Angroson, Inc. v. Independent Communications, Inc.
1986 Tex. App. LEXIS 7853, 711 S.W.2d 268 (1986)
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Rule of Law:
A contract executed by an agent who lacks authority to bind their principal is unenforceable and does not bar the aggrieved party from recovering the reasonable value of their services in quantum meruit from the principal who knowingly accepted the benefits.
Facts:
- Independent Communications, Inc. (I.C.I.) leased unfinished retail space in a mall.
- Frank Ramirez, an I.C.I. employee, contracted with general contractor Angroson, Inc. for construction work to finish the space.
- Ramirez signed the contract on behalf of Fone Factory, Inc., an affiliate corporation of I.C.I., but he was not an authorized agent for Fone Factory, Inc.
- Angroson completed the construction work as specified.
- After construction was complete, I.C.I. subleased the finished space to Fone Factory, Inc., which began operating its business there.
- When Angroson demanded payment, I.C.I. made a partial payment of $25,000 but refused to pay the full amount due.
- Both I.C.I. and Fone Factory, Inc. disclaimed any liability on the contract signed by Ramirez.
Procedural Posture:
- Angroson, Inc. sued Independent Communications, Inc. and Fone Factory, Inc. in trial court, alleging breach of contract and, alternatively, quantum meruit.
- Prior to submission to the jury, Angroson withdrew its breach of contract claim and proceeded solely on the theory of quantum meruit.
- The jury returned a verdict in favor of Angroson, awarding it the reasonable value of its services.
- The trial court initially entered a judgment on the jury's verdict against both defendants.
- Subsequently, the trial court set aside its judgment and entered a judgment notwithstanding the verdict (judgment n.o.v.) in favor of the defendants, finding that a valid contract existed which precluded recovery in quantum meruit.
- Angroson, as appellant, appealed the judgment n.o.v. to the intermediate court of appeals.
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Issue:
Does a contract signed by an unauthorized agent on behalf of a principal constitute a valid, express contract that bars recovery in quantum meruit for services rendered under that agreement?
Opinions:
Majority - Guillot, Justice
No. A contract signed by an unauthorized agent is not a valid, enforceable contract and therefore does not preclude recovery in quantum meruit. Under Texas law, a contract executed by an agent on behalf of a principal without authority is not enforceable. The other party's recourse against the agent is not on the contract itself, but for a breach of the agent's implied warranty of authority. Because the underlying contract is unenforceable, it cannot serve as a bar to an equitable claim for quantum meruit against a party that knowingly accepted and benefited from the services. In this case, both I.C.I. and Fone Factory, Inc. benefited from Angroson's work, and their president, Larry Christensen, was aware of the construction and Angroson's expectation of payment, thereby making a quantum meruit claim appropriate to prevent unjust enrichment.
Analysis:
This decision reinforces the distinction between an unenforceable contract and a valid contract as it relates to the equitable remedy of quantum meruit. It clarifies that for a contract to bar a quantum meruit claim, it must be legally enforceable; one executed by an unauthorized agent is not. The case also provides a strong example of imputing knowledge to affiliated corporations through a common officer, holding both entities liable when they share a controlling agent who knowingly accepts the benefits of the plaintiff's services. This strengthens the position of contractors and service providers who perform work under agreements later found to be invalid due to a lack of agent authority.
