It is equally clear that neither intended that A should assume more than one obligation. The learned Chief Justice, who wrote the opinion in the Cryer case, was very explicit in distinguishing between a suit for the liability of an undisclosed principal based on a negotiable instrument and an action, like the one which he was considering, for stockholder's liability, based on a quasi-contract from which the defendant received the benefits. Choses in action, it is true, were not subject to com- mon law execution until made so by comparatively modern legis- lation. If, in respect of the contract, the undisclosed principal himself sues the third party or settles with the third party, then the agent cannot sue the third party under the contract. The same may be said where the contract is in the form of a negotiable instrument. Clearly, the doctrine of the undisclosed principal allows the principal to sue and be sued on the contract even though the principal is not on the face of it a party to the contract and, at the same time, the agent may also sue and be sued on the contract.
The third person has contracted with the agent as a principal. This right of the agent to exoneration by the prin- cipal is a thing of value, is property, a part of his assets. The majority simply do not like the statute of frauds, and believe that it has been outgrown. Thus a ruling that section 2309 prevented recovery would impliedly overrule a whole line of decisions. The section definitely curtails the third party's rights against the principal. If, however, at the time he does not know that A is merely an agent, or if he does know he is an agent but does not know the principal's identity, then he may upon discovering the identity of the principal, either continue to hold A or elect to hold P.
This is, say a written contract executed in A's name as though he were the real principal. This presents a greater concern: if the contract is that of the agent or if the principal is not really a party to the contract entered into by the agent, how can the principal intervene on a contract that would be unenforceable as between the very parties to it? In the eyes of the third party, the agent is the principal. When the existence and identity of the principal is disclosed, the third party is entitled to elect choose whether to sue the principal or the agent. But if the third party chooses any of the parties and fails to recover the damages, he cannot sue the other party subsequently. People may post this content online or redistribute in any way for non-commercial purposes. The writer's study of the cases, above referred to, has fully convinced him as follows: 1.
However, you may in truth, have contracted with another company who, as principal, gave Lucky Leasing the authority to act as its agent and contract on its behalf. He may do this because he acts under instructions to that effect, or because he is careless in the manner in which he performs his agency, or because for some reason he chooses to bind himself. It is now too late, of course, to apply this theory to simple contracts made by the agent of an undisclosed principal. If the reasoning of this article is sound, the anomalous, but established English and American rule is open to these three objections. Nor is the case of Bank of America etc. The liability of an undisclosed principal and the agent is an alternative liability. To an action of assumpsit on this promise C objected that the action should have been in debt, as the sale was to him.
Common law doctrine on undisclosed principals confers rights and imposes liabilities on the undisclosed principal, notwithstanding that he is not made a party to the relevant contract. In other words, the third party considers the agent to be the principal. Agent and third party a. The agent is held personally liable in such cases, except in exceptional circumstances. This is an exception to the general rule of privity of contract. He can be held by the third person only in case he gave actual authority to the agent prior to the time the agent acted, to do the very act that the agent did.
The right of one person to sue another on a contract not really made with the person suing is unknown to every legal system except that of England and America. Fenwick 30 , the undisclosed principal was charged upon the agent's contract in just such a case. In 1888, he had assigned his interest to the defendants, Messrs. A good modern example of agents for undisclosed principals are stockbrokers, who in most cases transact securities transactions on behalf of clients but do so in a manner which makes them appear as principals. Therefore his rights are limited by any defense or claim the defendant third person had against the agent.
The right to charge the undisclosed prin- cipal as a defendant was established in the last quarter of the eighteenth century. Only with the agent does the third person stand in the relation of obligor and obligee. Because the nature of the transaction was hidden from him at the outset, he had no opportunity to demand the obligation of both principal and agent, as he otherwise might well have done. But before such legislation they were accessible to credi- 20 Le mandant doit indemniser entierement le mandataire de la gestion de l'affaire, dont il a bien voulu se charger. A contract involving a strictly personal skill or service cannot be performed by an undisclosed principal. The action was brought by the undisclosed principal for the price of goods sold by his factor. As further support for its holding the court relied on the fact that Civil Code section 1624, subdivision 5, expressly requires that an agency agreement for the sale of real property for compensation be in writing although no such code section pertains to personal property.
He was at all times unaware of Fenwick's involvement. In the instant case the record supports the trial judge's finding that plaintiff defended the action vigorously and in good faith, raising all possible defenses and prosecuting such defenses through appeal. For example, a contract for a picture painted by a named painter or a concert performance by a named artist cannot be performed by an undisclosed principal, as such performance involves the personal identity and skill of the agent which induces the third party to enter into the relevant contract with the agent. Code, § 1624a and § 1724 and their counterpart Code Civ. In other words, the principal is subject to two distinct duties, the duty of reimbursement and the duty of exon- eration. Apple Valley Health Care Center, Minn. There are some rights and liabilities which are imposed on the undisclosed principal by the law.