Tew v. . Wolfsohn , 174 N.Y. 272 ( 1903 )

While special pleading at common law was a marvel of legal accuracy and clearness and had the advantage of presenting for determination by the jury sharply defined issues of fact formulated in advance of the trial, still, owing to its technical character substantial causes of action and defenses were often excluded and at times a party was defeated, not by the proofs, but by the pleadings. To correct these evils the Code introduced a radically different system of pleading, and required a party to state in his complaint only "a plain and concise statement of the facts constituting each cause of action without unnecessary repetition, and the demand of the judgment to which the plaintiff supposes himself entitled." Under the new system pleadings have been construed with great liberality, but manifestly there must be some limit to the application of this rule in order to protect the rights of the adverse party. The great strength of the complaint now before us lies, if I may be pardoned the seeming contradiction, in its weakness, its prolixity and its confusion of expression. It means all things to all men. The judge at Special Term and the majority of the judges in the Appellate Division have held that the complaint states a cause of action on which the defendant Paula Wolfsohn (the wife of the appealing defendant) is liable, because the appellant was her agent in making the contract for the breach of which the action is brought and on which the appellant is liable, because, though making the contract as an agent, he failed to disclose his principal; and both courts have held that the defendants could be sued in a single action. The question of joinder of parties upon which the decision below proceeded is not passed upon by my associates, some of whom construe the complaint as alleging a joint contract of both defendants, while the prevailing opinion suggests a doubt whether any cause of action is charged against the appellant. Thus the draftsman has formulated a complaint as to the construction of which the courts are not in accord, though all agree the decision should be in his favor. He may succeed on the trial by proving either a joint liability of both defendants or the several liability of the appellant by by reason of his failure to disclose the name of his principal, though it is yet to be determined whether an agent and an undisclosed principal can be sued in the same action, since that question will not survive the withdrawal of the demurrer. It seems to me, therefore, that the pleader is not justly subject to the criticism passed on him in the prevailing opinion. How could the most learned, logical and accurate of pleaders have done as well for his client?

Section 484 of the Code of Civil Procedure provides that causes of action can be joined only when, except as otherwise prescribed by law, they affect all the parties to the action. By section 488 a defendant may demur when causes of action have improperly been united. The objection that the causes of action stated do not affect all the defendants is as good a ground for demurrer as the objection that one cause of action is on a contract and another for personal injury. (Nichols v. Drew, 94 N.Y. 22.) I dissent entirely from the proposition "that in order to sustain a demurrer on this ground the complaint must contain two or more causes of action so well stated and so complete and perfect that the court can divide them into the necessary number of actions." If this were the rule of practice the plaintiff would be very foolish to state each cause of action "complete and perfect" when imperfection would avoid a demurrer. But the rule is to the contrary. "If the complaint contains several causes of action improperly united contrary to the Code as is claimed, the vice may be reached by a demurrer, and the failure of the plaintiff to state them separately and number them would not be an answer to it, nor would a failure to move to correct the complaint in this respect defeat the effect of a demurrer. The plaintiff cannot deprive the defendant of the benefit of a demurrer upon this ground by omitting to number his causes of action. A substantial remedy cannot be prevented by a neglect to observe the rules of practice, nor in a case like this would the defendant be regarded as waiving such remedy by not making this motion." (Goldberg v. Utley, 60 N.Y. 429. See, also, Wiles v. Suydam, 64 N.Y. 173.) As was said by Judge PRYOR in Adams v. Stevens (7 Misc. Rep. 468), "the demurrer is not obviated by the fact that the several causes of action are indistinguishably blended in a single count or complaint." If it is clear that in an indictment two offenses are intended to be set out in a single count, the indictment is bad for duplicity, even though one of the offenses is set out defectively. (Dawson v. People, 25 N.Y. 399.)

