O.C.G.A. § 10-6-54 (2019)

Annotations

JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION AGENT LIABILITY PRINCIPAL LIABILITY General Consideration Section codifies preexisting law. - This section is a codification of the law as it stood prior to the original Code of 1863, and is not an innovation resulting from legislative enactment. Van Dyke v. Van Dyke, 123 Ga. 686, 51 S.E. 582, 1905 Ga. LEXIS 578 (1905). Section states general rule as to holding undisclosed principal. - General rule with reference to holding an undisclosed principal liable upon the contract of the principal’s agent is stated in this section. Van Dyke v. Van Dyke, 123 Ga. 686, 51 S.E. 582, 1905 Ga. LEXIS 578 (1905). Section does not apply to contract under seal. - Rule laid down in this section, that an undisclosed principal shall stand liable for the contract of the principal’s agent, does not apply when the contract is under seal. Van Dyke v. Van Dyke, 123 Ga. 686, 51 S.E. 582, 1905 Ga. LEXIS 578 (1905); Gill v. Atlanta, B. & Atl. Ry., 24 Ga. App. 780, 102 S.E. 457, 1920 Ga. App. LEXIS 521 (1920). Contract must purport to be principal’s to bind the principal. - General rule is this: in order to bind a principal on a contract made by an agent, it must purport on the contract’s face to be the contract of the principal, and the principal’s name must be asserted in the contract. It is not enough that the agent be described as such in the instrument. Kingsberry Homes v. Findley, 242 Ga. 362, 249 S.E.2d 51, 1978 Ga. LEXIS 1208 (1978). Because the plaintiff contracted with the defendant individually, and not as anyone’s agent, the fact that the defendant’s employer made the downpayment

was not conclusive as to which party entered into the agreement, and the plaintiff’s claim against the defendant should not have been dismissed by the trial court sua sponte. Bump-Aire Corp. v. Rogers, 236 Ga. App. 422, 512 S.E.2d 326, 1999 Ga. App. LEXIS 197 (1999). Person acting on person’s own account cannot bind another, despite benefit. - Mere fact that a wife got the benefit of goods bought by her husband on his own credit would not, whether he was solvent or insolvent, make her liable in law to the seller for the price of such goods. Hightower v. Walker, 97 Ga. 748, 25 S.E. 386, 1895 Ga. LEXIS 571 (1895). Trustees of a church are not, as such, liable for the price of lumber sold and delivered to the pastor on the pastor’s individual account, when the pastor neither acted as their agent nor had authority to do so, although the lumber was, with the church’s knowledge, used in improving the property of the church. Montgomery v. Walton, 111 Ga. 840, 36 S.E. 202, 1900 Ga. LEXIS 800 (1900). Mere fact that a wife may be the owner of a tract of land upon which a house is erected out of materials furnished solely on the credit of her husband will not render her liable for the value of such materials on the theory that she was the concealed principal of her husband when there is no evidence that he was in any way acting as her agent when he purchased the materials. Blount & Morel v. Dugger, 115 Ga. 109, 41 S.E. 270, 1902 Ga. LEXIS 317 (1902); Cornelia Planing Mill Co. v. Wilcox, 129 Ga. 522, 59 S.E. 223, 1907 Ga. LEXIS 502 (1907). Mere fact that the wife is the owner of cows which were fed upon provender furnished solely upon the credit of her hus-

General Consideration (Cont’d) band was held insufficient to establish her as the concealed principal of her husband, when there was no evidence that he was in any way acting as her agent when the purchase was made. Moore v. Sims, 24 Ga. App. 296, 100 S.E. 647, 1919 Ga. App. LEXIS 582 (1919). Undisclosed principal cannot deny liability for agent’s act. - If a husband is acting as agent for his wife and she is simply the undisclosed principal, her liability cannot be questioned any more than if he had, with her assistance, concealed or misled the plaintiff as to the true ownership of the property. Porter v. Terrell, 2 Ga. App. 269, 58 S.E. 493, 1907 Ga. App. LEXIS 343 (1907). Special contract. - If the agent delivers the property in the agent’s own name and the agent’s principal is undisclosed, the latter is bound by any special contract, so far as the terms thereof are legal and binding, which is made between the agent and the carrier; but if the company receives the goods as those of the principal and, without the knowledge or consent of the latter, the carrier attempts to make special contract with the agent, the principal is not bound thereby, unless the principal does some act from which the law infers a ratification. Wellborn v. Southern Ry., 6 Ga. App. 151, 64 S.E. 491, 1909 Ga. App. LEXIS 217 (1909). Disclosure of agency must encompass principal’s name to relieve agent from personal liability. Collins v. Brayson Supply Co., 157 Ga. App. 438, 278 S.E.2d 87, 1981 Ga. App. LEXIS 1860 (1981). Contract liability of a principal and the principal’s agent is not joint, and after election to proceed against one, the other cannot be held. Kingsberry Homes v. Findley, 242 Ga. 362, 249 S.E.2d 51, 1978 Ga. LEXIS 1208 (1978). Undisclosed principal. - If an employer is merely an agent and acts with the authority of an undisclosed principal, either may be held liable, but not jointly liable, and after election to proceed against one of them, the other is released from liability. Davis v. Menefee, 34 Ga. App. 813, 131 S.E. 527, 1926 Ga. App. LEXIS 56 (1926).

