Warson Construction Co. v. Schlussel

Appeal from a judgment of the Supreme Court, entered January 13, 1978 in Sullivan County, upon a verdict rendered at a Trial Term, in favor of plaintiff. Plaintiff instituted this action to recover for materials and services furnished by it and its predecessor pursuant to an oral agreement with one Alvin Adler, a professional engineer. The land and buildings on which the work was performed were owned by Evans Gardens, Inc. (Evans), a New York corporation of which defendant was president and 50% shareholder. Plaintiff claims that it was led to believe that Adler had entered into the contract on behalf of defendant, individually, and following a jury trial judgment was entered upon a verdict in favor of plaintiff. Defendant appeals, contending that, as a matter of law, the evidence adduced at trial was insufficient to establish that Adler had acted as an agent for defendant. Defendant was called as plaintiffs first witness and testified that when he authorized Adler to hire plaintiffs predecessor to do the work in question, he did so on behalf of Evans. Thereafter, plaintiffs president was permitted to testify that Adler had assured him that he (Adler) represented defendant. Plaintiffs direct examination of Adler was ambiguous, but on cross-examination Adler testified that he knew that Evans owned the land and buildings on which plaintiff was to work and that there was no question in his mind when he requested plaintiff to do the work that he was doing so on behalf of Evans. The documentary evidence of billings and payment contained references to Evans and defendant, as well as other entities, and, therefore, was equivocal. It is apparent from our review of the record that while there is no dispute that Adler contracted with plaintiff on behalf of a principal, the only direct proof that the principal was defendant is the testimony of plaintiffs president that Adler assured him he represented defendant rather than Evans. In light of the general rule that extrajudicial statements of an alleged agent are not admissible to prove the fact of agency (Mullen v Quinlan & Co., 195 NY 109, 115; Bussing v Lowell Film Prods., 233 App Div 493, 495, affd 259 NY 593; Richardson, Evidence [Prince, 10th ed], §253, p 223; 2 NY Jur, Agency, §29), this testimony, which clearly sought to establish the existence of a principal-agent relationship between defendant and Adler, was inadmissible, and, since the remaining evidence is not sufficient to establish a prima facie case of such 948 relationship, there must be a reversal. There is nothing in the record, other than the hearsay testimony of plaintiff’s president, to establish that Adler acted on behalf of defendant individually, nor is there any evidence that defendant, through his statements or his conduct, held Adler out as representing defendant individually. One who deals with an agent does so at his own peril (Ford v Unity Hosp., 32 NY2d 464, 472), and, accordingly, once plaintiff realized that Adler was acting as an agent rather than on his own behalf, it was incumbent upon plaintiff to take the necessary steps to ascertain whether Adler acted on behalf of defendant’s corporation or defendant individually. Judgment reversed, on the law and the facts, and complaint dismissed, without costs. Mahoney, P. J., Staley, Jr., and Mikoll, JJ., concur.