We now come to an examination of the allegations of the complaint. It first states that the appellant carried on business ostensibly on his own behalf, but, in fact, as the agent of his wife, and without disclosing his wife as principal; that a contract was entered into between the plaintiff and the appellant "acting as agent of his undisclosed principal, Paula Wolfsohn," whereby the plaintiff appointed the appellant his manager in America for a definite term and "whereby defendants agreed on their part that said Henry Wolfsohn would arrange a concert tour for the plaintiff," that the plaintiff performed the terms and conditions of said contract on his part; and "that defendants have wholly failed and refused on their part to perform the terms and conditions of the contract above set forth." It also alleged that the plaintiff paid the defendants a sum of money for which they failed to account. This last states a joint liability on the part of both defendants, but it is plainly a separate cause of action, for the suit is brought chiefly for damages for breach of the contract above recited. It is doubtless true that in a certain sense the breach of the contract declared on gave rise to but a single claim, but it by no means follows that it constituted but a single cause of action. Whether it created more than one cause of action depends on the number of parties liable for the breach and the character of their liability. A single claim even against a single party may give rise to separate causes of action when that claim is sought to be enforced on different grounds. In Wiles v. Suydam (64 N.Y. 173) the complaint, in a single count, charged the defendant with liability for a debt of a corporation of which he was both a stockholder and trustee, first, because no certificate of full payment of the stock had been filed;second, because no annual report of debts and liabilities had been made. It was held that there were two causes of action charged which under the Code could not be properly joined in the same action. In answer to the contention that because there was but one claim there was only one cause of action Chief Judge CHURCH said: "I am unable to concur in this view. The recovery of the debt is the object of the action, but a cause of action must have two factors, the right of the plaintiff and the wrong or obligation of the defendant. These must concur to give a cause of action. The cause of action against the defendant as a stockholder consists of the debt and the liability created by statute against stockholders when the stock has not been paid in and a certificate of that fact recorded. * * * The allegations against the defendant as trustee also constitute a distinct and perfect cause of action, but of an entirely different character. Here the liability is created by statute and is in the nature of a penalty imposed for neglect of duty in not filing a report showing the situation of the company." Apply that doctrine to the present case. There is but a single contract and a single breach. On that contract the wife is bound because the appellant was, in fact, her agent, and the appellant is liable because he did not disclose his agency and the name of his principal. If we assume that the liability of an agent and that of an undisclosed principal are several and not joint, a proposition I will discuss hereafter, it seems to me beyond question that there are two causes of action stated in the complaint, one against the principal and the other against the agent. With great deference to my associates I am compelled to say that I do not understand the argument that the allegations that the appellant pretended to conduct the business on his own behalf and without disclosing his wife as principal and that the wife was an undisclosed principal are immaterial and may be rejected as surplusage. Doubtless, so far as the plaintiff sought to charge the wife they are immaterial, but it must be remembered that the appellant here is not the wife but the husband, and the very life of the charge of liability on his part lies in the allegations referred to. Strike those allegations out and no cause of action is stated against him so far as a breach of the contract is concerned. That the failure of an agent in making a contract to disclose his principal renders him liable on the contract is unquestionable. (De Remer v. Brown, 165 N.Y. 410.) Had the appellant demurred on the ground that the complaint did not state a cause of action these allegations would have been a conclusive answer to his claim, yet now it is proposed to disregard them as surplusage. It is argued that the statement of the complaint that the appellant contracted as agent for his wife necessarily implies that he contracted in her name. It may be a sufficient answer to this to say that the complaint alleges directly to the contrary; that the husband assumed to act in his own behalf, and that the name of the wife was not disclosed. But apart from this, the statement of the complaint imports no such conclusion. Surely, it is possible that an agent may not disclose his principal. Otherwise, if there be no such thing, all books and the decisions have been far astray when discussing the liability of an undisclosed principal and of an agent who fails to disclose his principal. Though an agent does not disclose his principal he does, in law, contract as agent if the other party chooses to look to his principal, and his contract is properly so charged. Nevertheless, at the election of the other party, he may be treated as principal since he has held himself out as such. When, therefore, the complaint charged that the appellant was the agent of his wife it stated a good cause of action against her. When it stated that he failed to disclose his principal it stated a good cause of action against him.