Party with whom an agent contracts without disclosing the agent’s principal may treat the agent as the principal and elect to proceed against the agent as such in lieu of the principal, but the party may not proceed against the two jointly. Dinkler Mgt. Corp. v. Stein, 115 Ga. App. 586, 155 S.E.2d 442, 1967 Ga. App. LEXIS 1177 (1967). Third party must elect whether to proceed against agent or principal. - One who is in fact merely an agent and acts with the authority of an undisclosed principal may, at the election of the opposite party, be held as the principal therein, but the contractual liability of such undisclosed agent and the agent’s principal is not joint, and the injured party must elect against whom the party desires to proceed. Washburn Storage Co. v. Elliott, 93 Ga. App. 456, 92 S.E.2d 28, 1956 Ga. App. LEXIS 770 (1956). Agent Liability If an agent wishes to avoid personal liability, the duty is on the agent to disclose the agency and not on the party with whom the agent deals to discover the agency. Brown-Wright Hotel Supply Corp. v. Bagen, 112 Ga. App. 300, 145 S.E.2d 294, 1965 Ga. App. LEXIS 678 (1965); Dinkler Mgt. Corp. v. Stein, 115 Ga. App. 586, 155 S.E.2d 442, 1967 Ga. App. LEXIS 1177 (1967). Agents may be held when principals’ identities not disclosed. - If certain individuals composing a committee to represent the general citizenry, whose names and identities were not disclosed, purchased a monument to be erected as a memorial to the soldiers from a given county who died in the first World War and the contract of purchase and sale was duly executed by the seller in terms of the agreement, the members of the committee may be held liable as individuals in a suit by the seller on account for the price of the monument. Schneider Marble Co. v. Knight, 37 Ga. App. 646, 141 S.E. 420, 1928 Ga. App. LEXIS 552 (1928). In a suit brought by a carpet and paint company for unpaid work invoices for an apartment complex, the trial court did not err by granting partial summary judg-

ment and holding the complex’s property manager liable for the expenses because the company failed to disclose the company’s agency relationship with the complex’s owner. Carroll Mgmt. Group, LLC v. A Carpet & Paint, LLC, 334 Ga. App. 259, 779 S.E.2d 26, 2015 Ga. App. LEXIS 611 (2015), cert. denied, No. S16C0355, 2016 Ga. LEXIS 121 (Ga. Feb. 1, 2016). Election to recover from agent. - One who deals with an agent who fails to disclose the agent’s principal may recover from the agent, where the person so elects, or the person may proceed against the principal, when made known, should the person not elect to proceed against the agent. Brown-Wright Hotel Supply Corp. v. Bagen, 112 Ga. App. 300, 145 S.E.2d 294, 1965 Ga. App. LEXIS 678 (1965). One who performs personal services at the request of the agent, who fails to disclose the principal for whom the request is made, may recover from the agent, where the person so elects, or the person may proceed against the principal, when made known, should the person not elect to proceed against the agent. Dinkler Mgt. Corp. v. Stein, 115 Ga. App. 586, 155 S.E.2d 442, 1967 Ga. App. LEXIS 1177 (1967). If an agent buys in the agent’s own name without disclosing the principal and the seller subsequently discovers that the purchase was in fact made for another, the seller may, at the seller’s choice, look for payment either to the agent or the principal, even though the title has been made to the agent and the agent has been debited with the account. Kingsberry Homes v. Findley, 242 Ga. 362, 249 S.E.2d 51, 1978 Ga. LEXIS 1208 (1978). To avoid personal liability, the agent must disclose fact of agency and identity of principal, and one who deals with agent who fails to disclose the principal may at one’s election recover from either agent or principal. Collins v. Brayson Supply Co., 157 Ga. App. 438, 278 S.E.2d 87, 1981 Ga. App. LEXIS 1860 (1981). If the plaintiff did not take a default judgment against the undisclosed principal, no election was made as between the principal and agent, and the agent was subject to suit individually. Watson v. Sierra Contr. Corp., 226 Ga. App. 21, 485

