Caseflicks

Massachusetts Appeals Court • 1992

ATLANTIC SALMON A/S v. Curran

591 N.E.2d 206 | 32 Mass. App. Ct. 488

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Takeaway

In short, this case teaches that an agent avoids contract liability only by clearly disclosing both the agency and the principal’s actual identity; a counterparty need not search public records to fill in what the agent withheld.

Background

Curran bought salmon from Salmonor A/S and Atlantic Salmon A/S, two Norwegian exporters, while presenting himself as an officer of “Boston International Seafood Exchange, Inc.” or “Boston Seafood Exchange, Inc.” He used business cards identifying himself as marketing director, checks bearing the former name and signed “Treas.,” wire transfers in that name, and trade advertising using both names. Neither purported seafood corporation existed.

Curran later claimed that he had acted for Marketing Designs, Inc., a corporation he wholly owned and controlled. But Marketing Designs had been dissolved in 1983. In December 1987, a business certificate stated that Marketing Designs was doing business as Boston Seafood Exchange, without “Inc.” and without reference to Boston International Seafood Exchange. Curran never told the suppliers that Marketing Designs was his principal, and they did not learn of it until after they sued. The corporation was revived in December 1988.

The unpaid 1988 salmon debts totaled $101,759.65 to Salmonor and $153,788.50 to Atlantic. After a jury-waived Superior Court trial, the judge entered judgment for Curran. The judge accepted his position that the suppliers knew they were dealing with a corporation and could have identified Marketing Designs through public records. The suppliers appealed.

Issues

Issue #1

Whether an agent who reveals only that he is acting for an unidentified corporate principal is personally liable on the contracts he makes.

Holding

Yes. Curran was personally liable because he did not disclose the identity of the principal for whom he claimed to act.

Reasoning

A principal is partially disclosed when the other contracting party knows that the agent is or may be acting for someone else but does not know that principal’s identity. Here, the suppliers knew only that Curran purported to represent one or more seafood corporations. They had no notice that he claimed to be acting for Marketing Designs, Inc.

Under the ordinary rule stated in Restatement (Second) of Agency § 321, a person who contracts for a partially disclosed principal is himself a party to the contract unless the parties agree otherwise. Massachusetts law likewise places the burden on the agent to disclose both his representative capacity and the identity of his principal if he seeks to avoid personal liability.

Curran did not meet that burden. He dealt with the suppliers through the nonexistent names Boston Seafood Exchange, Inc. and Boston International Seafood Exchange, Inc.; his cards, checks, advertisements, and discussions all reinforced those names rather than identifying Marketing Designs. Use of a trade or fictitious name did not adequately identify the alleged corporate principal.

The suppliers had no duty to investigate public records to discover Curran’s claimed principal. Actual knowledge, or information equivalent to actual knowledge for a reasonable person, is required. A city business certificate that Marketing Designs was doing business as Boston Seafood Exchange could not shift the agent’s disclosure obligation to the suppliers, particularly where Curran continued to use the different name Boston International Seafood Exchange, Inc.

Issue #2

Whether the dissolution of Marketing Designs, Inc. or the precedent concerning a dissolved corporation relieved Curran of personal liability.

Holding

No. The dissolution question and Barker-Chadsey did not control because the decisive defect was Curran’s failure to disclose his alleged principal.

Reasoning

The trial judge relied on Barker-Chadsey Co. v. W.C. Fuller Co. to treat Marketing Designs’ dissolution as immaterial. But Barker-Chadsey involved a fully disclosed corporate principal and considered the effect of its dissolution on debts incurred by an agent.

This case was different: the suppliers never knew that Marketing Designs was the asserted principal. Because Curran was liable as an agent for a partially disclosed principal, the Appeals Court did not need to decide the suppliers’ remaining arguments concerning the consequences of the corporation’s dissolution.