Rick J. Deyoe v. Gray, Jansing & Associates, Inc.

• Court: Court of Appeals of Texas
• Decided: March 17, 2005
• Docket: 03-04-00055-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-04-00055-CV

Rick J. Deyoe, Appellant

v.

Gray, Jansing & Associates, Inc., Appellee

FROM THE COUNTY COURT AT LAW NO. 2 OF TRAVIS COUNTY NO. 259,914, HONORABLE ORLINDA NARANJO, JUDGE PRESIDING

MEMORANDUM OPINION

Appellee Gray, Jansing & Associates, Inc. brought suit for breach of contract against

appellant Rick Deyoe, Realtex Development Corporation, Cameron Place, Ltd., Cameron Place I,

Ltd., and Cameron Place II, Inc., to recover $6982.38 in unpaid engineering services fees plus

attorney’s fees and costs in connection with the development of the Cameron Place Apartments

project. After a bench trial, the trial court rendered judgment in favor of Gray Jansing, awarding the

sum of $6982.38 plus pre- and post-judgment interest, attorney’s fees, and costs. In two issues,

Deyoe challenges the sufficiency of the evidence, asserting that he was not a party to the contract and

the contract did not impose any obligations on him. We affirm the judgment.

BACKGROUND

Deyoe is the president and sole shareholder of Realtex Development Corporation.

Realtex was founded in April 1998 to develop multifamily housing projects for the affordable housing market. Deyoe is also the registered agent for Cameron Place, Ltd., Cameron Place I, Ltd.,

and Cameron Place II, Inc., and the president of Cameron Place II, Inc. (“Cameron Place

defendants”). The Cameron Place defendants did not answer and did not appear.

On August 4, 1999, Gray Jansing submitted a proposal for engineering services for

the Cameron Place Apartments project. Under the Engineering Services Agreement, Gray Jansing

was to provide engineering services to support the site development permit for the apartments. The

proposal was submitted by Gray, Jansing & Associates, Inc., over the signature of John M. Jansing,

Jr., P.E. The proposal was submitted to Deyoe in care of Cameron Place, Ltd., on August 16, at the

address for Realtex. Deyoe countersigned the proposal on a line beneath the word “approved,” and

no representative designation appeared below Deyoe’s name.

When Gray Jansing was not paid for services rendered, it filed suit against Deyoe,

Realtex, and the Cameron Place defendants for breach of contract, suit on a sworn account, and,

alternatively, quantum meruit. In addition, Gray Jansing asserted, as an alternate theory of recovery,

that Deyoe and Realtex were the alter ego of the Cameron Place defendants. At trial, Gray Jansing

claimed that Deyoe signed the contract in his individual capacity and was individually liable; Deyoe

urged that he approved the proposal as agent for Cameron Place, Ltd., which was owned by an

individual known as Charlie Palmer, and that Deyoe was not individually liable because Gray

Jansing had actual knowledge of the identity of the principal.

After a bench trial, the trial court found in favor of Gray Jansing and filed findings

of fact and conclusions of law in support of its final judgment. The trial court also found Deyoe

2 individually liable, Realtex not liable, and the Cameron Place defendants in default and liable. The

findings of fact and conclusions of law also included the following:

Findings of Fact

1. On or about August 16, 1999, Plaintiff and Defendant Rick Deyoe entered into a contract whereby Plaintiff would provide engineering services for a development know as Cameron Place Apartments.

2. The contract was signed by Rick J. Deyoe in his individual capacity.

3. The contract on its face obligates Rick J. Deyoe and Cameron Place, Ltd. to perform under the contract.

4. Rick J. Deyoe did not disclose to Plaintiff any intent to sign the contract as an agent for any other person or entity.

5. Defendant Cameron Place, Ltd. is a Texas limited partnership, whose general partner is Cameron Place I, Ltd., a Texas limited partnership, whose general partner is Cameron Place II, Inc.

Conclusions of Law

2. Defendant Rick Deyoe failed to show by a preponderance of the evidence that he disclosed to Plaintiff his intent to sign only in a representative capacity.

3. Rick Deyoe is liable in his individual capacity.

4. Defendants Rick Deyoe, Cameron Place, Ltd., Cameron Place I, Ltd. and Cameron Place II, Inc. have breached the contract with Plaintiff for failure to pay for services rendered by the Plaintiff.

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10. Plaintiff is not entitled to judgment against Realtex Development Corporation.

Deyoe appeals from this judgment.