S.E.2d 563, 1997 Ga. App. LEXIS 513 (1997). Third person knowing of agency and making agent debtor cannot charge principal. - A wife cannot be held accountable unless her husband acted as her agent in the transaction, nor even then if the fact of agency was known to the seller and the seller extended credit to her agent, not to her. Fisher v. Darsey, 21 Ga. App. 583, 94 S.E. 839, 1918 Ga. App. LEXIS 415 (1918). If at the time of the sale the seller knows not only that the person who is nominally dealing with the seller is not principal but agent, but also who the principal really is, and, notwithstanding all the knowledge, chooses to make the agent the seller’s debtor, dealing with the seller and the seller alone, the seller must be taken to have abandoned the seller’s recourse against the principal, and cannot afterwards, upon failure of the agent, turn round and charge the principal, having once made an election at the time when the seller had the power of choosing between the one and the other. Kingsberry Homes v. Findley, 242 Ga. 362, 249 S.E.2d 51, 1978 Ga. LEXIS 1208 (1978). No recovery from agent after discovering agency and looking to principal. - If the creditor, when the creditor ascertains that there is a principal who is liable, accepts the principal as the debtor and looks exclusively to the principal, the creditor cannot afterwards recover from the agent. Miller v. Watt & Walker, 70 Ga. 385, 1883 Ga. LEXIS 342 (1883). Agent receiving property for undisclosed principal does not take title. - Ruling that when the original tenant, having reserved no rights against the subtenant in the transfer of a note to the landlord and having claimed no interest in the property delivered to the original tenant by the subtenant, the proceeds of which the original tenant paid to the landlord in satisfaction of the transferred note, title never vested in the original tenant, is not altered by the fact that the subtenant may not have known that the subtenant’s note to the tenant had been transferred to the landlord; when it appears without dispute that the

Agent Liability (Cont’d) original tenant did not accept the cotton as owner, but, even if under an assumed agency, received the cotton only for the landlord as principal, undisclosed both to the subtenant and the claimant. Watson v. Sudderth, 32 Ga. App. 383, 123 S.E. 143, 1924 Ga. App. LEXIS 413 (1924). When extrinsic evidence admissible concerning agent being party to contract. - If it appears unambiguously in an integrated contract that the agent is a party or is not a party, extrinsic evidence is not admissible to show a contrary intent, except for the purpose of reforming the contract. If the fact of agency does not appear in an integrated contract, an agent who appears to be a party thereto cannot introduce extrinsic evidence to show that one is not a party except: (a) for the purpose of reforming the contract; or (b) to establish that one’s name was signed as the business name of the principal and that it was so agreed by the parties. Kingsberry Homes v. Findley, 242 Ga. 362, 249 S.E.2d 51, 1978 Ga. LEXIS 1208 (1978). When wife retains property, only slight evidence of husband’s agency required. - When the wife retains property and enjoys the property, only slight evidence of the husband’s agency in contracting the debt for the property is required to charge her. Pinkston v. Cedar Hill Nursery & Orchard Co., 123 Ga. 302, 51 S.E. 387, 1905 Ga. LEXIS 448 (1905). If principal and agent are improperly joined, one may be dismissed. - When the plaintiff, having a right to elect whether the plaintiff will sue the agent or the undisclosed principal, improperly joins both in the same action, the plaintiff may exercise the right of election, proceed against one, and dismiss as to the other. Lippincott & Co. v. Behre, 122 Ga. 543, 50 S.E. 467, 1905 Ga. LEXIS 255 (1905). Unpublished decision: Realty company was liable to a construction company for breaching oral agreements because, to avoid personal liability, the realty company had the duty to disclose that the company was acting solely as the principal’s agent in making the oral contracts.

