Winer v. Valentino
121 A.D.3d 1264, 995 N.Y.S.2d 255 (2014)
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Rule of Law:
An individual who signs a contract as an agent for an entity will be held personally liable if the agency relationship and the identity of the principal are not disclosed at the time of contracting. The use of a registered trade name alone is insufficient disclosure, and the other party has no duty to investigate the principal's identity.
Facts:
- Plaintiff entered into a contract to have a new home built by an entity identified in the contract as 'J & J Enterprises.'
- Defendant Joseph F. Valentino Jr. signed the contract, an accompanying specifications sheet, and a subsequent financial acknowledgment.
- Valentino's signatures did not include any title, reference to a corporation, or any other indication that he was signing in a representative capacity.
- The contract text did not mention that J & J Enterprises was a trade name for the corporation Jean M. Valentino, Inc., nor did it identify the corporation in any way.
- The contract documents used the pronouns 'he' and 'his' when referring to the builder.
- Unbeknownst to the plaintiff at the time of signing, J & J Enterprises was the registered trade name for the corporation, Jean M. Valentino, Inc.
Procedural Posture:
- Plaintiff commenced an action for breach of contract and warranty against defendant Joseph F. Valentino Jr. in the Supreme Court, Ulster County (the trial court).
- Plaintiff amended the complaint to add a corporation, Jean M. Valentino, Inc., as a defendant after discovering it did business under the trade name J & J Enterprises.
- Defendants moved to dismiss the claims against Valentino personally, arguing he was acting as an agent for a disclosed corporate principal.
- The Supreme Court granted the motion in part, dismissing the complaint against Valentino.
- Plaintiff, as appellant, appealed the dismissal to the Supreme Court, Appellate Division (an intermediate appellate court).
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Issue:
Does an individual who signs a construction contract using a trade name, without explicitly indicating their representative capacity or the corporate identity of the principal, remain personally liable on the contract even if the trade name is publicly registered to a corporation?
Opinions:
Majority - Rose, J.
Yes. An individual who signs a contract is personally liable unless they disclose both that they are acting as an agent and the identity of their principal at the time the contract is made. The court reasoned that for a principal to be considered 'disclosed,' the other party must have notice of both the agency relationship and the principal's identity. In this case, the contract identified the builder only by the trade name 'J & J Enterprises,' and Valentino signed without any reference to his role as a corporate officer. The court found that using a trade name, even a publicly registered one, does not constitute sufficient disclosure of the corporate principal. Furthermore, the plaintiff had no duty to investigate public records to uncover the principal's identity. Because disclosure must occur at the time of contracting, subsequent documents like insurance certificates were irrelevant. Therefore, the documentary evidence did not conclusively establish a defense that Valentino was merely an agent for a disclosed principal.
Analysis:
This decision reinforces the strict requirement for agents to clearly disclose their principal to avoid personal liability. It clarifies that merely using a trade name is insufficient to put a third party on notice of a corporate principal's existence, placing the burden of disclosure squarely on the agent. The ruling protects individuals and entities who contract with businesses, ensuring they know the true identity of the party with whom they are dealing. This precedent serves as a crucial reminder for business owners and agents to use precise language and sign contracts in a proper representative capacity (e.g., 'Jane Doe, President, XYZ Corp.') to maintain the corporate shield.