3 ANALYSIS

On appeal, Deyoe contends that the trial court erred in finding him individually liable

because (i) he merely signed the agreement on behalf of a disclosed principal, and (ii) the agreement

did not impose any obligations on him. He asserts that Gray Jansing had actual knowledge that

Cameron Place, Ltd. was the principal. Gray Jansing responds that Deyoe signed the contract in his

individual capacity, that he never disclosed that he signed the contract as agent for any principal, and

that the principal was undisclosed.

When the trial court acts as fact-finder, we review its findings under legal and factual

sufficiency standards. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). We

review fact findings for sufficiency under the same standards that are applied in reviewing evidence

supporting a jury’s answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In evaluating

legal sufficiency, we view the evidence in the light most favorable to the prevailing party.

Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 24 (Tex. 1994). To support a reversal on grounds

that the evidence is legally insufficient, we must be persuaded that reasonable minds could not differ

on the matter in question. Id. at 25. When reviewing a challenge to the factual sufficiency of the

evidence, we must consider, weigh, and examine all of the evidence in the record. Plas-Tex, Inc. v.

U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We set aside the finding only if it is so contrary

to the great weight and preponderance of the evidence as to be clearly wrong and unjust. Ortiz v.

Jones, 917 S.W.2d 770, 772 (Tex. 1996).

A party attempting to overcome an adverse fact finding as a matter of law must

surmount two hurdles. Anderson, 806 S.W.2d at 795 & n.3. First, the record must be examined for

4 evidence that supports the finding, while disregarding all evidence to the contrary. Id. at 795.

Second, if there is no evidence to support the finding, the entire record must then be examined to see

if the contrary proposition is established as a matter of law. Sterner v. Marathon Oil Co., 767

S.W.2d 686, 690 (Tex. 1989).

The law is well settled. Unless the parties have agreed otherwise, a person making

or purporting to make a contract with another as agent for a disclosed principal does not become a

party to the contract. A to Z Rental Ctr. v. Burris, 714 S.W.2d 433, 435 (Tex. App.—Austin 1986,

writ ref’d n.r.e.); see also Burch v. D. L. Hancock, 56 S.W.3d 257, 261 (Tex. App.—Tyler 2001, no

pet.); Restatement (Second) of Agency § 320 (1957). If, however, the principal remains undisclosed,

or if it is known that a person is acting as an agent but the principal’s identity is not disclosed, the

agent is a party to the contract. Restatement (Second) of Agency §§ 321, 322 (1957); see Boyles v.

McClure, 243 S.W. 1080, 1081-82 (Tex. Comm. App. 1922, judgm’t adopted); see also 12 Williston

on Contracts § 35:43 (4th ed. 1999).

For an agent to avoid personal liability, he must disclose to the contracting party his

intent to sign as a representative as well as the identity of his principal; the party with whom the

agent deals has no duty to discover the principal. Burris, 714 S.W.2d at 435; Mahoney v. Pitman,

43 S.W.2d 143, 146 (Tex. Civ. App.—Amarillo 1931, writ ref’d). Uncommunicated intent will not

suffice. Seale v. Nichols, 505 S.W.2d 251, 255 (Tex. 1974). The inference that the agent is a party

to the contract exists until the agent gives such complete information concerning the principal’s

identity that the principal can be readily distinguished; if the other party has no reasonable means

of ascertaining the principal, the inference prevails unless the parties have agreed otherwise. Burris,

5 714 S.W.2d at 435; see also Restatement (Second) of Agency § 321 cmt. a (1957). Disclosure of

an agency, then, is incomplete to relieve an agent from liability unless it also includes the identity

of the principal. Burris, 714 S.W.2d at 435.

The burden does not fall on the party dealing with the agent to discover the existence

of the relationship merely because he had a means of discovering the agent’s representative capacity.

Id.; Anderson, 398 S.W.2d at 794. Actual knowledge of the existence and identity of the principal

is the test; the contracting party’s suspicion is not sufficient. Southwestern Bell Media, Inc. v.

Trepper, 784 S.W.2d 68, 71 (Tex. App.—Dallas 1989, no writ); Burris, 714 S.W.2d at 435; see also

Johnson v. Armstrong, 18 S.W. 594, 595 (Tex. 1892); Carter v. Walton, 469 S.W.2d 462, 471 (Tex.

Civ. App.—Corpus Christi 1971, writ ref’d n.r.e.). In determining whether sufficient disclosure of

an agency relationship was made, we look to the time that the parties entered into the contract.