Circle Y Constr., Inc. v. WRH Realty Servs., 427 Fed. Appx. 772, 2011 U.S. App. LEXIS 10629 (11th Cir. 2011). Principal Liability Third party’s right as to such principal does not depend upon diligence. - Right to proceed against the principal, is not dependent on the diligence of the plaintiff in discovering the fact of the concealed agency. Baldwin v. Garrett & Sons, 111 Ga. 876, 36 S.E. 966, 1900 Ga. LEXIS 875 (1900); Beacham v. Coe-Mortimer Co., 30 Ga. App. 456, 118 S.E. 441, 1923 Ga. App. LEXIS 503 (1923); Barrington v. Davis Jenkins & Sons, 44 Ga. App. 682, 162 S.E. 642, 1932 Ga. App. LEXIS 453 (1932). Upon discovery, third person may go against principal. - When a person enters a demand for cars, without at that time disclosing an agency for another, but it appears that at the time of shipment, it was disclosed that the cars were intended solely for the use of another and the bill of lading was issued in the name of the true owner, the carrier might in such case go directly against the principal for demurrage charges, upon the agency being disclosed. Central of Ga. Ry. v. Rabun, 21 Ga. App. 402, 94 S.E. 598, 1917 Ga. App. LEXIS 607 (1917). If an agent fails to disclose the agent’s principal, a person dealing with the former may, when the fact is discovered, go against the principal under the contract. United States v. Ferguson, 409 F. Supp. 393, 1975 U.S. Dist. LEXIS 11415 (S.D. Ga. 1975), aff’d, 529 F.2d 999, 1976 U.S. App. LEXIS 12012 (5th Cir. 1976). Right to proceed against principal depends on special agent’s authority. - Right of a third person to elect to proceed against principal is confined to the liability arising from the actual authority given the agent, when the authority given is a special and limited one, and no question of apparent authority or estoppel was involved. Piel v. Snow’s Laundry & Dry Cleaning Co., 92 Ga. App. 411, 88 S.E.2d 628, 1955 Ga. App. LEXIS 599 (1955). If no agency or if undisclosed principal has settled, one is not directly liable. - If there was in fact no agency, or if the agency existed, but the

undisclosed principal has previously accounted and settled with the agent, the plaintiff is authorized to go directly upon the principal. Price-Evans Foundry Co. v. Southern Bell Tel. & Tel. Co., 19 Ga. App. 264, 91 S.E. 283, 1917 Ga. App. LEXIS 90 (1917); Beacham v. Coe-Mortimer Co., 30 Ga. App. 456, 118 S.E. 441, 1923 Ga. App. LEXIS 503 (1923). Question of fact as to relationship precludes summary judgment. - Question of fact remained as to whether the crematory was acting as the

undisclosed agent of the funeral home in contracting with the widower for the cremation; therefore, summary judgment for the funeral home was reversed on the breach of contract claim as the record on appeal was unclear as to the exact nature of the relationship between the crematory and the funeral home such as whether the funeral home was a co-owner of the crematory along with several other funeral homes. Moore v. Lovein Funeral Home, Inc., 358 Ga. App. 10, 852 S.E.2d 876, 2020 Ga. App. LEXIS 686 (2020).

RESEARCH REFERENCES Am. Jur. 2d. 3 Am. Jur. 2d, Agency, § 251 et seq. C.J.S. 3 C.J.S., Agency, § 520 et seq. ALR. Signing of contract by agent of undisclosed principal as satisfying statute of frauds, 23 A.L.R. 932; 138 A.L.R. 330. Liability of undisclosed principal on sealed contract, 32 A.L.R. 162. Sufficiency of execution of instrument by agent or attorney in fact in name of principal without his own name appearing, 96 A.L.R. 1251. Concealment of fact that party to contract was acting for undisclosed principal as fraud which will toll statute of limitations, 114 A.L.R. 864.

Right to join agent and undisclosed principal in same action, 118 A.L.R. 701. Action or judgment against agent as affecting right to maintain action against undisclosed principal, 119 A.L.R. 1316. Exceptions to rule which permits suit by or against undisclosed principal, 130 A.L.R. 664. Use of trade name in connection with contract executed by agent as sufficient disclosure of agency or principal to protect agent against personal liability, 150 A.L.R. 1303. Principal’s payment to or settlement with agent as affecting former’s liability to third person with respect to contract negotiated by agent, 71 A.L.R.2d 911.