Pittsburgh Terminal Coal Corporation v. Bennett

• Decision Date: 28 September 1934
• Docket Number: No. 5240.,5240.
• Citation: 73 F.2d 387
• Parties: PITTSBURGH TERMINAL COAL CORPORATION v. BENNETT.
• Court: U.S. Court of Appeals — Third Circuit

73 F.2d 387 (1934)

PITTSBURGH TERMINAL COAL CORPORATION v. BENNETT.

No. 5240.

Circuit Court of Appeals, Third Circuit.

September 28, 1934.

C. Russell Phillips, of Philadelphia, Pa., C. F. Taplin, of Cleveland, Ohio, Sidney J. Watts, of Pittsburgh, Pa., and Robert T. McCracken, of Philadelphia, Pa., for appellant.

Grover C. Ladner, of Philadelphia, Pa., and Harvey A. Miller and Miller & Nesbitt, all of Pittsburgh, Pa., for appellee.

Before WOOLLEY, DAVIS, and THOMPSON, Circuit Judges.

DAVIS, Circuit Judge.

This case was here on a former appeal from a judgment entered on a verdict directed by the District Court. We reversed the judgment and awarded a new trial. On the new trial, the jury rendered a verdict for the plaintiff, and the defendant appealed. We affirmed the judgment. The defendant filed a petition for reargument, which was allowed, and the case is here on the reargument for a new trial.

On July 4, 1934, the plaintiff was killed in an automobile collision, and his sister, Martha Williams Bennett, has been substituted as plaintiff-appellee.

In support of its petition, the defendant says that the court below did not consider on the first trial, and refused to consider on the second trial the questions as to: (1) Whether or not the fact that the contract was under seal should make any difference in the result; (2) whether or not there had been an election of remedies by the plaintiff; and (3) whether or not plaintiff had failed to perform.

The trial court on the second trial submitted to the jury for its determination the following questions:

"(a) Was the appellant, the Pittsburgh Terminal Corporation, Hoffacker's undisclosed principal?

"(b) Was the appellee's claim barred by the Statute of Limitations?

"(c) Did the appellant, the Pittsburgh Terminal Coal Corporation, breach the contract of October 11th, 1924?

"(d) The court then instructed the jury, in the event the three preceding questions, as here stated, were answered in favor of appellee, then what were the damages resulting from the breach of the contract?"

The jury found the first three questions in favor of the appellee, and, under the evidence and the charge of the court, these findings settled these questions unless, as a matter of law, they are disturbed by the answers to be given to one or more of the three questions urged in this reargument which the court refused to consider in the second trial.

1. As to whether or not the fact that the contract was under seal makes any difference in the result, the appellant says that "one not a named party to a sealed instrument cannot be sued upon it in the federal courts."

The tendency of courts generally is to relax the rigor of common-law and technical rules because they are a bar in many cases to the administration of substantial justice, and in the case of seals the need for them has largely disappeared in modern times when public schools and even colleges are open to almost every one who really desires an education.

The lands over which the contract in question arose lie in the state of West Virginia. There the distinction between contracts under seal and not under seal has by statute been abolished (chapter 36, article 3, § 1 § 3555 Annotated Code of 1932; Donahue v. Rafferty, 82 W. Va. 535, 96 S. E. 935), and there an undisclosed principal may be sued on an instrument under seal. In the case of Hill v. Gratigny Plateau Development Corporation (C. C. A.) 52 F.(2d) 142, it was held that in the sale of real estate the law of the state where the land lies controls, and, if that principle is to be applied in this case, the question of the seal must be determined in accordance with the law of West Virginia, where an undisclosed principal may be sued on an instrument under seal.

But, if the law of Pennsylvania, where the suit was brought, controls, the same result must be reached in this case.

In Pennsylvania, all deeds or instruments for conveying or releasing lands made by any natural person, either in his individual capacity or as fiduciary, are valid without a seal, and have the same force and effect as if a seal were present. Title 21, PS Pa. § 10.

