Court Opinion

ID: 9751480
Source: CourtListenerOpinion
Date Created: 2023-08-28 16:30:16.334942+00
Date Added: 2024-06-11T07:26:48.224363
License: Public Domain

Concurring Opinion by
Mr. Justice Chidsey:
I concur in the opinion of the majority in the case of Smiler v. Toll. In Toll v. Pioneer Sample Book Company, I concur in the result but cannot agree with the grounds upon which the majority opinion rests. For the reason hereinafter stated, I would dismiss the appeal.
*139In Toll v. Pioneer Sample Book Company, the majority opinion affirms the order of the court below on two grounds: (1) a disclosed principal is not liable on a sealed instrument where the principal has not signed the contract and is not referred to in the agreement, and (2) the contract itself protected the disclosed principal from liability by the provision: “This agreement contains the entire contract between the parties and there are no oral agreements or representations between the parties hereunto appertaining.”.
I think this Court should be hesitant to give to a seal its full ancient effect, since the use of a seal has lost much of its former significance and solemnity. A seal was entitled to much weight when most contracting parties could not write and a seal was made by heating wax and making an impression therein with the ring or individual seal of the signatory party. The very mechanics of such an act were impressive and served to make the parties so sealing an instrument aware of the importance and legal effect of the contractual obligation they were undertaking. Today, with literacy so general, a wax seal is a curiosity and almost unknown in ordinary business transactions. Most legal forms are prepared by printers and invariably the word “SEAL” or “L.S.” (which is its legal equivalent, Hazleton National Bank v. Kintz, 24 Pa. Superior Ct. 456) is printed on the form at the end of the line intended for the signature. These forms are often signed by the parties to agreements without any knowledge of the history or legal significance of a seal or the effect of the printed word “SEAL” at the end of the line. It has even been held that any mark, including a mere dash or naked, straight line drawn after a signature may operate as a seal: Appeal of William Hacker, Trustee, 121 Pa. 122, 15 A. 500. Should the mere presence of such a line or the presence of a few letters printed on a pre*140pared form be held to be conclusive in the determination of the rights of contesting parties to property valued by the parties at $95,000? Or is such a holding so out of step with the business practices of today that the presence of a seal or one of its substitutes should be given a less conclusive effect?
In some jurisdictions seals are given no effect at all. In other jurisdictions if the seal is unnecessary to the validity of the instrument it is disregarded as surplus-age: 3 C.J.S. §246, p. 174. The majority opinion concedes that a seal is not necessary to validate an agreement of sale, but holds that the presence of the word “seal” protects the disclosed principal from suit on such agreement of sale. This holding is apparently motivated by the thought that to hold otherwise would mean that hereafter seals would have no effect at all, and that established business practices would be affected, and that such a fundamental change should be made by the Legislature. To regard the seal as surplusage in this case would not eliminate the use or proper effect of seals, nor require any legislative change in existing law.
Seals have lost much of their former sanctity in this State. As was stated in Brill v. Brill, 282 Pa. 276, 282, 127 A. 840, by the present Chief Justice when he was sitting as a Judge of the Court of Common Pleas in an opinion adopted by this Court: “There was formerly a question as to whether a third person not a party to a contract could bring suit on it when it was under seal, and therefore whether the action had to be in covenant instead of assumpsit (Strohecker v. Grant’s Executors, 16 S. & R. 237), but this was a mere technicality dependent upon the old rules of pleading, and apparently no longer exists, since there are many cases in the Pennsylvania reports where actions by third persons upon bonds under seal have been allowed as, for example, in Com. v. National Surety .Company, [253 Pa. 5] . . .”.
*141The majority opinion recognizes and sets forth four exceptions to the general rule that a principal is not liable on a sealed contract made by his agent where the principal is not a party thereto or named therein as one for whose benefit it was made. When analyzed, these four exceptions can be reduced to two, (1) where the intent of the parties is evident that a disclosed principal or other party although unnamed is entitled to the benefits or assessed with the burdens of a contract, (2) where the principal is undisclosed but there is privity of estate between him and his agent, and in addition the principal is in actual possession or has beneficial enjoyment of the property.
