Georgi v. Texas Co.

Page, J.: The sole question in this case is whether the defendant, the Texas Company, can be held as an undisclosed principal of the American Oil Cloth Company in the business transacted with the plaintiff. The plaintiff brought an action against the American Oil Cloth Company, and prior to entering judgment the information was placed before them that the Texas Company was their undisclosed principal. Thereupon, the attorney for the plaintiff wrote to the Texas Company demanding payment and threatening to commence suit. Thereupon, the attorney for the Texas Company, to whom the letter had been referred, answered: ‘ ‘ Any agreement which The Texas Company may have made ' with American Oil Cloth Company to pay invoices of Standard Paint Company was in consideration of an undertaking by American Oil Cloth Company which has not been observed. “The Texas Company, therefore, cannot entertain the-claim of your client.” After the receipt of this letter the plaintiff entered judgment against the American Oil Cloth Company, and thereafter filed a proof in bankruptcy against it. It is argued by the appellant that having proceeded to enter judgment and to strive to enforce the claim through the bankruptcy court the plaintiff has .shown an election to hold the agent and to release the undisclosed principal. I do not so understand the law. An election can only be predicated upon full knowledge, and the letter of the attorney of the Texas Company is, to say the least, evasive, and tends to create the impression that there was some agreement to pay bills for the American Oil Cloth Company in consideration of some undertaking on the part of the American Oil Cloth Company which had not been observed; that is, that the transaction was not that of principal and agent, but rested on some other agreements between the parties. I do not think that where the party has sought to throw doubt upon the existence of the relation he can thereafter come into court and claim that the party had full knowledge. If they desired to compel the plaintiff to elect they should have supplied him with full knowledge of the facts. It is not necessary in this case to enter upon a consideration [811] of the vexed question whether the recovery of a judgment against the agent with knowledge of the existence of the principal would constitute an election to hold the agent and discharge the principal (Cherrington v. Burchell, 147 App. Div. 16) or whether the principal would only he discharged by a satisfaction of the debt. (Beymer v. Bonsall, 79 Penn. St. 298; Cobb v. Knapp, 71 N. Y. 348, 352; First National Bank v. Wallis, 84 Hun, 376, 379; affd., 156 N. Y. 663; Tew v. Wolfsohn, 77 App. Div. 454, 457; Mechem Agency [2d ed.], § 1759.) In the instant case it was not shown that the plaintiff hrid such knowledge as would put him to his election. It was shown upon the trial that the defendant was the principal of the American Oil Cloth Company. The judgment and order should be affirmed, with costs. Clarke, P. J., and Smith, J., concurred; McLaughlin and Scott, JJ., dissented.