Douglas v. Steele ( 1991 )

BRIGHTMIRE, Judge.

Two issues are presented in this action for damages brought by the prepaid victims of a bankrupt Hawaiian tour operator against a local travel agent: (1) Whether a judgment entered individually against a travel agent described as doing business as a corporation is void for uncertainty; and (2) whether a travel agent may be held personally liable for nondelivery of a promised vacation by a nonparty tour company.

We answer the first issue in the negative, and the second in the affirmative and affirm the judgment.

I

There is little dispute concerning the operative facts.¹ The plaintiffs, Ben C. and Carol Douglas, planned to celebrate their twenty-fifth wedding anniversary during a vacation in Hawaii. In March 1986, they engaged the services of the defendant, Linda Steele, a travel agent doing business as The Travel Haus, Inc., in Stillwater, Oklahoma. The agent suggested various trips and the Douglases, after reviewing the available options, selected a package offered by a tour company called Total Hawaii. There was evidence that the agent suggested to the Douglases another tour operator but they preferred the Total Hawaii trip. The Douglases paid the agent $1,348 cash and received a receipt dated March 4, 1986. The agent then made a check dated “March 3, [sic ] 1986,” to Total Hawaii in the amount of $1,213.20 and kept the balance as a commission for her services. On March 10, 1986, the check was deposited in the Valley Bank of Nevada by Trans Ocean Travel and Leisure, Inc., to its general account.² The check bore confirmation No. 860303001246EEW. There is no evidence, however, that the Douglases promptly received their airline tickets, hotel bookings, or other confirmation of their travel plans, nor any explanation from the agent as to why they did not. These circumstances, as we point out later on, permit an inference that the corporate parent of Total Hawaii was bankrupt when the money was sent on March 3,1986, and that such condition could have been discovered by the agent before forwarding the money entrusted to her by the Douglases.

The Douglases evidently waited for quite some time and when they did not receive their tickets or hear from their agent, they contacted her and were informed that Total Hawaii had filed for bankruptcy. So, on March 9, 1989, having never received the promised trip or a refund of their money, the Douglases filed this small claims action against the agent.

A bench trial was held April 7,1989, with both parties appearing pro se. Ben Douglas and Linda Steele were the only witnesses to testify. A narrative statement of the trial evidence indicates that the trial court made these findings: (1) The Douglases were offered a selection of trips to choose from by the agent; (2) the Douglases relied on the agent’s services and recommendations in selecting a trip; (3) the Douglases received nothing in return for their $1,348 cash consideration; (4) the agent, rather than the Douglases, should have pursued a claim against Total Hawaii in bankruptcy court; and (5) the agent failed to raise the misjoinder or nonjoinder of parties defendant at trial. The court entered judgment for the Douglases for $1,348 plus costs.

From this adverse judgment the agent appeals.

II

Agent Steele first contends that the Douglases sued a “non-entity” and therefore the challenged judgment is void and unenforceable.

The argument is that a judgment rendered against “Linda Steele doing business as The Travel Haus, Inc.” is an improper combination of two legal entities, i.e., an individual and a corporation, and therefore the defendant was not named with sufficient certainty to constitute a valid judgment.

This contention is without merit. The initiating small claims affidavit names Linda Steele as the party who allegedly was personally indebted to the Douglases. The mere fact that the descriptive phrase “dba The Travel Haus Inc.” was added to Steele’s name on the affidavit, and that the judgment was rendered against the agent using the same appellation, neither transforms the individualization of Linda Steele as the defendant nor impairs the validity of the judgment. Absent a showing at trial that the agent was acting only in a representative capacity for a valid and subsisting corporation, such identifying language is to be considered no more than descriptio personae. German-American Mercantile Bank v. Ripley, 124 Wash. 322, 214 P. 160 (1923).

To recapitulate, we are not here dealing with a situation where the plaintiffs sued and obtained judgment against a legally nonexistent entity. See Causey v. Carpenters S. Nev. Vacation Trust, 95 Nev. 609, 600 P.2d 244 (1979). Nor where the defendant was sued in his official or representative capacity and judgment was erroneously entered against him individually. See Reed v. Molony, 38 Cal.App.2d 405, 101 P.2d 175 (1940). Here the agent was sued as an individual. She defended as an individual. And the judgment properly treated her as an individual.

It may be noted that the agent, of course, could have complained about the appellation or the nonjoinder of The Travel Haus, Inc., by pretrial motion or at the hearing on the merits. 12 O.S.Supp.1990 §§ 2012, 2019. Or, if she felt aggrieved by being made a party, she could have sought, on motion raised “at any stage of the action,” an order dismissing her as a mis-joined party. 12 O.S.Supp.1990 § 2021. But, as the trial court pointed out, the agent never raised any issue about her status or capacity at any stage of the trial court proceedings and therefore waived the right to complain of a defect of parties defendant on appeal. Johnston v. Woodard, 376 P.2d 602 (Okl.1962); Finance Corp. v. Modern Materials Co., 312 P.2d 455 (Okl.1957).

Ill

The agent next argues that she is not liable under the law of agency for the Douglases’ loss caused by Total Hawaii’s nonperformance of its contractual obligations to provide them with an island vacation. She contends that she was a disclosed agent for either The Travel Haus, Inc. or Total Hawaii and is not individually liable for breach of contract by either.

