
    Albert S. Moore, Respondent, v. Vulcanite Portland Cement Company, Appellant, Impleaded with Northampton Portland Cement Company and Louis O. Hedden, Defendants.
    First Department,
    October 25, 1907.
    Principal and agent — when undisclosed principal cannot sue.
    Although an undisclosed principal may asa general rule sue on contracts which his agent makes in his own name; there are exceptions, as where the third person places personal trust and confidence in the agent contracting in Ms own . name or gires him exclusive credit.
    
      When a party insists that the person with- whom. he contracts shall' be the real-party to perform and enforce thecontract, he is not bound to recognize either an assignment of the contract or an undisclosed principal.
    Thus, where a seller refuses to carry out the contract-of sale or’ to deliver to a third person until the buyer gives assurance that it is the real purchaser, the seller is not liable in an action by an undisclosed principal of the buyer.
    Appeal by the defendant, the Vulcanite Portland Cement Company, from a judgment of the Supreme Court in favor of the-plaintiff,'entered in the; office of the clerk of the county of New York-on the 28th day of January, 1907, upon' .the verdict of a jury, and also from, an order entered in said clerk’s office on the 23d day of January, 1907, denying said defendant’s motion for a new trial made upon the minutes.
    
      William, Forse Scott, for the appellant.
    
      Horace D. Byrnes, for the respondent.
   Ingraham, J.:

. This appellant made, a contract with V. J. Hedden & Sons, a copartnership, whereby the appellant “ agrees to sell and V. J. Hedden & Sbns agree to buy ” 25,000 barrels of cement at a price fixed. This contract was signed, “ The Vulcanite Portland' Cement Company. By.W. F. Vernon, Sales Agt. Accepted L. O. Hedden,” the latter being a member of the firm • of V, J. Hedden & Sons.. This contract was dated May 1,1902, and the original instrument was transmitted to the appellant with a letter dated May 6, 1902, signed by “ V. J. Hedden & Sons Co., per Moore,’’ which stated :-- “We beg to return herewith, duly signed, the contract of sale datéd May 1st for 25,000 barrels of Vulcanite Portland Cement, as per our acceptance given to you. • We will give you due notice of time' and destination in making the deliveries under said contract.” On June 11, 1902, the appellant ■ was by letter signed “ V. J. Hedden & Sons Co., per Móohé,” directed to ship 5,000 barrels of cement to Newark, N. J. A letter similarly signed was sent to the appellant on June 12, 1902, requesting it to deliver a minimum of 2,000 barrels-per week in addition to the 300 barrels per week which, were to be shipped as per order given the day before. . This was followed on the thirteenth of June by a letter similarly signed, with a request for 2,00.0 barrels additional to be shipped to Allegheny,, Penn, On Jane fourteenth there was a letter to the appellant, signed “ Y. J. Hedden & Sons, per Moore,” disputing the statement of appellant in relation to the delivery at Harrison, H. J., insisting upon “ our contract rights,” and requesting to know whether the appellant intended to refuse to fulfill its contract. This was followed by a letter signed “ Y. J. Hedden & Sons Co., per Moore,” in which the writer demanded a reply before twelve o’clock of that day as to whether the appellant proposed to go on and deliver cement under the contract. On the same day the appellant wrote a letter to “ Y. J. Hedden & Sons ” stating that they had referred the matters contained in their letter of the fourteenth to their main office in Philadelphia ; •andón June twentieth the appellant, wrote to “ Y. J. Hedden & Sons Company ” that, they were in receipt of a letter, under date of the eighteenth instant on the 'letter head of “ Y. J. Hedden & Sons ” and signed Y. J. Hedden & Sons Company, per Moore,” and stating that the matter was in a very unsatisfactory shape; that according to the contract the purchaser was named as “ Y. J. Hedden & Son,” and it was accepted by “ L. O. Hedden.” It was then stated that the appellant had been advised that the firm of Y. J. Hedden & Sons had been dissolved or was in process of liquidation^ and that its business had been taken over by the Y. J. Hedden & Sons Company ; that this left the matter without a binding contract “ upon you, your company or your firm, whichever one it is. Such a contract is not mutual and, therefore, is not binding. * * * We supposed we were selling to the responsible firm of Y. J. Hedden & Sons 25,000 barrels of cement, to be delivered at Harrison, New Jersey. * ■* * How,'we have to suggest that if you want this cement for the Y. J. Hedden & Sons Company to be used at Harrison, H. J., in connection with the contract which we understand that company has at that point, we will execute a properly drawn contract with the incorporated company, provided we have as security for the payment of the cement so sold, in accordance with the terms thereof the personal obligations of Yiner J. Hedden, Charles It. Hedden, Samuel S. Hedden and Louis O. Hedden, whom we understand to be the' persons who compose the firm of Y. J. Hedden & Sons. You will recognize that it is not reasonable to ask us to sell an incorporated company with so small a capital as $1,000 paid in, a bill of merchandise which would exceed over ■ $B0j000,. delivered at Harrison, N. J. Nor does our contract call' for a delivery to the incorporated company, nor is there any ■acceptance by tile incorporated company of the contract.’’ '

