Opinion
A95A2735
DECIDED MARCH 8, 1996
Action on debt. Crisp Superior Court. Before Judge Faircloth.
Wright Hyman, Thomas H. Hyman, for appellant.
James W. Hurt, for appellee.
The trial court granted summary judgment to Cordele Electric Supply in its suit to recover personally from L. J. Carpenter a debt related to his business, Midstate Electric Company. We reverse because Carpenter has shown genuine issues of fact remain on his sole defenses: that he incurred this debt as the agent of F. A. E., Inc., d/b/a Midstate Electric Company and that Cordele extended credit to the company, not to Carpenter.
Cordele Electric sued to recover amounts due for electrical supplies it sold to Midstate Electric on an open account between January and March, 1994. Cordele argued Carpenter was individually liable for the debt based upon the original credit application he made in October, 1990. The record shows Carpenter signed the application as "Officer or Owner" of the applicant company, "Midstate Electric Company." Carpenter was noted as the "person responsible for account," but the application mentions nothing of F.A.E., Inc. The application indicates Cordele extended a $2,000 credit line. The trial court found this application dispositive of Carpenter's personal liability.
In response to Cordele's motion for summary judgment, Carpenter submitted an affidavit in which he deposed that he signed this application as an officer of F.A.E., Inc. solely on behalf of Midstate Electric Company. He also presented 13 checks totaling in excess of $50,000 written to Cordele between May, 1992 and February, 1994 and drawn on the account of "F.A.E., INC. dba Midstate Electric Company." Although Carpenter signed these checks without indicating his representative capacity, he contended the checks were drawn as payment by F.A.E., Inc. for supplies purchased on this account and that Cordele accepted and negotiated these checks.
Summary judgment is appropriate only when the court, viewing all the facts and reasonable inferences in a light most favorable to the non-movant, concludes the evidence does not create a triable issue as to each essential element of the case. Lau's Corp. v. Haskins, 261 Ga. 491, 495(4) ( 405 S.E.2d 474) (1981). Here, the key issue is whether Carpenter sufficiently disclosed the identity of his principal — F.A.E., Inc. — so as to escape personal responsibility on the debt. Chambliss v. Hall, 113 Ga. App. 96, 98-99(2) ( 147 S.E.2d 334) (1966). To succeed on its summary judgment motion, Cordele had to show it did not know Carpenter purchased these supplies as an agent of F.A.E. Crolley v. Haygood Contracting, 201 Ga. App. 700, 702(3) ( 411 S.E.2d 907) (1991).
1. Contrary to the trial court's finding, the language of the credit application noting Carpenter as the "person responsible for account" does not control. Even if this language constituted Carpenter's personal promise to guarantee payment of any credit extended through this application, that personal guaranty was extinguished when Cordele extended credit beyond the $2,000 limit agreed to in the application. OCGA § 10-7-22; Southeastern Automotive Warehouse v. McCurdy, 205 Ga. App. 550, 551 ( 422 S.E.2d 574) (1992); West c. of Savannah v. Liberty Mtg. Corp., 160 Ga. App. 323, 324 ( 287 S.E.2d 320) (1981). This case turns on broader principles of agency.
2. A factfinder must determine whether Carpenter disclosed the identity of his principal. Here, the credit application does not mention Carpenter's corporate principal, but his affidavit shows for almost two years before Midstate incurred these specific debts, Carpenter paid the account with checks drawn on the corporation, F.A.E. The bills at issue were addressed to "Midstate Electric Company," not Carpenter. "[T]o protect the agent from personal liability, it is essential that the principal be disclosed to the third [party] at the time the transaction is being conducted." (Emphasis supplied; footnote omitted.) 3 AmJur2d 834, Agency, § 327. The fact that prior charges were paid by checks drawn on the account of a corporate entity may have put Cordele on notice that Carpenter acted only as an agent of F.A.E. when he incurred debts for these supplies in 1994. See Jensen v. Alaska Valuation Service, 688 P.2d 161, 164 (Alaska 1984) and Potter v. Chaney, 290 S.W.2d 44, 46 (Ky. 1956), in which those courts held an agent's use of corporate checks may amount to a disclosure of its corporate principal.
"Whether or not the fact of the agency and the identity of the principal were disclosed or known to the other contracting party is a question of fact which may be shown by direct or circumstantial evidence." (Citation and punctuation omitted.) Wojcik v. Lewis, 204 Ga. App. 301, 304(2) ( 419 S.E.2d 135) (1992); Brown-Wright Hotel Supply Corp. v. Bagen, 112 Ga. App. 300, 303 ( 145 S.E.2d 294) (1965). "While the fact that a trade name is used is a factor to be considered on the issue of disclosure of agency, . . . the use of a trade name is not necessarily a sufficient disclosure of the identity of the principal . . . ." Crolley, 201 Ga. App. at 702(3). But unlike the defendants in Crolley, and Hunter Turnkey v. Pilot Prop. Co., 210 Ga. App. 365 ( 436 S.E.2d 84) (1993), there is some evidence that Carpenter disclosed to Cordele the identity of his corporate principal prior to entering the specific transactions on which Cordele sued. See, e.g., Lamas v. Baldwin, 140 Ga. App. 37, 39-40(1) ( 230 S.E.2d 13) (1976), holding that all the circumstances surrounding a transaction might lead the agent to reasonably believe the other contracting party knew the identity of his principal and understood their relationship.
3. Carpenter also contends an issue of fact exists as to whether Cordele extended credit to him personally or to his corporate principal, F.A.E. We agree. Because the jury may determine Carpenter disclosed to Cordele his principal's identity before making the 1994 credit purchases, the jury must also determine this issue. "When the agency is known and the credit is not expressly given to the agent, he shall not be personally responsible upon the contract. The question to whom the credit is given is a question of fact to be decided by the jury under the circumstances of each case." OCGA § 10-6-87; see Wojcik, 204 Ga. App. at 305. The language of the credit application noted that Carpenter was the "person responsible for account." But as discussed in Division 1, resolution of this case depends on whether Cordele extended credit for the 1994 purchases to Carpenter or to the corporation. It is true that "[a]n agent may expressly contract on his own credit, and be bound, even though his principal [is] known." Brown Huseby v. Chrietzberg, 242 Ga. 232, 234 (3) ( 248 S.E.2d 631) (1978). If the jury determines Carpenter disclosed his corporate principal, it must then determine whether the parties intended that principal or Carpenter to be bound for the 1994 charges upon which Cordele sued.
Judgment reversed. Beasley, C.J., and Ruffin, J., concur.