ATLANTIC SALMON A/S v. Curran

Massachusetts Appeals Court
32 Mass.App.Ct. 488, 591 N.E.2d 206 (1992)
ELI5:

Rule of Law:

An agent who enters into a contract on behalf of a principal has a duty to disclose both the fact of the agency and the identity of the principal. Failure to disclose the principal's identity renders the principal partially disclosed, making the agent personally liable on the contract.


Facts:

  • Beginning in 1985, the defendant, Curran, began purchasing salmon from plaintiffs, Salmonor A/S and Atlantic Salmon A/S.
  • Curran represented himself as an agent for corporate entities named "Boston International Seafood Exchange, Inc." or "Boston Seafood Exchange, Inc."
  • Curran used business cards, checks, and advertising bearing these corporate names, signing checks with the designation "Treas."
  • In reality, no corporations with these names existed.
  • Curran was the sole owner of a separate, legally distinct corporation named "Marketing Designs, Inc.," which had been formed to sell motor vehicles.
  • At the time the debts to the plaintiffs were incurred in 1988, Marketing Designs, Inc. had been administratively dissolved.
  • Curran never informed Salmonor or Atlantic of the existence of Marketing Designs, Inc., and they were unaware of it until after litigation began.

Procedural Posture:

  • Salmonor A/S and Atlantic Salmon A/S (plaintiffs) sued the defendant in Massachusetts Superior Court (trial court) to recover debts.
  • Following a jury-waived trial, the Superior Court judge entered a judgment in favor of the defendant.
  • The plaintiffs (appellants) appealed the judgment to the Appeals Court of Massachusetts.

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Issue:

Is an agent personally liable for debts incurred on behalf of a principal when the agent fails to disclose the principal's true identity, even if the other party knows the agent is acting in a representative capacity for some corporate entity?


Opinions:

Majority - Warner, C.J.

Yes, an agent is personally liable for debts incurred on behalf of a principal when the agent fails to disclose the principal's true identity. When the other party has notice that the agent is acting for a principal but does not have notice of the principal's identity, the principal is considered partially disclosed, and the agent is a party to the contract. The court reasoned that the duty to disclose the principal's identity rests squarely on the agent, not on the third party to discover it. The plaintiffs' potential ability to find the principal's identity by searching public records is irrelevant; the standard is actual knowledge. Using trade names like "Boston Seafood Exchange" is not a sufficient disclosure of the principal's true identity, which was "Marketing Designs, Inc." Therefore, because Curran failed to provide actual knowledge of his principal's identity, he is personally liable for the debts.



Analysis:

This decision reaffirms the strict duty of an agent to provide actual, unambiguous notice of the principal's identity to avoid personal liability. It clarifies that merely indicating that one is acting for a corporation or using a trade name is insufficient disclosure. The ruling underscores that the burden of discovery is not on the third party, even if public records could reveal the principal's identity. This holding protects third parties in commercial transactions and serves as a strong deterrent against agents using ambiguous or fictitious business names to obscure their principal's identity.

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