1 Cothay V. Feunell, 10 b. & c. 671.

U

1G2 prinCirAl and tiiikd party.

a person not a party to a contract may nnqnostionably sue

and also 1)C sued is the case of tlie undisclosed principal.

В§ 121, Suits against undisclosed principal.

The action against an undisclosed i)i-incipal rests logically

upon the ground that the principal's estate has had the

benefit of the contract and ought to bear the burden. This

doctrine is as old as the Year Books in which wc read that an

action of debt was maintained against an abbot on the count

that the plaintiff had lent money and sold a horse to a monk,

" which money and horse came to the profit of the house,

etc." ^ It is illustrated in many modern cases, where, clearly,

the decision need not go further than the doctrine that where

the principal's estate is unjustly enriched at the expense of the

third party's, the latter may maintain assumpsit for the value

of the benefit conferred.^ Such an action does not logi-

cally rest upon a true contractual obligation arising from the

assent of the parties, but upon a quasi-contractual obligation

created by the law on grounds of justice and fair dealing.

But for the aid of the fiction of identity of principal and

agent the courts might have been driven into so treating it.

and limiting the recovery to the measure of benefits conferred.

In that case the doctrine would never have been extended to

include the second half of the rule which gives the undisclosed

jirincipal an action against the third party, except in the case

where the third person's estate had Ijcen unjustly enriched at

the expense of the principal's.

This is illustrated in the case of Kayton v. Barnctt.^ X

having declined to sell to P, the latter procured A to purchase.

X expressly stated that he would not sell to P, and A there-

upon assured X that he was not buying for P but for himself.

1 Y. B. 34 & :55 Edw. I. pp. 560-560 (1307). See also Doctor and Stu-

dent (1518), where we read (l)ia. ii. cli. 42): ''If the .servant lu that

case buy them in his own name, not speaking of his master, the master

shall not be charged, unless the things bought come to his use." xiud

see Gurratt v. Culluin, stated in Scott v. Surman, Willes, 400, 405.

2 Nelson v. Powell, 3 Doug. 410; Wilson v. Hart, 7 Taunt. 205; Kay-

ton V. Barnett, 116 N. Y. 625; Plenderson v. Mayhew, 2 Gill (INId.), 393.

В« 116 X. Y. 625.

CONTEACT FOR UNDISCLOSED PRINCIPAL. 163

X was nevertheless allowed to maintain an action against P

for the price. The court through FoUett, Ch. J., said : " Not-

withstanding the assertion of the plaintiffs that they would

not sell to the defendants, they, through the circumvention of

Bishop and the defendants, did sell the property to the de-

fendants, who have had the benefit of it, and have never paid

the remainder of the purchase-price pursuant to their agree-

ment. Bishop was the defendants' agent. Bishop's mind

was, in this transaction, the defendants' mind, and so the

minds of the parties met, and the defendants having, through

their own and their agent's deception, acquired the plaintiffs'

property by purchase, cannot successfully assert that they are

not liable for the remainder of the purchase-price because

they, through their agent, succeeded in inducing the de-

fendants to do that which they did not intend to do, and,

perhaps, would not have done had the defendants not dealt

disingenuously."

Here is a curious mixture of the equitable notion that the

defendant ought to reimburse the plaintiff for the benefits

received, and the notion that the defendant had in verity

promised to do so because his agent had promised, and the

agent's mind is the principal's mind and so the minds of the

parties have met.

But the doctrine once established that the contract obliga-

tion rests upon assent, and it will speedily be extended beyond

the cases where benefits have been conferred, and the third

party will be given an action upon a bilateral executory con-

tract.i And actions will be given in cases where the principal

is guilty of no inequitable conduct, as where, for instance, he

has given his agent funds with wliich to purchase, and the

agent has purchased in his own name on credit, under circum-

stances where, had the agency been known, it would be reason-

able to infer that he had authority to purchase on credit.^

1 Episcopal Church v. Wiley, 2 Hill Ch. (S. C.) 584; s. c. 1 Riley,

Ch. (S. C.) 156; Schmaltz r. Avery, 10 Q. B. 655.

2 See remarks of Wallace, J., in Fradley v. Ilyland, 37 Fed. Rep. 49,

52-53, and the conclusion, " But it is probably too late to consider the

1G4 nuNcirAL and tiiikd party.

В§ 122. Suits by undisclosed principal.

Having reached the conclusion, by aid of the fiction of

identity, that the minds of the parties have met, it is easy

to invoke the doctrine of recijirocity or mutuality of con-

tract and hold that the undisclosed principal may also sue

the thiid party, although, in fact, the third party never

undertook and never intended to undertake an obligation

in favor of the principal,^ " The contract of the agent is

the contract of the principal, and he may sue or be sued

thereon, though not named therein ; and notwithstanding

tlie rule of law that an agreement reduced to writing may

not be contradicted or varied by parol, it is well settled that

the ])rincipal may show that the agent who made the contract

in his own name was acting for him."^ And so it follows

that a contract made between A and B, each believing the

other to be acting in his own behalf, may be shown to be a

contract between P and X, the two undisclosed principals.^

Earlier cases which held that only the promisee in the

written instrument could sue upon it/ must be regarded as

overruled or overwhelmed by later decisions which proceed

on the theory that the nominal promisee (the agent) and

the real promisee (the principal) are identical.

В§ 123. Parol evidence rule.

It is now settled law that the admission of parol evidence

to show that a written contract made in the name of the

agent was in fact made in behalf of an undisclosed, or

if disclosed, unnamed principal, does not violate the rule

questions thus suggested upon principle." See also Watteau v. Fenwick,

1893, 1 Q. B. 346 ; Hubbard v. Tenbrook, 124 Pa. St. 291.

1 Cothay v. Fennell, 10 B. & C. 671; Taintor u. Prendergast, 3 Hill

(N. Y.), 72; Eastern R. Co. v. Benedict, 5 Gray (Mass.), 561. For an

illustration of the difficulty of establishing this doctrine, see Scriuishire

V. Alderton, 2 Str. 1182.

2 Ford V. Williams, 21 How. (U. S.) 287; Burton v. Goodspeed, 69

111. 237.

8 Darrow v. Ilorne Produce Co., 57 Fed. Rep. 463.

* United States v. Parmele, 1 Paine (U. S. C. C), 252. Cf. Hunting-

ton V. Knox, 7 Cush. (Mass.) 371.

COXTKACT FOR UNDISCLOSED rKINGirAL. 165

against the admission of parol evidence to vary the terms

of a written contract.^ " Whatever the original merits of

the rule that a party not mentioned in a simple contract in

writing may be charged as principal upon oral evidence,

even where the writing gives no indication of an intent to

bind any other person than the signer, we cannot reopen it,

for it is as well settled as any part of the law of agency." ^

And this rule extends to contracts required by the Statute

of Frauds to be in writing.^ This rule must bo viewed in

connection with these qualifications : (1) that parol evidence