Posey v. Broughton Farm Co., 997 S.W.2d 829, 832 (Tex. App.—Eastland 1999, pet. denied);

Lacquement v. Handy, 876 S.W.2d 932, 940 (Tex. App.—Fort Worth 1994, no writ). Knowledge

acquired after a cause of action has accrued cannot affect the right to recover from the agent

personally on a contract. See Dodson v. Peck, 75 S.W.2d 461, 463 (Tex. Civ. App.—Amarillo 1934,

writ dism’d w.o.j.).

This case turns on the findings of fact by the trial court. The issue of disclosure is a

question of fact. Lacquement, 876 S.W.2d at 939. Where conflicting evidence is presented

concerning disclosure, the issue must be resolved by the trier of fact. Id. We are not authorized to

substitute our assessment of the evidence for that of the trial court. Southern States Transp., Inc. v.

6 State, 774 S.W.2d 639, 640 (Tex. 1989). If the trial court’s findings are supported by probative

evidence, then we may not disregard them as a matter of law. Id.

Deyoe challenges the trial court’s finding that he contracted with Gray Jansing

individually rather than as an agent. Here, the trial court heard evidence that Deyoe signed a contract

with Gray Jansing for engineering services on a project known as the Cameron Place Apartment

Project. The proof at trial showed that the sole agreement between the parties, the Engineering

Services Agreement, was signed by John Jansing for Gray Jansing and by Rick Deyoe with no

company identified next to his name. The letter agreement was addressed to Deyoe in care of

Cameron Place Ltd. at the address for Realtex. Gray Jansing submitted its monthly invoices for

work done on the project to Deyoe at Realtex. Deyoe testified that he informed Gray Jansing of the

address for the contract. Two of the invoices were paid with checks drawn on Realtex’s operating

account; the checks were signed by Deyoe. Despite these payments, Deyoe never notified Gray

Jansing that he was not the party responsible for the payments. Jansing testified at trial that Deyoe

never identified anyone else who was responsible for the payment of the invoices. Jansing testified

that he was “not aware of any other parties, any other owners, any other side agreements whatsoever.

I dealt solely with Mr. Deyoe on this project in relation to setting up the project, reviewing the

project, and proposing our services to complete the project for him.” Jansing also testified that he

“was led to believe that Mr. Deyoe was the owner of the project,” and that he always believed he was

doing business with Deyoe.

Deyoe testified that he was the president and sole shareholder of Realtex

Development Corporation. His relationship to the Cameron Place defendants was less clear. When

7 asked whether he was the president of Cameron Place II, Inc., he responded, “I was appointed to that

position by Charlie Palmer.” He did not know whether he remained the registered agent for the

company and could not recall whether he had incorporated the company, but he recalled that he or

his company had paid an attorney for the incorporation of Cameron Place II, Inc. The following

testimony transpired on examination of Deyoe by opposing counsel:

Q: You are a limited partner in Cameron Place, Ltd., aren’t you?

A: No.

Q: You were at one time, weren’t you?

A: I don’t know.

Q: And you did not know at the time of your deposition, on November 12th, whether you were ever a limited partner in Cameron Place, Ltd., did you?

Q: You have not done anything since November 12, 2002 to determine whether or not you are a limited partner in Cameron Place, Ltd., have you?

Q: Okay. You are a limited partner for Cameron Place I, Ltd., aren’t you?

Q: Well, at the time of your deposition, November 12th, you said that you did not know if you were a limited partner for Cameron Place I, Ltd. Do you now know for sure that you are not a limited partner?

Q: Okay. You have not done anything in the last eight months to determine whether or not you are now or ever were a limited partner for Cameron Place I, Ltd., have you?

8 On examination by his counsel, Deyoe recalled that he had not received a K-1 statement for Cameron

Place, Ltd. or for Cameron Place I, Ltd., which, according to Deyoe’s testimony, would “indicate

[he] was never a limited partner.” Deyoe testified that the address on the agreement belonged to

Realtex and that he had given the address to Jansing for purposes of the contract. He denied

knowledge of any bank accounts opened for the Cameron Place defendants and of Realtex’s

payments to eight entities on behalf of Cameron Place in the amount of $52,000. Deyoe further

testified that any money paid by Realtex was funded by Charlie Palmer. Upon receipt of the invoices

from Gary Jansing, Deyoe would contact Palmer and Palmer would wire the funds. The evidence

at trial showed Deyoe had received and maintained records for wire transfers from Palmer in the

amount of $25,000.