That the liability of an agent of an undisclosed principal and that of his principal is several seems to me very clearly settled by authority. Judge Story, referring to this subject, says (Contracts, 266): "But we are not, therefore, to infer that the principal may not also, when he is afterwards discovered, be liable for the payment of the price of the same goods; for, in many cases of this sort, as we shall hereafter abundantly see, the principal and agent may both be severally liable on the same contract." Mr. Meechem lays down the rule (Agency, sec. 689): "The other party is at liberty on discovering the principal to elect to hold either the agent or the principal, but he cannot hold both." The authorities differ as to what constitutes an election, and in some cases it has even been held that the recovery of a judgment against the agent without satisfaction will not be deemed conclusive of such election. But no authority or text writer gainsays the doctrine that the question is one of election between the two, not of joint liability. So, inTuthill v. Wilson (90 N.Y. 423) it was held by this court through FINCH, J.: "The vendor could not enforce his claim against both the principal when discovered and the agents who contracted in his behalf. Granting that each was liable, both were not, for both could not be at one and the same time, since the contract could not be the personal contract of his agents and yet not their contract, but that of the principal. The vendor had a choice and was put to his election. (Meeker v. Claghorn,44 N.Y. 351.)"

At common law only parties jointly liable could be sued in the same action. This rule has been modified with us, but only to a certain extent. By section 454 of the Code of Civil Procedure (re-enactment of section 120, Code of Procedure, and of provisions of the Revised Statutes) two or more persons severally liable on the same written instrument may be included in the same action as defendants. But the right is strictly confined to the case of a written instrument. This is apparent from the course of legislation. As this section was originally enacted in 1876, it embraced in terms the case of parties "severally liable for the same demand, and, without reckoning offsets or counterclaims in the same amount, although upon different instruments." In 1877 the provision last cited was stricken out, leaving it in the form in which it now stands. Under this section it has been held that the maker and guarantor of a promissory note could not be sued in the same action, because the contract of guaranty was separate from the contract imported by the note, and that hence a demurrer lay by each defendant for improper joinder of action. (Barton v. Speis, 5 Hun, 60.) The decision seems to have been accepted as the law in the Supreme Court and generally followed in its decisions. The case of McLean v. Sexton (44 App. Div. 520), cited in the opinion in the court below, is not in point. The Code (sec. 339) expressly authorizes joinder in an action to foreclose a mechanic's lien of any person liable for the debt on which the lien is filed. Such an action is similar in character to an action for the foreclosure of a mortgage. There, also, it is provided by law that any party liable for the debt can be joined as a defendant and a personal judgment for any deficiency recovered against him. Therefore, in such an action, you may sue not only the bondsman, but all persons who, either by guaranty or by subsequent conveyance, have assumed payment of the debt. But in an action at law on the bond itself you can do nothing of the sort.

If, however, we assume that the construction of the complaint adopted by Judge O'BRIEN is correct, that the contract first declared on is that of the wife alone and that the allegations are insufficient to charge the husband with liability thereon, then it would seem perfectly plain that the demurrer is well founded, for then there are two causes of action stated, one against the wife alone on the original contract, and the second for money paid to the husband and wife jointly. There is but one theory on which it is possible to sustain this complaint, that is that the original contract was not the contract of the wife as principal nor that of the husband as an agent who contracted in his own name or without disclosing his principal, but the joint contract of both husband and wife. How this theory can be accepted, in face of the direct allegation that the contract was made by the husband, as agent of the wife, I cannot see.

The interlocutory judgment should be reversed, with costs to the appellant in all the courts, and the action against the appellant severed from that against the other defendant, with leave to the plaintiff to serve an amended complaint in the severed action upon payment of such costs.

PARKER, Ch. J., BARTLETT, HAIGHT, VANN, JJ. (and WERNER, J., in result), concur with O'BRIEN. J.; CULLEN, J., reads dissenting opinion.

Judgment affirmed.