather than for Hegeman-Harris as principal. In this case, the fact that Maxwell's Electric was aware that Hegeman-Harris was an agent for several disclosed principals is insufficient to warrant a conclusion that Maxwell's Electric knew that, when Hegeman-Harris ordered the hookup of the amusement rides through Mr. Dubois, it was acting for Washington Sportservice. On the contrary, the evidence presented, including evidence of the hectic atmosphere and the confusion at that time, would more likely support a conclusion that Hegeman-Harris was acting for an undisclosed principal, who...