In the case of Lancaster v. Knickerbocker Ice Co., 153 Pa. 427, 26 A. 251, 252, the court said:

"It is text-book law, applied and enforced in a long and unbroken line of cases, that where a simple contract, other than a bill or note, is made by an agent in his own name, his undisclosed principal may maintain an action or be sued upon it. 2 Evans, Prin. & Ag. pp. 468, 469; 1 Amer. & Eng. Enc. Law, p. 392, and cases cited. It is also well settled that an unauthorized and unnecessary addition of a seal to such contract may be treated as surplusage. Deckard v. Case, 5 Watts 22 30 Am. Dec. 287; Hennessey v. The Western Bank, 6 Watts & S. 300 40 Am. Dec. 560; Dubois' Appeal, 38 Pa. 231 80 Am. Dec. 478; Jones v. Horner, 60 Pa. 214; Schmertz v. Shreeve, 62 Pa. 457 1 Am. Rep. 439; Cook v. Gray, 133 Mass. 106; Blanchard v. Blackstone, 102 Mass. 343; Purviance v. Sutherland, 2 Ohio St. 478."

"A seal in this state Pennsylvania has no solemnity of form, being made by the mere gyration of a pen, and often affixed by persons ignorant of its legal effect." Jones v. Horner, 60 Pa. 214, 218.

In the case of Ottman et al. v. Nixon-Nirdlinger et al., 301 Pa. 234, 151 A. 879, 880, the court said: "It is admitted that, if the writing in question was a simple contract, though under seal, an action would lie against the undisclosed principals of the assignee (Lancaster v. Knickerbocker Ice Co., 153 Pa. 427, 26 A. 251). * * * Though a seal retains in part its common-law force in limiting a right of action (Greene County v. Southern Surety Co., 292 Pa. 304, 141 A. 27), yet this is not true where its use is mere surplusage (Dick v. McWilliams, 291 Pa. 165, 139 A. 745; Swisshelm v. Swissvale Laundry Co., 95 Pa. 367), or, where added, it appears from the writing itself the one signing acts for another (Yentis v. Mills, 299 Pa. 25, 148 A. 909)."

Accordingly, if the contract on which this suit is based is an instrument for conveying or releasing lands, or is a simple contract, the addition of the seal was mere surplusage and has no force and effect.

Again, while a seal in Pennsylvania retains in part its common-law force in limiting a right of action, it appears in the contract in this case that Hoffacker, who signed it, was acting as agent for another, and the seal was therefore without effect.

Accordingly, the presence of the seal does not constitute a defense, and the undisclosed principal could be sued on the instrument just as though it did not have a seal.

2. The second question urged by the appellant as to why a new trial should be awarded is that the appellee had made an election of remedies; that he had sued Hoffacker, the agent, and entered judgment against him in West Virginia, rather than his undisclosed principal, the appellant here, and this barred his right to sue the appellant.

It is a general rule of law which is well settled by a long line of decisions that, if a person contracts with an agent of an undisclosed principal, upon discovery of the principal, he has a right of action against the agent and a corresponding right against the principal. He may elect to proceed against either, but he may not proceed against both. If he elects to proceed against the agent after he discovers the identity of the principal, he may not thereafter proceed against the principal. If judgment is taken against either with full knowledge of all the facts, no claim thereafter may be asserted against the other, even though the judgment is unsatisfied. Williston on Contracts, vol. 1, § 289; Barrell v. Newby, 127 F. 656 (C. C. A. 7); Johnson & Higgins v. Charles F. Garrigues Co., 30 F.(2d) 251 (C. C. A. 2).

Appellant says that the identity of the principal became known to the plaintiff shortly after April 13, 1928, that with this knowledge he entered judgment against the agent in his suit in West Virginia on April 28, 1928, and that thereafter recovery against the appellant was barred.

It is true that plaintiff entered judgment against Hoffacker in the circuit court of Ohio county, W. Va., on April 28, 1928, but suit was begun more than two years before. In January, 1926, he brought suit against Hoffacker and Clarence E. Tuttle, president of the defendant company, for the balance of the purchase price. On this suit plaintiff took a voluntary nonsuit, and later brought suit against Hoffacker alone in the same court on the same cause of action. But, before he brought this suit, he searched the records and found that the property still stood in the name of Hoffacker. The jury rendered a verdict in his favor for $25,000 on October 14, 1927. It was on this verdict that judgment was entered on April 28, 1928. Just before the entry of judgment, on April 13, 1928, defendant recorded the deeds conveying the property from Hoffacker to the defendant. "Sho...