Court Opinion

ID: 9771563
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:47:24.911463+00
Date Added: 2024-06-11T15:41:16.901253
License: Public Domain

McCLUNG, Justice.
Larry R. Lassiter appeals a summary judgment granted in favor of Rotogravure Committee, Inc., in a suit on a contract. Lassiter attempted to avoid liability on the contract by claiming that it was a corporate obligation of either Turtle Creek Racquet Club, Inc. or Turtle Creek Place, Inc. d/b/a Turtle Creek Racquet Club, and that he signed it only in his representative capacity as president of either corporation. The issues on this appei.,1 are whether the contract adequately discloses a principal-agent relationship so as to allow extrinsic evidence concerning the capacity in which Las-siter signed and, if so, whether Lassiter provided the trial court with competent summary judgment proof to raise an issue of fact regarding his affirmative defense of agency. We hold that extrinsic evidence is admissible and that Lassiter has raised a fact issue concerning the capacity in which he signed the contract. Accordingly, we reverse and remand for trial.
Under the contract in question, the “advertiser” agrees to pay in full by October 1, 1984, $4,900 for a half-page advertisement in a special advertising section of the Dallas Morning News benefiting the Dallas Opera. At the foot of the contract appears the following:
PRINT COMPANY NAME EXACTLY AS IT SHOULD APPEAR IN THE ROTOGRAVURE: _ TURTLE CREEK RACQUET CLUB
Address, Zip 10th Floor Two Turtle Creek Village
Telephone_528-3643_
Print Signature LARRY R. LASSITER
Signature /s/_LARRY R, LASSITER
If an instrument sued on clearly shows on its face that it is the obligation of the person who signed it, parol evidence is not allowed to exempt him from liability, on the ground that he meant to bind only his principal. Byrd v. Southwest Multi-Copy, Inc., 693 S.W.2d 704, 706 (Tex.App.—Houston [14th Dist.] 1985, no writ) (citing Southern Badge Co. v. Smith, 141 S.W. 185, 187-88 (Tex.Civ.App.—Dallas 1911, writ ref’d)). If the instrument is ambiguous, however, so that it is uncertain whether it is intended to bind the principal or agent, parol evidence of the circumstances attending its execution is admissible to show the real understanding. Id.
The above rule is similar to that applied to negotiable instruments under the Uniform Commercial Code. Official comment 3 to section 3.403 makes it clear that, as between the immediate parties, parol *10evidence is admissible to prove a signature by an agent was made in his representative capacity where the instrument names the principal represented but does not show that the person signed in a representative capacity. Womack v. First National Bank of San Augustine, 613 S.W.2d 548, 554 (Tex.Civ.App.—Tyler 1981, no writ); TEX.BUS. & COM.CODE ANN. § 3.403, comment 3 (Tex.UCC) (Vernon Supp.1986). We conclude that this rule is properly applicable to the present case. Cf. Byrd, 693 S.W.2d at 706 (applying the rule to a nonnegotiable instrument). Here, the contract names the “company" Turtle Creek Racquet Club but does not show that Lassiter signed in his representative capacity.
Rotogravure argues that extrinsic evidence is not admissible to show the capacity in which Lassiter signed because the contract does not sufficiently disclose the principal. To support this proposition, Rotogravure cites Lachmann v. Houston Chronicle Publishing Co., 375 S.W.2d 783 (Tex.Civ.App.—Austin 1964, writ ref'd n.r. e.), which holds that use of a trade name in a contract is not a sufficient disclosure of the identity of a principal and the fact of agency. We do not disagree with the holding in Lachmann. However, we do disagree that it is applicable to the present case. In Lachmann, it was stipulated by the parties that the names of the companies that appeared above the appellant’s signature on the contract were trade names. Here we have no such stipulation.
A business name meets the requirements of the Business Corporation Act for a corporate name if it contains the word “company.” TEX.BUS.CORP.ACT. ANN. art. 2.05 (Vernon 1980). In Texas, therefore, a business name need not contain the words “incorporated” or “corporation” to indicate corporate status. Accordingly, the use of the word “company” in a business name is sufficient to charge a person dealing with the business with notice that it may be incorporated. Joyner v. Alban Group, Inc., 541 S.W.2d 292, 294 (Tex.Civ.App.—Houston [1st Dist.] 1976, no writ); see Staacke v. Routledge, 111 Tex. 489, 241 S.W.2d 994, 999 (1922). Therefore, the designation “... company ...: Turtle Creek Racquet Club” is not per se a trade name and does not fall under the rule enunciated in Lachmann. We conclude that the contract in the present case adequately discloses the identity of the principal and the fact of agency. We hold, therefore, that the contract is ambiguous, allowing the admission of extrinsic evidence, because it discloses the principal but does not disclose in what capacity Lassiter signed.
While this ambiguity does provide Lassi-ter with the opportunity to present parol evidence as to the understanding of the parties, he must still submit some summary judgment proof to establish an issue of fact as to the substance of that understanding. Byrd, 693 S.W.2d at 706.
In response to the motion for summary judgment, Lassiter provided an affidavit that states in part:
I never at any time entered into any negotiations or signed the paper alleged to be a contract in my individual capacity. All discussions with me and the execution of the piece of paper alleged to be a contract occurred in my office at said corporation’s offices. The person who solicited my donation on behalf of the corporation was fully aware of my capacity at the time of such discussions and signing of said piece of paper. As is indicated in said Defendants’ Third Response to Plaintiff’s Motion for Summary Judgment, Mrs. Cindy Brinker was presented my business card showing the name of Turtle Creek Place, Inc. and my name as President of said corporation before the interview began.
***** *
In behalf of the corporation, I agreed to that arrangement, but strictly on the condition that the donation would be made by the corporation only when said new financing for said construction project was obtained.
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I signed the piece of paper on that condition, specifically, that the charitable donation of money would be made by the corporation if and when new financing *11was obtained for the project with which we were having difficulty in getting new financing.
******
The picture and caption in the advertising piece allegedly contracted shows me as President of Turtle Creek Place, Inc. and shows said corporation as doing business as Turtle Creek Racquet Club. Cindy Brinker was escorted through our corporate offices and was shown brochures and other materials indicating said corporate status.
Under Texas common law, in order for an agent to avoid liability for his signature on a contract, he must disclose his intent to sign as a representative to the other contracting party. Uncommunicated intent will not suffice. Seale v. Nichols, 505 S.W.2d 251, 255 (Tex.1974); Byrd, 693 S.W.2d at 706; see Griffin v. Ellinger, 538 S.W.2d 97, 100 (Tex.1976); Antil v. Southwest Envelope Co., 601 S.W.2d 47, 48 (Tex.Civ.App.—Beaumont 1979, no writ).
In Seale, the affidavit in question only stated that the signatory served as president of a duly incorporated business and that when he signed the document he intended only to sign in his capacity as president. In the case before us, Lassiter’s affidavit goes further and states sufficient facts to show that he communicated his intent to sign only in his capacity as president. Having found the contract ambiguous insofar as it concerns whether Lassiter intended to be obligated in a personal capacity or in behalf of the corporation, we hold that his affidavit is sufficient to raise a question of fact with regard to that issue. Cf. Antil, 601 S.W.2d at 47-48. Accordingly, the trial court’s judgment is reversed, and this cause is remanded for trial on the merits.
SCALES, J., files a dissenting opinion.