Opinion ID: 1206136
Heading Depth: 1
Heading Rank: 4

Heading: Complaint Varying Lease Terms

Text: Montoya, however, reasons that, since his signature was not on the lease, the facts recited in the complaint tending to show that he was an undisclosed principal cannot be considered by the court in determining whether a claim has been stated by the pleading. His theory is that the pleading of matters not contained in the contract itself, which matters change the import of the contract, constitutes varying the terms of a written contract by inadmissible parol testimony. The effect of establishing such a principle of law would be to say that an undisclosed principal could not be held liable under a written contract signed by his agent. This is not correct and ignores fundamental principles of agency law. The law in New Mexico is that an agency relationship can be created orally even where the contract made by the agent pursuant to authority given him by the principal is in writing, or even where such contract must be in writing to comply with the requirements of the Statute of Frauds. Kennedy v. Justus, 64 N.M. 131, 325 P.2d 716 (1958). Thus the mere fact that one makes a written contract does not prevent a third party from showing it was made by that person as an agent so that he can make a claim against the principal. This is the classic situation where a wholly-undisclosed principal is involved. [T]he parol evidence rule does not prevent the introduction of oral testimony to show that a contract executed by and in the name of an agent is, in fact, the contract of the principal. The oral evidence does not contradict the writing because the agent remains bound by the contract, and the effect is merely to show that by virtue of the law of agency his signature also binds another. Frohlich v. Metropolitan Chemical Company, 61 Wash.2d 66, 377 P.2d 443, 446 (1962). Accord, Kennedy v. Justus, supra . The only New Mexico case cited by appellees regarding this issue, Luna et al. v. Mohr, 3 N.M. (Gild., E.W.S. ed.) 63, 1 P. 860 (1884), is inapposite. It deals with old technicalities of pleading regarding negotiable instruments, not contracts generally, and was decided prior to adoption of our modern rules of pleading. We find no merit in Montoya's claim that DeBaca is precluded from bringing this action against Montoya since the complaint shows that the latter is not entitled to the entire beneficial interest in the lease, and thus would have no reciprocal right to sue DeBaca. The decision of the trial court is reversed, and the case is remanded for actions not inconsistent herewith. IT IS SO ORDERED. McMANUS, C.J., and PAYNE, J., concur.