Case Name: Alfred F. Georgi, Respondent, v. The Texas Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1916-07-10
Citations: 173 A.D. 809
Docket Number: 
Parties: Alfred F. Georgi, Respondent, v. The Texas Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 173
Pages: 809–814

Head Matter:
Alfred F. Georgi, Respondent, v. The Texas Company, Appellant.
First Department,
July 10, 1916.
Principal and agent — action against undisclosed principal for purchase price of merchandise — when plaintiff will not be deemed to have elected to hold agent.
Where, in an action by an assignee of a vendor against the defendant as an undisclosed principal to recover the purchase price of certain merchandise, it' appears that the plaintiff, who had brought an action against the purchaser, upon learning, prior to the entry of judgment, that the defendant was an undisclosed principal wrote to it demanding payment and threatening suit, and received a reply that any agreement which the defendant may have made with the purchaser to pay invoices of the vendor was in consideration of an undertaking by the purchaser which has not been observed, the plaintiff, by subsequently entering judgment against the purchaser and filing a proof in bankruptcy against it, cannot be deemed to have elected to hold such purchaser and to release the undisclosed principal. This because the letter by the defendant to the plaintiff was evasive and did not supply him with the full knowledge of the facts necessary to an election. McLaughlin and Scott, JJ., dissented, with opinion.
Appeal by the defendant, The Texas Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 17th day of January, 1916, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 28th day of January, 1916, denying defendant’s motion for a new trial made upon the minutes.
James L. Nesbitt, for the appellant.
Nathan D. Stern, for the respondent.

Opinion:
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
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.