The first exception includes the cases cited by the majority opinion where the identity or existence of an unnamed party is ascertainable from the instrument, as in third party beneficiary contracts, or where a contract signed as “agent” discloses that the agent was acting for his principal. It is true that in these instances the identity of the principal or existence of an unnamed party was ascertainable from the contract itself, but the basic reason for the exception is the ascertainment of the intent of the signatory parties as to the rights and duties of unnamed parties, for this purpose the source of ascertaining intent in this regard should not be limited to the contract itself but should include the surrounding circumstances if they serve to show such intent. Thus in the present case (Toll v. Pioneer) in their complaint the Tolls averred that the president of the defendant corporation inspected the premises, passed upon the terms of the agreement before it was signed, and the down money of $9,500 was paid with the corporation’s check. There were other circumstances tending to establish that Pioneer was the principal in the transaction and Smiler, who was the corporation’s vice-president and general manager, only its *142agent. In Dinger v. Friedman et al., 279 Pa. 8, 123 A. 641, the plaintiff was permitted to show by evidence dehors the contract in question that although the contract Avas executed by an individual under seal, it was not his individual undertaking but that of a partnership of which he was a member. While that is a partnership case, it logically supports the proposition that the intent of thé signatory parties as to the rights and duties of unnamed parties can be sought and this intent may 'be ascertained from surrounding circumstances despite the existence of a seal and its archaic attribute in this regard. Unless the exception to the general rule under discussion is extended to include the intent of the parties'in this regard as disclosed by the surrounding circumstances, their intent in many instances would be frustrated and injustice done. Where there is no seal, parol evidence is admissible to charge the principal or to enable the principal to sue in his own name on a contract executed by his agent, although there is no evidence of agency in the contract itself. See: Wigmore on Evidence, 3rd Ed., Vol. 9, §2438, p. 124. A seal as a substitute for the actual intention of the parties is a dying ember in the ashes of the past and should not be rekindled.
The second exception to the general rule makes no pretense of effectuating the intent of the parties, but is merely an application of the equitable principle that one cannot accept the complete benefit of a transaction without also assuming its burdens. Thus in Ottman et al. v. Nixon-Nirdlinger et al., 301 Pa. 234, 151 A. 879, where there was privity of-estate and the undisclosed principal had beneficial enjoyment of the property, an undisclosed principal acting through a straw man was held to be- subject- to'suit-on a- sealed contract to which it Avas not-a party, but this decision did not destroy the efficacy of straw transactions. Nor Avould the allow*143anee of suit against a disclosed principal in the instant case destroy straw transactions as the majority opinion fears. The justification for the allowance of straw man real estate transactions is set forth in Ladner’s Real Estate Conveyancing, Vol. 1, Section 81-B(a), p. 211, as follows: “This method of protecting oneself from personal liability on a mortgage is usually practiced by persons who deal extensively in real estate. Such men from the very nature of their business cannot afford to be personally responsible for the payment of the principal of a mortgage after they have conveyed away the property, yet they would be so long as the mortgage remains if they executed the bond.”. Persons engaged in buying and selling real estate can continue to operate through a straw man without being subject to liability since there is usually no privity of estate with the straw man and they are not in actual possession of the property nor do they have the beneficial enjoyment of the property after they have conveyed it away. The fear of the majority that straw transactions would be destroyed if the seal be regarded as mere surplusage in the present case is unfounded.
The majority opinion also expresses concern for the rule that a seal imports consideration and doubt as to the statute of limitation to be applied if the seal be regarded as surplusage. The answer to the questions posed is clear. If it is the intent of the parties as disclosed from an examination of the instrument itself or the surrounding circumstances that the seal was added with the intent of importing consideration, then that intent will be effectuated, but if the contract shows on its face that there is sufficient consideration, or words expressing an intention to be legally bound, (Act of May 13, 1927, P. L. 985, 33 PS §6), then the seal is surplusage for that purpose. If an action on a contract is commenced within six years, then the seal is sur*144plusage as far as the statute of limitations is concerned, but if suit is commenced after the expiration of the statutory period, the seal is effective to take the agreement out of the statute.
The majority opinion inferentially recognizes that the use of a seal is primarily a question of the intent of the parties when it states: “To so hold [that a seal may be surplusage] would in many instances negate the acts and intentions of the partiesand “Can it reasonably be said . . . that the addition of a seal was intended by the parties to be meaningless?”. The majority opinion then goes on to support its conclusion that the parties intended to exclude the disclosed principal from liability by quoting the provision of the contract “ ‘This agreement contains the entire contract between the parties and there are no oral agreements or representations between the parties hereunto appertaining.’ ”, as evidence of their intention that only the named parties should be liable on the contract. “Entire contract” refers to the mutual promises and conditions in the contract, not to the parties. The provision was intended to prevent parol evidence of the intent of the parties as to the terms and obligations of the contract. It should not be construed to limit liability to the named parties to the exclusion of a disclosed principal having the beneficial interest therein.
I would dismiss the appeal in Toll v. Pioneer for the reason that the disposition of the companion case of Smiler v. Toll conclusively determines on the merits that the contract in question was properly terminated and this makes moot the issue which arises out of the attempt by plaintiffs in Toll v. Pioneer to enforce the contract.