This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If A signs a written contract made with B on behalf of A's principal X, and affixes his own name thereto without apt words to show that he is acting only as agent B may undoubtedly hold A on such contract. If, however, B wishes to hold the real principal X, his right to do so is not inconsistent with his right to hold A,since both rights may exist together until B has made his election between them.1 Accordingly it does not contradict the legal effect of such instrument to show that X is the real party in interest. If B wishes to sue X, the real principal, the parol evidence rule does not, therefore, prevent B from showing that A signed on behalf of X. Such evidence is admissible therefore where the contract is in writing, but is not required by law to be in writing or to be proved by writing.2 Thus one who deposits money in a bank and takes receipts given by the cashier in his own name, without any official designation, may show that the bank was the real party to the contract.3 The fact that i. warehouse receipt is declared negotiable by statute does not make it negotiable within the meaning of this rule. The holder of the receipt may show who the real principal is and hold him on the receipt.4 In an action on a non-negotiable note the maker may show that the nominal payee was the agent of the real payee, and thus show the dealings between the maker and the real payee to show failure of consideration.5
16 Harris v. Sharpies, 202 Pa. St. 243; 58 L. R. A. 214; 51 Atl. 965.
17 Shaw v. Jacobs, 89 la. 713; 48 Am. St. Rep. 411; 21 L. R. A. 440; 55 N. W. 333; 56 N. W. 684.
1Guidery v. Green, 95 Cal. 630; 30 Pac. 786; Kinney v. Whiton, 44 Conn. 262; 26 Am. Rep. 462; Chamberlain v. Lesley, 39 Fla. 452; 22 So. 736; Forsyth Mfg. Co. v. Castlen, 112 Ga. 199; 81 Am. St. Rep. 28; 37 S. E. 485; Gould v. Excelsior Co., 91 Me. 214; 64 Am. St. Rep. 221; 39 Atl. 554; Courtney v. Mfg. Co., 97 Md. 499; 55 Atl. 614; Drew v. Wiswall, 183 Mass. 554; 67 N. E. 666; Gerniania Bank v. Osborne, 81 Minn. 272; 83 N. W.
1084; Jamestown, etc., Association v. Allen, 172 N. Y. 291; 92 Am. St. Rep. 740; 64 N. E. 952; State v. Cunningham, 154 Mo. 161; 55 S. W. 282; Selig v. Rehfuss, 195 Pa. St. 200; 45 Atl. 919; Lewis v. Turn-ley, 97 Tenn. 197; 36 S. W. 872; Steed v. Harvey, 18 Utah 367; 72 Am. St. Rep. 789; 54 Pac. 1011; Puget Sound, etc., Works v. Clem-mons, 32 Wash. 36; 72 Pac. 465; Knowles v. Rogers, 27 Wash. 211; 67 Pac. 572.
2 See Sec. 696.
3 Gillighan v. Boardman, 29 Me. 79; Horn v. Hansen, 56 Minn. 43; 22 L. R. A. 617; 57 N. W. 315; Patchin v. Swift, 21 Vt. 292.