The answer ’to Rat letter, signed “V. J. .Hedden & Sons, per Moore,” stated that the appellant was mistaken in understanding ■that the business of V. J. Hedden & Sons had been taken over by .the V. J. Hedden '•& Sons. Company; that the firm of V. J. Hed-den & Sons, comprised of the four gentlemen .named in its letter,still éxists and is doing business; that Louis 0. .Hedden,-as a member of the- firm of V. J. Hedden & Sons, had ample authority to bind liis. firm, and in pursuance of such authority executed the contract in question; that “y.ouvere and are selling to the responsible firm ■of V. J. Hedden & Sons the 25,000 -barrels of cement, but the price to be paid you is $1.02 per barrel free on board cars at Vulcanite, : N. J., and we have given and will give you- the shipping directions' as. to the point or points to which we wish this cement sent.” This was followed by, further correspondence, There was finally a letter written by the appellant .to V. JVHedden & Sons, stating -that the letter of June 21,1902, was signed by “your Mr..Mooré,” and they, were advised that this statement of Mr. Moore did not bind the firm; that the appellant was also advised “ that this difficulty can be obviated by a letter addressed to us, in which it will be stated that the firm does exist between the same parties as heretofore and is not in liquidation, and that the firm as such accepts the terms of the contract of May 1st, 1902, with this company- as. binding upon the firm and the respective members thereof — and then have each member of - the firm sign - this letter, wlién this-company will -then comply with the terms of the contract on its part to be kept and performed.”

In answer to this a letter dated June 28, .1902, was addressed to the appellant, signed by V.- J. Hédden &-Sons, V. J, Hedden, -Charles E-. Hedden, Samuel S. Hedden and L. O. Hedden. It was' there stated that' in compliance with the request as stated in' appellant’s letter of the twenty-seventh' instant, “ we beg to confirm the statement as made to you in the previous letter written to you on the 26th inst. and signed by Mr. Moore to the effect that the firm of V. J. Hedden & Sons as a copartnership is..still in existence for the purpose of prosecuting business and as such firm does hereby confirm, and ratify the contract executed on May 1st, 1902, • with your company for the purchase of 25,000 barrels of Vulcanite Portland Cement at the price of $1.02 _per barrel in bags f. o.-b. at mill, delivery to be as ordered, such contract having been signed by Mr. L. Ó. Hedden of the firm.” As this somewhat changed the conditions of the contract of May 1, 1902, there was some further correspondence about it when on July 11,1902, a letter was written to the appellant as follows :

“ Dear Sirs.—We hereby confirm' and ratify the contract as made with you under date of May 1st, 1902, and signed by Mr. L. O. Hedden for our firm.
Tours truly,
“V. J. HEDDEU & SOUS:”

And this was followed by a letter from the appellant dated July 14, 1902, stating :“We are in receipt of your favor of the lltli confirming and ratifying the contract made between this company and V. J. Hedden & Sons,' dated May 1st, 1902, and signed by Mr. L. O. Hédden. This letter, is satisfactory tó our attorney ;” and requesting shipping directions, which thereafter followed.

’ Hp to and including September twenty-third the appellant shipped under orders from V. J. Hedden & Sons 3,200 barrels of cement, upon which there was due $3,904, for which the vendíes had not paid. On October 18, 1902, the appellant wrote to V. J. Hedden & Sons stating that they were in receipt of a letter of the fifteenth instant, demanding 21,400 barrels of cement and threatening to annul the contract, and then continued: “ As you have not paid for the cement delivered to you, we, deem botli the notice and the annulment of no avail. We could not reasonably be expected to deliver more goods to one who has failed- to pay for goods already received, nor can we admit that you can take any advantage of a contract which you have already broken by failure to pay as it requires. * * * Hnder the circumstances, we have been obliged to rescind our contract with you and to place our claim in the hands of our attorneys for collection.” This was followed on October twenty-first by the commencement of an action against the firm of V. J. Hedden & Sons, to recover the contract price for the cement delivered. On the same day, October twenty-first, V. J. Hedden & Sons remitted to the appellant a draft for $3,904. in payment of, the cement delivered, and then demanded the delivery of the remaining cement under the contract. This demand not having been complied with, i this action was subsequently - commenced, not by Y. J. Hedden &- Sons, but by Albert S. Moore, claiming that he, the defendant L. O. Hedden, and one B. Sherwood Dunn, were'the principals in the contract executed by Y. J. Hedden & Sons; that Y. J. Hedden & Sons made'this contract as their .agent; that Dunn had assigned his .interest in the contract to the defendant Northampton Portland Cement. Company; that the plaintiff had requested the Northampton Portland Cement Company and Hedden to join him in commencing the action, which they had refused to do, and they are,"therefore,-.made defendants;-and asking a recovery .of the damages sustained by breach of the contract by the defendant. Y. J. Hedden & Sons are not'parties to-this action, nor is Dunn, who, it is alleged, was Originally one of the principals, for'whose benefit this contract with the appellant was made. -