First of all, there is no question that the agent is liable to the Douglases for $134.80, the sum she retained as compensation for the services she was to perform on their behalf in arranging for a trip that was never delivered. The only other question then is whether the agent is liable to the Douglases for the remaining $1,213.20 she received from them.

We hold that she is. There is no evidence that the agent was acting in any capacity other than as the Douglases’ agent when she made the arrangements for their Hawaiian holiday. According to Restatement (Second) of Agency § 1 (1957):

“(1) Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.

(2) The one for whom action is to be taken is the principal.

(3) The one who is to act is the agent.”

An agent who handles travel and vacation plans is a special agent of the traveler for the purposes of that one transaction between the parties. McCollum v. Friendly Hills Travel Center, 172 Cal. App.3d 83, 217 Cal.Rptr. 919 (1985). And this is so even though the agent’s compensation may be paid by the company to whom she steers the business, much like an advertising agent. Thus, the agent’s contention that she was a disclosed agent of Travel Haus or Total Hawaii is contrary to both the law and the facts.

Defendant Steele was a paid agent for the Douglases and, for a portion of the money they paid, she promised to assist them in the planning of their vacation. She had a duty to act with the care, skill and diligence a fiduciary rendering that kind of service would reasonably be expected to use. Restatement (Second) of Agency § 379(1). Such duty included the exertion of reasonable efforts to give her principals information relevant to the affairs entrusted to her, and among other things, required her to use due diligence in making reasonable inquiry into the current financial stability and performance of the person or entity with whom she recommended her principals do business. Restatement (Second) of Agency § 381. This agency relationship also imposed a duty to promptly communicate to her principals confirmations and all other relevant information about the proposed travel plans and tours which would help them protect themselves from harm or loss.

In Josephs v. Fuller (Club Dominicus), 186 N.J.Super. 47, 451 A.2d 203, 205 (1982), the court observed with a good deal of common sense that “it would be absurd to hold that [the travel agency] had no duty to acquire any knowledge of the facilities it was booking. Plaintiffs could well have made their own arrangements, choosing a resort at random. But rather than risk a substandard vacation, they took advantage of the service offered by defendant.”

Here, if the agent knew or with the use of reasonable inquiry could have known of the possible insolvency or impending bankruptcy of Total Hawaii’s parent corporation, she had a duty to inform the Douglases of this fact at the time they made their tour selection, or at least before they paid for the trip. This does not mean, of course, that a travel agent’s duty of loyalty to his principal requires him to assume an absolute risk of nonperformance by third parties or become a guarantor of the safety of the principal’s funds. See Hervey v. American Airlines, 720 P.2d 712 (Okl.1986); Rookard v. Mexicoach, 680 F.2d 1257 (9th Cir.1982). But a travel agent does have a duty to discover and disclose to his principal material information which is reasonably obtainable unless the information is so clearly obvious and apparent to the principal that, as a matter of law, the travel agent would not be negligent in failing to disclose it. McCollum, 217 CaLRptr. at 925.

The evidence here is that for some undisclosed reason the agent suggested that the Douglases not use Total Hawaii. This implies that she had a reason. Such reason was not disclosed. If, for instance, rumors had reached the agent that Total Hawaii was having financial difficulties or there had been an unusual number of complaints about its performance or service, this information should have been imparted to the Douglases. Here, as we said, nothing was communicated.

The fact that the agent suggested that the Douglases use a different tour operator, coupled with the fact that they received no immediate response or confirmation in the form of airline tickets, hotel reservations, or any other communication from either the agent or Total Hawaii, permits an inference that the agent had some adverse information about Total Hawaii which she should have imparted to her principals or, if she did not have such information, she should have. In other words, these circumstances, as we mentioned earlier, should have put the agent on notice that something was amiss requiring her to make a timely investigation to determine the cause of the delay and take appropriate steps to protect the Douglases from loss.

Finally, the trial court could have also found from the evidence that the agent should have checked on Total Hawaii in advance of releasing the Douglases’ money to it, and that she failed to do so. It was uncontroverted that upon receipt of the Douglases’ vacation funds, the agent promptly forwarded a check, less her commission, to Total Hawaii, and never followed through with the fulfillment of her duties to the Douglases.

These circumstances made out a prima facie case of liability. It then became necessary for the agent to overcome it with countervailing evidence. We find none in the record.

The trial judge found the issues in favor of the Douglases and her findings are presumed to be correct. Golsen v. ONG Western, Inc., 756 P.2d 1209 (Okl.1988).

IV

The judgment appealed is therefore affirmed.

REIF, P.J., concurs. MEANS, J., dissents.

1 . This action was filed in the small claims division of the District Court of Payne County. No stenographic report of the trial was made. A narrative statement of the trial proceedings, however, was settled and approved by the trial judge and included in the record on appeal. Civil Appellate Procedure Rule 1.22, 12 O.S.Supp.1990, ch. 15, app. 2.

2 . The endorsement stamp stated Trans Ocean Travel & Leisure, Inc., was "aka Total aka Total Las Vegas aka Total Hawaii."