Court Opinion

ID: 9771565
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:47:24.923684+00
Date Added: 2024-06-11T15:41:16.925096
License: Public Domain

SUPPLEMENTAL OPINION ON MOTION FOR REHEARING
McCLUNG, Justice.
This opinion on rehearing in no way alters our original opinion. We choose to supplement our original opinion for two primary reasons: (1) to further explain why Lachmann is inapposite; and (2) to amplify the reasons we find section 3.403 of the Texas Business and Commerce Code persuasive.
First of all, this is an appeal from a summary judgment, whereas Lachmann was an appeal from a judgment after a trial. In addition, the court in Lachmann was without the benefit of findings of fact and was therefore required to imply findings in favor of the judgment. In other words, the issue here is whether the appellant should be allowed to offer evidence that he signed the contract in a representative capacity; the issue there was whether certain stipulated evidence concerning use of a trade name was sufficient to overcome the presumption implied against agency. We read Lachmann as holding merely that, in the complete absence of other evidence, the use of a trade name is not per se adequate to rebut such presumption. One who places his individual name on a contract does not disclose a principal/agent relationship sufficient to immunize himself from personal liability solely by also affixing a trade name above his signature. Lachmann did not address the issue of parol evidence. We are not saying that Lassiter is not liable; we are saying that under the contract as executed, his liability is uncertain and, therefore, he should be allowed to introduce parol evidence to prove the true understanding of the parties.
We are persuaded that this is a reasonable rule for an ordinary commercial contract because the same outcome now re-*13suits under the law pertaining to contracts with the most freely transferable rights, the law of commercial paper. We agree with appellant’s assertion in his first brief that section 3.403 of the Texas Business and Commerce Code reflects common law principles of agency. See Byrd v. Southwest Multi-Copy Inc., 693 S.W.2d 704, 706 (Tex.App.—Houston [14th Dist.] 1985, no writ).
Comment 3 to section 3.403 states:
Assuming that Peter Pringle is a principal and Arthur Adams is his agent, an instrument might, for example, bear the following signature affixed by the agent—
(a) “Peter Pringle”, or
(b) “Arthur Adams”, or
(c) “Peter Pringle by Arthur Adams, Agent”, or
(d) “Arthur Adams, Agent”, or
(e) “Peter Pringle Arthur Adams”, or
(f) “Peter Pringle Corporation Arthur Adams”.
A signature in form (a) does not bind Adams if authorized (Sections 3 — 401 and 3 — 404).
A signature as in (b) personally obligates the agent and parol evidence is inadmissible under subsection (2)(a) to disestablish his obligation.
The unambiguous way to make the representation clear is to sign as in (c). Any other definite indication is sufficient, as where the instrument reads “Peter Pringle promises to pay” and it is signed “Arthur Adams, Agent.” Adams is not bound if he is authorized (Section 3 — 404).
Subsection 2(b) adopts the New York (minority) rule of Megowan v. Peterson, 173 N.Y. 1 (1902), in such a case as (d); and adopts the majority rule in such a case as (e). In both cases the section admits parol evidence in litigation between the immediate parties to prove signature by the agent in his representative capacity. Case (f) is subject to the same rule.
Appellee does not dispute that the name of appellant’s alleged principal, “Turtle Creek Racquet Club,” appears on the contract. Both parties agree that Lassiter’s signature appears on the contract. Consequently, we are faced with the situation contemplated by example (e) above. In such case, as between the immediate parties, the law of commercial paper allows extrinsic evidence to show the fact of agency, even though such body of law minimizes personal defenses in order to encourage a free transfer of contractual rights. The same showing should be allowed with respect to ordinary commercial contracts under which rights are not so freely transferable. Accordingly, we hold that because in this record the completed contract is comparable to example (e) above and does not on its face clearly show the obligation to be that of Lassiter, extrinsic evidence of the circumstances attending the contract’s execution is admissible to establish the real understanding of the parties with respect to liability.
Appellee argues that in any event, “Turtle Creek Racquet Club” is a trade name and not a sufficient disclosure of the identity of the corporate principal. Lachmann noted that at “150 A.L.R. 1303, the majority of cases [cited] hold that the use of a trade name is not sufficient disclosure of the identity of the principal and of the fact of agency.” The case annotated there is Saco Dairy Co. v. Norton, 140 Me. 204, 35 A.2d 857 (1944). Saco states, “Whether a disclosure of agency has been made depends upon the facts and circumstances surrounding the transaction, and ... the question is to be decided upon the judgment of the trier of facts. ... It is not to be questioned that a trade name may be used under such circumstances that agency will be sufficiently disclosed.” Id. at 858-59. Lassiter should be allowed the opportunity to establish those facts here. The trial court’s action granting summary judgment was error. We abide by our original opinion as supplemented. Consequently, appellee’s motion for rehearing is overruled.
SCALES, J., maintains his dissent.