Story Case

Crawford Kennedy, as agent for the Cherry Red Brick Company, made a contract with the Holtzer Machine Company for the purchase of machinery to be delivered as Kennedy instructed, on the first day of the following year. Kennedy did not disclose his principal at the time of making the contract. The Holtzer company was not ready to deliver on the day named, because of a fire in their plant, and since they had not protected themselves by covering such a possibility in their contract, Kennedy brought suit on the contract, stating, in the declaration to the Court, that he was acting as agent for the brick company. The Holtzer company then maintained that Kennedy could not recover in this suit, because he was an agent in making the contract. Is this a good defense!

Ruling Court Case. Colbum Vs. Phillips, Volume 3 Gray (Massachusetts), Page 64

Colburn made a contract with Phillips, by which the latter agreed to ship two hundred tons of stone from Salem to Norfolk, Virginia, at $175 a ton.

The plaintiff brought this action, alleging that he was acting as agent for Grant and Christey, in making the foregoing contract, and that his principal was compelled to pay a higher rate than agreed upon, which was paid under protest, and for the recovery of which this action is brought.

The defendant contended that the plaintiff had no claim, whatsoever, against him, because his declaration admitted that the contract, though made in his own name, was for the undisclosed principal, who, alone, should be permitted to sue.

Mr. Justice Hoar said: "In Sims vs. Bond, Volume 5 Barnewell & Adolphus (English), Page 393, Lord Denman asserts that, 'It is a well-settled rule of law, that where a contract, not under seal, is made with an agent in his own name for an undisclosed principal, either the agent or the principal may sue upon it.' "

Ruling Law. Story Case Answer

Since the third person is generally permitted to hold the agent, the agent is permitted to hold the third person upon contracts made for an undisclosed principal.

In the Story Case, the defense made by the Holtzer company is not good. The agent is permitted to sue when he has made a contract for an undisclosed principal.