Birmingham Matinee Club v. McCarty , 152 Ala. 571 ( 1907 )

McCLELLAN, J.

On this appeal, in our view, the vital and decisive question is May an undisclosed principal enforce, in breach of performance, a contract made by an agent fully authorized thereunto, in his own name, for the sale to and purchase by another of lands of the principal wherein it is stipulated that the ostensible seller (the agent in reality) will grant by warranty deed an unincumbered title? As a general rule, the principal, though undisclosed, is invested by the authorized act of the agent, for the benefit and advantage of the principal, with every right and burdened with every liability arising out of or pertaining to the contract as perfectly as if the principal had, in his own name and person, made the contract. — Mechem on Afency, § 768 et seq; Story on Agency, .§§ 160-162. But this rule is subject to au important exception, viz., that if the contract involves elements of personal trust and confidence, as a consideration moving from the agent (of the undisclosed principal), contracting in Ms own name, to the otlier party to the contract, the principal, while it remains executory, cannot, against the resistance of the other party, enforce it, either to compel performance by the other party or in damages for a breach. — Mechem on Agency, § 770; King v. Batterson, 43 Am. Reu. 13, 13 R. I. 117; Boston Co. v. Potter, 25 Am. Rep. 9, 123 Mass. 28; Winchester v. Howard} 93 Am. Dec. 93, 97 Mass. 303; 1 Ency. Law, pp. 1171, 1172, and notes; Story’s Agency, §§ 160, et seq and notes. The reason for this exception is manifest. If the party contracting without knowledge of the agency, were bound to take the service or conveyance or property from the undisclosed principal, the well-recognized rule that one may determine for himself with whom he will deal, with whom he will contract would be directly infracted; and the elements of the contract reasonably attributable to personal confidence and trust, including the financial responsibility of the agent, with whom he alone deals as principal, would be stricken of force to which under all principles of substantial justice and right the relying party is entitled to the benefit. Of course, it follows that for a failure or refusal, by the party dealing with the agent, to perform the contract, which was in reality, but unknown to be, the undertaMng of an undisclosed principal, and not the undertaking of the individual with whom made, the recalcitrant party, cannot be mulcted in damages by the developed principal.

Applying this principle to the case at bar, the appellant is without right to and cannot recover; and the judgment to that effect was well rendered. As in such cases, the erroneous (if so) action of the court below was without injury to it. The judgment, responding to the plea of recoupment, was properly rendered. The sum paid by the defendant ivas recoverable, the record affirmatively showing that the sum paid was received by the plaintiff. — Flinn v. Barber, 64 Ala. 193. The rat-ifiaction of the contract as urged, by the plaintiff wrought by the receipt of the sum paid by the defendant to Agee could not avail or compel the latter to accept the former as a; substitute for Agee with whom he dealt and whose warranty of title, only, he engaged to take.

There is no reversible error in the record and the judgment is affirmed.

Affirmed.

Tyson, C. J., and Dowdell and Anderson, JJ., concurring.