In a pre-trial Request for Disclosure admitted into evidence, Deyoe stated that he and

Realtex “have no affiliation with the Cameron Place entities.” He testified at trial, however, that he

worked for them and acted as their agent. When asked whether he had ever disclosed to John

Jansing or to Gray Jansing that Charlie Palmer was the owner of Cameron Place, Ltd., Deyoe could

not recall. Deyoe testified that he and Realtex were originally the developer of the project but that

“Charlie Palmer decided he wanted to take over the development and it was his project.” Deyoe did

not know whether Jansing knew that Palmer took over the project and could not recall whether he

told him that information.

Apart from his testimony in support of his contention that Gray Jansing had actual

knowledge, Deyoe places significance on the fact that when Gray Jansing initially filed suit, it sued

only Cameron Place, Ltd. Deyoe was identified only as the registered agent of Cameron Place, Ltd.

9 in the original petition. Deyoe and the other parties were later added to the lawsuit in the first

amended petition, which was filed when Gray Jansing changed legal counsel. From this, Deyoe

argues that Gray Jansing had actual knowledge of the agency relationship and that he “judicially

admitted” that the party owing the debt was Cameron Place, Ltd., not Deyoe or Realtex. But

statements contained in superseded pleadings—unlike live pleadings—are not conclusive and

indisputable judicial admissions. Sosa v. Central Power & Light, 909 S.W.2d 893, 895 (Tex. 1995).

In any event, this issue was waived when contrary evidence was introduced and appellant failed to

object.

We have reviewed the record and conclude that there is evidence in the record to

support each of the findings of fact. Specifically, the evidence in the record supports the trial court’s

finding that Deyoe signed the contract in his individual capacity, that it obligated Deyoe and

Cameron Place, Ltd. to perform under the contract, and that Deyoe did not disclose to Gray Jansing

any intent to sign the contract as an agent for any other person or entity. To be sure, Deyoe disputes

that he signed in his individual capacity. He offered no testimony, however, that he represented to

Jansing or anyone at Gray Jansing that he was acting on behalf of Charlie Palmer or Cameron Place.

Jansing’s testimony that he thought Cameron Place, Ltd. was also a party to the contract is at odds

with his other testimony that “I never understood there to be anybody else involved other than Mr.

Deyoe. I was never told that there were any other parties involved.” For Deyoe to avoid liability,

however, he must disclose both that he is acting in a representative capacity and the identity of the

principal. The record does not reveal any great weight of evidence contradicting the trial court’s

findings in this case.

10 In both Burris and Lacquement, the courts held the agent liable because the

contracting party had no knowledge of the unidentified principal in the transactions. 714 S.W.2d

at 437; 876 S.W.2d at 940. In those cases, the agent disclosed his representative status, but failed

to disclose the true identity of the principal. Likewise, here the court found that Deyoe failed to

disclose his intent to sign as agent or the principal’s actual identity. The remaining question is

whether Gray Jansing had actual knowledge. The ownership of the Cameron Place defendants and

the relationship between Charlie Palmer and Deyoe remained contradictory even in Deyoe’s

testimony at trial. Deyoe testified that Palmer took over the development of the Cameron Place

project, but he could not recall whether he ever informed Jansing that Palmer was the owner or

developer of the Cameron Place project. At most, the identity of Cameron Place—but not its

role—was known to Gray Jansing. Because the duty to disclose lies with the agent—and the party

with whom the agent deals is not obligated to discover the existence of a principal or his identity—a

party’s mere knowledge that others are somehow involved does not transform it into knowledge of

agency sufficient to defeat liability. See Burris, 714 S.W.2d at 437.

It was for the trial court to resolve the conflicting testimony, and the court was

entitled to evaluate the witnesses’ credibility and accept or reject some or all of the testimony. This

Court is not a fact-finder and may not pass on the credibility of the witnesses or substitute its

judgment for that of the trier of fact, even if a different conclusion could be reached on the evidence.

See Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988). Because there was evidence to support

the trial court’s finding that the agency relationship was undisclosed and that Deyoe signed the

11 contract in his individual capacity, we hold that the evidence is legally and factually sufficient to

support the trial court’s findings.

Having overruled Deyoe’s issues, we affirm the judgment of the trial court.

Jan P. Patterson, Justice

Before Chief Justice Law, Justices Patterson and Puryear

Affirmed

Filed: March 17, 2005