As' one of-the defenses in this action, the defendant alleged that the contract set forth in the complaint was made with the said iir.m of Y. J. Hedden & Sons in reliance upon the plaintiff’s representations that the cement contracted for was for the sole, use of Y. J. Hedden & Sons in their own building operations at Harrison, N. J.,- and not otherwise, and that the said plaintiff fraudulently concealed from this defendant the information.that the said Y. J. Hedden &'Sons were acting as agents for the -plaintiff and others, as set. forth in the complaint. .The plaintiff has recovered a verdict against the appel-lant for the'total damage sustained -by what was alleged to be a breach of this contract ; and Upon that verdict judgment in favor of the plaintiff was entered for the full amount of the damages-—the other defendants, who were entitled to recover two-thirds of these damages, not being mentioned in the judgment. - ;

The defendant insisted before the court below, and insists upon this appeal, that it was not liable to-the' plaintiff or to the other members of the so-called syndicate; that it refused to make any -contract with the plaintiff or with any other than the firm of Y. J. Hedd.en & Sons ; and that iinder- the circumstances before- detailed, the plaintiff as an. undisclosed principal was not entitled to enforce this' contract- made by the defendant with Y. J. Hedden & Sons. That objection was overruled below; and the first question presented upon this appeal is whether, under the circumstances detailed, the plaintiff can maintain (his action.

It is undoubtedly the well-settled'general rule that “ where an agent enters into a contract as though made for himself, and the existence of a principal is not disclosed, the principal may, as a general rule, enforce the contract.” (1 Am. & Eng. Ency. of Law [2d ed.], 1168; Nicoll v. Burke, 78 N. Y. 580; Milliken v. Western Union Tel. Co., 110 id. 403.) There are, however, exóeptions to this general rule. One of these exceptions is stated in the American and English Encyclopædia of Law (Vol. 1 [2d ed.], p. 1171), as “ where a personal trust or confidence is reposed by the other party in the agent who contracted in his own name; ” and this is based upon another general principle illustrated by the case of Arkansas Smelting Co. v. Belden Co. (127 U. S. 379), where Mr. Justice Gray in delivering the opinion of the court said: “Everyone has a right to select and determine, with whom he will contract, and cannot have another person thrust upon him without his consent. In the familiar phrase of Lord Denman, ‘You have a right to the benefit you contemplate from the character, credit and substance of the party with whom you contract.’ ” (Humble v. Hunter, 12 Q. B. [Ad. & El.] 310, 317.) And among other cases cited in support of this proposition were Winchester v. Howard (97 Mass. 303, 305) and Boston Ice Co. v. Potter (123 id. 28). This same principle was applied and enforced in New York Bank Note Co. v. Hamilton B. N. Co. (180 N. Y. 280), where the question arose as to whéther a contract was assignable, and the court said : “ Doubtless the general rule is that an executory contract not necessarily personal in its character, which can, consistent with the fights and interests of the adverse party, be sufficiently executed by the assignee, is assignable in the absence of agreement in the contract.” But it was held that that rule did not apply as the plaintiff, the assignee, was not only technically but substantially a different entity from its predecessor; that the defendant could not be obliged to intrust.its money, collected on the sale of the presses, to the responsibility of an entirely different corporation from that with which it had contracted, and .the contract could not be assigned to the plaintiff without the assent'of.-the other party to it. Although there was a vigorous dissent from-this proposition, it was sustained by a large majority of the court. .

We.have it thus established that this contract was not assignable by Hedden & Sons to Moore and his associates, and that this appellant could not have been' compelled to perform by delivering its cement'to Moore and his associates if they had attempted to assign, the contract. The evidence establishes that the appellant had insisted upon making a personal contract with this responsible firm ; had refused to deliver the cement under the contract to a coi- ■ poration which it was understood had been organized to take over the business of the firm of V. J. Hedden & Sons; called attention to the fact ’ that the correspondence had been conducted by one Moore (plaintiff in this action) On behalf of thát firm or corporation, and had refused to admit the existence of the contract until it was definitely determined that the party with -Which it had contracted was the" copartnership to whom, it was willing; to sell.and deliver the cement. It seems to me that .this presents an exception to the general rule that an undisclosed principal can enforce a contract made by its. agent for its benefit, as presenting a case in which the vendor expressly refused to make a contract with any party éxcept the one of its own selection, and is brought directly within the exception as stated in Story on Agency (9th ed. § 160a), that the “ principal also will be liable to be sued andl be entitled to sue thereon in all. cases, unless from the attendant circumstances it is clearly manifested that an exclusive credit is given to the agent. ”

