Bone International, Inc. v. Brooks

CLARK, Judge. Plaintiffs sole assignment of error is to the granting of summary judgment for the lack of a genuine issue of material fact. In its brief, plaintiff cites authority for a number of general propositions concerning the circumstances under which the granting of summary judgment would be proper. Thus, the following propositions, among others, are urged upon this Court: 1. Upon a motion for summary judgment the court must not attempt to resolve issues of fact but determine whether there is a genuine issue of material fact to be tried. Lambert v. Duke Power Co., 32 N.C. App. 169, 231 S.E. 2d 31, cert. denied, 292 N.C. 265, 233 S.E. 2d 392 (1977). 2. A motion for directed verdict may be granted only if the evidence is insufficient, as a matter of law, to support a verdict for the plaintiff. Husketh v. Convenient Systems, Inc. 295 N.C. 459, 245 S.E. 2d 507 (1978). 3. To determine the sufficiency of the evidence to go to the jury, all the evidence supporting the plaintiffs claim must be taken as true and considered in the light most favorable to the plaintiff, giving him the benefit of every reasonable inference which may be legitimately drawn therefrom, with contrasts, contradictions, conflicts, and inconsistencies resolved in the plaintiffs favor. Oliver v. Royall, 36 N.C. App. 239, 243 S.E. 2d 436 (1978). 4. Judgment as a matter of law is never proper when the facts are in dispute. Cutts v. Casey, 278 N.C. 390, 180 S.E. 2d 297 [187] (1971); Jones v. Development Co., 16 N.C. App. 80, 191 S.E. 2d 435, cert. denied, 282 N.C. 304, 192 S.E. 2d 194 (1972). We recognize these propositions as the law in this State, and we will endeavor to apply these principles to the facts presented by plaintiff to determine if they were sufficient to create a genuine issue of material fact. Plaintiff cites only two opinions to establish the existence of a genuine issue of material fact, Howell v. Smith, 258 N.C. 150, 128 S.E. 2d 144 (1962) (Bobbitt, J.), and Howell v. Smith, 261 N.C. 256, 134 S.E. 2d 381 (1964) (Sharp, J.). Both opinions deal with the same case. The first reversed the judgment of involuntary nonsuit, concluding that plaintiff had presented a genuine issue of triable fact. The second affirmed a jury verdict in favor of plaintiff. Since both Howell opinions deal with the liability of agents for undisclosed principals, we presume that plaintiff considered the defendant in this case to be an agent for an undisclosed principal. Plaintiff is of course wise in seeking to characterize defendant as an agent for an undisclosed principal. Were defendant acting for a disclosed principal, plaintiff would have no case. ‘“An agent who contracts on behalf of a disclosed principal and within the scope of his authority ... is not personally liable to the other contracting party.’” Walston v. Whitley & Co., 226 N.C. 537, 540, 39 S.E. 2d 375, 377 (1946); see also Way v. Ramsey, 192 N.C. 549, 135 S.E. 454 (1926). Defendant presented with his affidavits uncontradicted documentary evidence in the form of invoices from plaintiff, which had been marked paid. These invoices, dated 1976 and 1977, showed that, on at least three occasions during those two years, defendant authorized work to be done on the trucks which had by this time been transferred to corporate ownership. The same invoices billed “John C. Brooks, Inc.” for the repair work they described. We hold that these invoices establish, as a matter of law, knowledge on the part of the agent of the plaintiff who filled out the invoice that defendant’s trucking business was being carried on as a corporation and that defendant had authority to act for the corporation. The knowledge of plaintiff’s agent must be imputed to plaintiff. Bruce v. Casualty Co., 127 F. Supp. 124 (E.D.N.C.), aff'd 222 F. 2d 642 (4th Cir. 1955); Wilkins v. Welch, 179 N.C. 266, 102 S.E. 316 (1920). [188] Even if we assume, as plaintiff seems to suggest, that the original agreement was reached between plaintiff and defendant prior to the incorporation of the business, taking defendant “outside the usual rule that an officer of a corporation will not be individually bound when contracting within the scope of his employment as an agent of the corporation,” Howell v. Smith, 261 N.C. at 260, 134 S.E. 2d at 384, we believe plaintiff is still barred as a matter of law from recovery. Justice Sharp’s opinion in the Howell case speaks directly to such a circumstance: “If a third party to a contract involving an undisclosed principal discovers the agency and the identity of the principal while a continuing, divisible contract for the furnishing of goods or supplies is still executory, he then has the option to deal either with the agent or the principal with respect to the future performance of the contract. Ordinarily, the agent who made the original purchase is not liable if the third party continues to deliver goods after acquiring knowledge of the principal’s identity unless he has agreed to be personally liable.” Id, 134 S.E. 2d at 385 (Emphasis added). We see no reason in this case to treat a contract for services any differently than a contract for goods, and believe a contract such as plaintiff alleges in its complaint would be divisible so as to bring it within the above rule. We hold that, even if defendant were originally a party to the contract alleged in plaintiffs complaint, plaintiff’s subsequent election to bill defendant’s corporation for services rendered under the contract would establish an irrevocable choice by plaintiff to deal with the principal with respect to future performances of the contract. A corporation is an entity separate and apart from its agent. Although this separate entity may be disregarded when a third party who dealt with an agent of the corporation has no way of knowing that a corporation was involved in the transaction, once the third party learns of the corporation’s involvement we think it unfair and against sound public policy to allow that third party thereafter to hold liable first the corporation and then the agent at his whim. Upon learning of the corporate involvement, the third party can say to the agent, “You never told me I was dealing with a corporation. I thought I was dealing with you. I will continue to deal with you.” The third party [189] can also say, “I thought I was dealing with you, but I see now that I was actually dealing with a corporation. Hereafter I will deal with the corporation.” What the third party cannot do is say, as plaintiff has attempted here to say, “I thought I was dealing with you, but I see now that I was actually dealing with a corporation. Now that I know this, I will recognize and deal with the corporation, but I will also hold you personally liable for the corporation’s debts to me.” We hold that plaintiff, having chosen to deal with the corporate entity, may not also now hold defendant personally liable for corporate debts. The affidavit of plaintiff’s president seeks to establish that defendant “agreed to pay the amount set forth in the Complaint.” We believe any agreement by defendant to pay the amount in the complaint would fall within the statute of frauds, G.S. 22-1, which states in pertinent part: “No action shall be brought ... to charge ... any defendant upon a special promise to answer the debt ... of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party charged therewith .... ” We have already held that the debt was that of the corporation. Plaintiff’s affidavit does not set forth facts ‘“or other circumstances showing that [defendant] has expressly or impliedly incurred or intended to incur personal responsibility----’” Walston v. Whitley & Co., 226 N.C. at 540, 39 S.E. 2d at 377. The judgment of the trial court is Affirmed. Judges Hedrick and Martin (Robert M.) concur.