Opinion
Rehearing Granted April 28, 1930
Appeal from Superior Court, Stanislaus County; L.W. Fulkerth, Judge.
Action by Belle Klinger against the Modesto Fruit Company, Inc., and others. Judgment for plaintiff, and named defendant appeals.
Reversed. COUNSEL
T.B. Scott, of Modesto, for appellant.
Frank B. Collier and J.M. Cross, both of Modesto, for respondent.
L.J. Maddux, of Modesto, for defendants.
OPINION
R.L. THOMPSON, J.
This is an appeal from a joint and several judgment against agents and their undisclosed principal for the purchase price of grapes. The plaintiff is not entitled to judgment against both parties under such circumstances, and the judgment is therefore erroneous.
The complaint alleges that the defendants Horton and Gibson, as the agents of the Modesto Fruit Company, a corporation, purchased on consignment 17 carloads of black grapes from the respondent which were sold by the fruit company for the net sum of $7,102.43, no part of which was paid plaintiff, except the sum of $4,849.46, leaving a balance of $2,252.97 of the purchase price unpaid. It was specifically alleged that the defendants Horton and Gibson acted as the employees of the fruit company in that transaction without disclosing their agency. The liability of an undisclosed principal is clearly alleged.
The Modesto Fruit Company answered separately, setting up their written contract with the defendant Horton and denying his agency in the transaction. Each of the individual defendants answered separately. At the trial the court adopted findings to the effect that on May 12, 1926, the defendants Horton and Gibson entered into written contracts with the plaintiff to purchase the grapes in the name of B.W. Horton; that the Modesto Fruit Company "took over and assumed the contracts" on May 15, 1926, and that in the purchase of the grapes the defendants Horton and Gibson acted as the agents for the fruit company. The complaint and findings will support no other theory of the liability of the appellant. A joint and several judgment was thereupon entered against the defendants for the sum of $2,476.41.
This appeal was perfected by the Modesto Fruit Company only. Neither of the individual defendants appealed, and the judgment has become final against them.
Clearly the allegations of the complaint, the findings, and the judgment are based upon the theory that the Modesto Fruit Company is liable upon these contracts for the purchase of grapes as the undisclosed principal of Horton and Gibson. There are no findings to support the existence of a joint venture or a partnership between the several defendants in this transaction. Assuming that the evidence will support a judgment against the Modesto Fruit Company as the undisclosed principal of the other codefendants, the law is well settled that under such circumstances the vendor is not entitled to a judgment against both the principal and agent. When the agency is established, the creditor must designate which party he elects to hold responsible for the obligation. McDevitt v. Corriea, 70 Cal.App. 245, 254, 233 P. 381; Ewing v. Hayward, 50 Cal.App. 708, 718, 195 P. 970; 1 Cal.Jur. 858, § 134; 2 C.J. 843, § 526; 2 Mechem on Agency (2d Ed.) 1312, § § 1729-1759. Prosecuting a claim to judgment against an agent after securing knowledge of the interest of an undisclosed principal will be deemed to constitute an election to hold the agent on the part of the creditor and will relieve the principal from further liability. 2 Mechem on Agency (2d Ed.), 1338, § 1759; 2 C.J. 846, § 529; 21 R.C.L. 894, § 68; Murphy v. Hutchinson, 93 Miss. 643, 48 So. 178, 21 L.R.A. (N.S.) 785, note 788, 17 Ann.Cas. 611; Gay v. Kelley, 109 Minn. 101, 123 N.W. 295, 26 L.R.A.(N.S.) 742, note. When there is an issue as to the existence of the agency, both the agent and the alleged principal may properly be joined in the action for the purpose of determining their relationship. But since a creditor is not entitled to a judgment against both, a choice as to which party he elects to hold liable for the obligation should be made before the judgment is rendered. Tew v. Wolfsohn (N.Y.) 77 A.D. 454, 79 N.Y.S. 286, affirmed 174 N.Y. 272, 66 N.E. 934. The reason which is assigned for the necessity of requiring an election on the part of the creditor before the claim is reduced to a judgment is that the obligation rests upon a contract which by its terms binds only the agent who procures it, and the undisclosed principal is bound only because he is the real party for whose benefit the contract is procured. If the principal, under such circumstances, is liable, then the agent is not also liable, except for fraud in procuring the contract, which fraud was not alleged in the present case. There is but one contract and one obligation. It is not a joint or several obligation but rather an alternative one. Both parties may not be held, and the creditor must therefore choose before the entry of judgment which he will elect to hold. 2 Mechem on Agency (2d Ed.) 1331, § 1750. In the concurring opinion of Mr. Justice Finlayson in the case of Ewing v. Hayward, 50 Cal.App. at page 718, 195 P. 970, 975, it is aptly said:
"It seems that if, as in the instant case, the alleged undisclosed principal denies the existence of the relation of principal and agent, the party seeking to recover on the contract may commence the action against both the alleged undisclosed principal and his agent, in order to ascertain the facts. But though the plaintiff may bring the action against both, the rule, as I understand it, is that the plaintiff in such an action cannot have judgment against both the undisclosed principal and his agent, but, before the close of the case, must elect whether he will take a judgment against one or the other. See Sessions v. Block, 40 Mo.App. 569; Pittsburg Plate Glass Co. v. Roquemore (Tex.Civ.App.) 88 S.W. 449; Weil v. Raymond, 142 Mass. 206, 7 N.E. 860; Tuthill v. Wilson, 90 N.Y. 423; Mattlage v. Poole, 15 Hun (N.Y.) 556. *** The lower court, instead of requiring plaintiff to make an election at the close of the case *** entered judgment against both. This, I think, is ground for reversal."
The case of McDevitt v. Corriea, 70 Cal.App. 245, 233 P. 381, on principle is squarely in point and is decisive of this appeal. In that case the appellant Corriea & Bros. was a produce marketing corporation of San Francisco. It employed one Biggerstaff of Yuba county to purchase turkeys for the market season of 1922. Biggerstaff hired a man by the name of Corey to assist him. They bought the turkeys of plaintiff in their own names without disclosing their principal. The turkeys were not paid for. Suit was brought jointly against the produce marketing company and the individuals who contracted for the turkeys, for their contract price. Biggerstaff suffered judgment by default to be entered against him. Corriea & Bros. answered, denying the agency and alleging that the turkeys were shipped to them on consignment. The court found that the agency existed, but entered a joint and several judgment against all the defendants. Corriea & Bros. was the only defendant that appealed. In a well-considered opinion written by the late Justice Hart, the judgment in that case was reversed on the ground that the owner of the turkeys was not entitled to a judgment against both the agent and the principal, and that a choice as to which party the creditor elected to hold responsible should have been required.
For the foregoing reasons it becomes necessary to reverse the judgment in the present case so far as it applies to this appellant. It is so ordered.
We concur: FINCH, P.J.; PLUMMER, J.