Case Name: GEORGI v. TEXAS CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1916-07-10
Citations: 160 N.Y.S. 231
Docket Number: 
Parties: GEORGI v. TEXAS CO.
Judges: 
Reporter: West's New York Supplement
Volume: 160
Pages: 231–235

Head Matter:
(173 App. Div. 809)
GEORGI v. TEXAS CO.
(Supreme Court, Appellate Division, First Department.
July 10, 1916.)
1. Principal and Agent <©=>145(4)—Relations with Third Persons—Remedies oi? Parties—Election.
Where a creditor has taken judgment and filed prooí in bankruptcy against an agent, this does not constitute an election to hold the agent and to release the undisclosed principal, unless the creditor had lull knowledge of the relation at the time of taking Ms proceedings.
| yd-. Note.—For other cases, see Principal and Agent, Cent. Dig. § 499; Dec. Dig. <©=>145(4).]
2. Principal and Agent <©=>145(4)—Relations with Third Persons—Remedies oi? Parties—Election.
Where, in the course of an action, it is brought out that defendant in the transaction in controversy is an agent of a hitherto undisclosed principal, and thereupon the claim is presented to the principal, who replies that any agreement with the agent to pay the claim in question was in consideration of an undertaking by the agent which has not been observed, such reply, being evasive and tending to throw doubt on the existence of the relation, prevented the taking of judgment by plaintiff and the presentation of a claim in bankruptcy against the agent from oper ating as an election to hold the agent and release the undisclosed principal.
<g=3l?or other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
[Ed. Note.—For other cases, see Principal and Agent, Cent. Dig. § 499; Dec. Dig. <§=>145(4).]
McLaughlin and Scott, JJ., dissenting.
Appeal from Trial Term, New York County.
Action by Alfred F. Georgi against the Texas Company. From a judgment for plaintiff on á directed verdict, and from an order denying a new trial on the minutes, defendant appeals. Affirmed.
Argued before CLARKE, P. J., and McLAUGHLIN, SCOTT, SMITH, and PAGE, JJ.
James L. Nesbitt, of New York City, for appellant.
Nathan D. Stern, of New York City, for 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 Oilcloth Company in the business transacted with the plaintiff. The plaintiff brought an action against tire American Oilcloth 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 Remanding 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 Oilcloth Company to pay invoices of Standard Paint Company was in consideration of an undertaking by American Oilcloth 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 Oilcloth 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 Oilcloth Company in consideration of some undertaking on the part of the American Oilcloth 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 tire 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, 131 N. Y. Supp. 631), or whether the principal would only be discharged by a satisfaction of the debt (Beymer v. Bonsall, 79 Pa. 298; Cobb v. Knapp, 71 N. Y. 348, 352, 27 Am. Rep. 51; First National Bank v. Wallis, 84 Hun, 376, 379, 32 N. Y. Supp. 382; affirmed Id., 156 N. Y. 663, 50 N. E. 1117; Tew v. Wolfsohn, 77 App. Div. 454, 457, 79 N. Y. Supp. 286; Meehen on Agency [2d Ed.] § 1759). In the instant case it was not shown that the plaintiff had such knowledge as would put him to his election. It was shown upon the trial that the defendant was the principal of the American Oilcloth Company.
The judgment and order should be affirmed, with costs.
CLARKE, P. J., and SMITH, J" concur.