Mendelsohn v. Holton

149 N.E. 38, 253 Mass. 362, 42 A.L.R. 1307, 1925 Mass. LEXIS 1238
CourtMassachusetts Supreme Judicial Court
DecidedSeptember 30, 1925
StatusPublished
Cited by13 cases

This text of 149 N.E. 38 (Mendelsohn v. Holton) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mendelsohn v. Holton, 149 N.E. 38, 253 Mass. 362, 42 A.L.R. 1307, 1925 Mass. LEXIS 1238 (Mass. 1925).

Opinion

Sanderson, J.

This is an action of contract in 'which the plaintiff seeks to recover on an account annexed for services performed between January 11,1922, and February 1, 1922, in making a financial report of the Rose Tea Company. The answer is a general denial. The defendant admitted that the services were performed and that if he were liable for them the plaintiff would be entitled to recover the amount set forth in the account annexed to the declaration. The jury returned a verdict for the plaintiff and the only question argued is an exception saved in the following language: “I desire an exception to the part of the charge in which his Honor said that if an agent is not authorized to contract in behalf of the principal and orders work done he is personally liable on the contract.”

The plaintiff was a public accountant doing business under the name of L. E. Mendelsohn and Company. The business of the defendant was analyzing the statements and reports of corporations for the purpose of arriving at the true value of their assets. The Rose Tea Company was incorporated June 1, 1919, and operated a series of “chain stores.” At the time the services were rendered for which the plaintiff seeks to recover, the defendant was not an officer of the company. There was evidence tending to prove that in December, 1921, he, with three men who were a majority of the directors of the Rose Tea Company, bought a controlling interest in the company and deposited their holdings [364]*364as collateral to secure a note of the corporation. The plaintiff had been employed by the Rose Tea Company to make monthly financial statements from 1919 to January 21,1922, when the company went into bankruptcy. On or about January 11, 1922, she was asked to make a financial report of the company for the year 1921. The plaintiff testified that she made a contract with the defendant for the preparation of this report for him on his personal credit; while the defendant’s evidence tended to prove that he asked the plaintiff to prepare the report for the stockholders, stating that he was acting as agent of the corporation in ordering it. He also offered evidence that a vice-president and director who principally looked after the financial matters of the corporation assented to the retaining of the plaintiff for the corporation and that through this director the corporation employed the plaintiff to make the report. Under the instructions the jury could have found for the plaintiff on the theory (1) that the parties expressly agreed that the work should be done for the defendant and on his personal account; or (2) that he was personally hable because without authority he made a contract for the work in the name of the corporation.

There is nothing in the record to indicate which theory of the case the jury adopted. The trial judge did not rule as stated in the exception that an agent is liable personally on the contract if, not being authorized to contract on behalf of the corporation, he orders work done for it. The jury were instructed that if the contract was made with the corporation the plaintiff could not recover, and they were permitted to find for the plaintiff on the contract made by the parties if they found, as the plaintiff contended, that the 'contract was made by the defendant personally in his own behalf, but not otherwise. The other theory on which they were permitted to find for the plaintiff was on a contract which the judge ruled that the law created, in case the jury should find that the agreement was made in the name of the corporation by the defendant acting without authority. We assume that the exception relates to this ruling.

In a few jurisdictions a plaintiff may sue the agent on the [365]*365contract which he makes in the name of an alleged principal if made without authority. But by the great weight of authority there is no .liability on the contract under such circumstances. It is generally held, however, that the agent is liable in damages to a plaintiff who is thus misled to his injury, and that these damages would include any loss that he suffered by reason of not having a valid contract.

The conflict in the cases principally relates to the form of the remedy. In England, New York and some other jurisdictions, the action may be brought in contract for the breach of an implied warranty of authority. Collen v. Wright, 8 El. & Bl. 647. Lewis v. Nicholson, 18 Q. B. 503. Starkey v. Bank of England, [1903] A. C. 114. Seeberger v. McCormick, 178 Ill. 404. White v. Madison, 26 N. Y. 117. Simmons v. More, 100 N. Y. 140. Trust Co. v. Floyd, 47 Ohio St. 525. In Massachusetts, in such a case, there can be no recovery against the principal named because the agent had no authority to bind him and no recovery on the contract against the agent because the contract was not made with him. Ballou v. Talbot, 16 Mass. 461. Jefts v. York, 4 Cush. 371. Abbey v. Chase, 6 Cush. 54. Jefts v. York, 10 Cush. 392. Draper v. Massachusetts Steam Heating Co. 5 Allen, 338. Bartlett v. Tucker, 104 Mass. 336. Peoples National Bank of Boston v. Dixwell, 217 Mass. 436. Magaw v. Beals, 242 Mass. 321.

In Abbey v. Chase, 6 Cush. 54, 56, 57, Metcalf, J., speaking for-the court said: “when one who has no authority to act as another’s agent, assumes so to act, and makes either a deed or a simple contract, in the name of the other, he is not personally liable on the covenants in the deed, or on the promise in the simple contract, unless it contains apt words to bind him personally. . . . The only remedy against him, in this Commonwealth, is an action on the case for falsely assuming authority to act as agent.”

In an opinion by Shaw, C.J., the nature of the liability was stated in the following language: “If one falsely represents that he has an authority, by which another, relying on the representation, is misled, he is liable; and by acting as agent for another, when he is not, though he thinks he is, [366]*366he tacitly and impliedly represents himself authorized without knowing the fact to be true, it is in the nature of a false warranty, and he is liable. But in both cases his liability is founded on the ground of deceit, and the remedy is by action of tort.” Jefts v. York, 10 Cush. 392, 395.

In Draper v. Massachusetts Steam Heating Co. 5 Allen, 338, 339, the court in an opinion by Hoar, J., said : “in this Commonwealth it is settled that if the instrument purports to express the contract of the principal, the agent is not personally hable upon it; but that the remedy in such a case against him is by an action on the case for falsely representing himself to be authorized to bind his principal.”

In Bartlett v. Tucker, 104 Mass. 336, the plaintiff sought to hold the defendant in contract on notes which he signed in the name of another without authority. The court in an opinion by Gray, J., said: “In such a case, it is clear that by the law of this Commonwealth, as shown by the cases already cited, the defendant could not be sued in contract upon the note, but only in tort”; and at another place in the same opinion the liability was stated to be “only in an action of tort for falsely representing himself to be authorized to sign the name of the other person. This rule has been asserted and steadfastly maintained by this court for half a century.”

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Cite This Page — Counsel Stack

Bluebook (online)
149 N.E. 38, 253 Mass. 362, 42 A.L.R. 1307, 1925 Mass. LEXIS 1238, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mendelsohn-v-holton-mass-1925.