The authorities cited by counsel for the respondent aré not adverse to" this view. ■ There' is a clear distinction between this case and- a case where a party seeks to hold liable an undisclosed, principal to whom he has sold goods through an. agent and who has actually received the goods and applied them to his own use. • It cannot 1)6. doubted but that the party to a contract who has discovered that the goods were sold to an undisclosed principal may waive his right to refuse to recognize any other party to the contract than the person with whom he has 'contracted, and insist upon holding responsible the undisclosed principal. But an entirely different question is presented where the party to the. contract refuses to recognize an undisclosed principal as a principal, and insists upon holding the party with whom he contracted - as the real party to the contract: The proposition is, that a party to a contract is entitled to insist that the' parties with, whom he contracted are the real parties who will perform and enforce the contract, and he is not bound to recognize either an actual assignment of the contract dr, what is its| equivalent, an enforcement of the contract by an undisclosed prin-i cipal upon the ground that the contract was really made for his benefit.!

In Taintor v. Prendergast (3 Hill, 72) the action was. brought to recover a sum of money advanced to the defendant, in part payment for "a quantity of wool which he agreed,to deliver to the plaintiff’s agent. It was proved that the money that was advanced was the money of the plaintiff. . The .contract was not complied with, and the action was brought to recover this money .which the plaintiff through its agent had advanced to the defendant under a contract made between the plaintiff’s agent and the defendant. There was no evidence to show that the defendant had refused to contract with the plaintiff, or that the defendant had insisted upon’a direct contract with the agent in order to .hold him responsible. It was recognized in that case that if there had been evidence of an exclusive credit given to the agent, the principle would hot be applicable. In Nicoll v. Burke (78 N. Y. 580) William and E. A. Oruikshank made a lease.as agents; the form of the lease shows that they were acting for an undisclosed principal, arid the lease iri this form was accepted by the tenant. The general rule is stated, but the case not being within the exception to which I have referred, that exception was not discussed.

Coleman v. First Nat. Bank of Elmira (53 N. Y. 388) was an action against ah undisclosed principal to recover a sum of money which - had been deposited with the cashier of the bank; and the jury found that the bank was the principal and that the deposit was' with it. In thatcase the court said: “ The jury having found that, the money was in fact deposited with the bank, the case then in one aspect is that of a depositor taking the personal certificate and obligation of a person who was at the time the chief financial officer and agent of the bank for its repayment. If he did this under circumstances indicating an intention to give the sole credit to Van Campen, knowing as he did .that the bank w.as the real principal, then his election Would bind him, and he could not subsequently resort to the bank on the insolvency of the agent; *., * * If the plaintiff had examined the certificate, he would have been apprised of the fact that it purported to be the individual obligation of Yan Campen. But. lie did not do so.. He had a right to' suppose that it. was- the proper acknowledgment of- the bank with which the money was deposited.” . The case of Ludwig v. Gillespie (105 N. Y. 653) was an action brought to recover the purchase price of certain merchandise sold and delivered by the plaintiff to the defendant. The.Con■tract was: “Sold for account of Mr. E. Ludwig, Agt., to Mr. L. C. ■Gillespie, four thousand' (4,000) cases Syrian bitumen.” -The plaintiff when he made this contract was acting as agent for a firm in France, and the bitumen was sold by him for and on account of this firm in France as their agent. It. was held that the action was brought within the principle that when a contract not under seal, is made with an agent in his own name for an undisclosed principal, whether he describes himself as an agent or not, either the principal or agent may sue upon it. There the agent was allowed to recover. In Milliken v. Western Union Tel. Co. (110 N. Y. 403) the action Vas. against a telegraph company to enforce a contract made with plaintiff’s agent in Paris,. France,, for the transmission and delivery of a message, and the defendant secured-possession of. the message under a contract to procure a delivery.of it to the-person answering the description at its address in New York. The court there applied the general rule that the principal is entitled to maintain an aétion under a contract made by its agent with ,a third party, although the agency is not disclosed at the time of the making of the contract. Ho fact to bring the case within the exception which we think controls this case was presented, and that exception was not discussed.' .

.We are, therefore, of opinion that the' plaintiff could not maintain. this action, and* for that-. reason the judgment-and order must be re versed, and a new trial-ordered, with costs to the appellant to abide the event. • , .

Patterson, P. J., Laughlin, Clarke and Houghton, JJ., concurred.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.-  