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.
A contract may be signed by A with his own name, but entered into by him on behalf of his real principal, X, with the adversary party, B. If the contract is one which the law requires to be in writing, B can not use extrinsic evidence to show that X is the real principal and to hold him liable on the contract. The chief example under this rule is the negotiable instrument.1 This is not because of the parol evidence rule, but because such contracts must consist entirely of the writing, and parties can not be added by parol. Thus if a check is signed "A, agent," the real principal can not be held liable on the check.2 The same rule applies to a note signed by "A, agent."3 The principal can not be held liable upon a draft which is drawn by his agent in the name of the agent,4 even if it is shown that the principal has been accustomed to honor similar drafts.5 , A partner can not be held upon a note which is signed by his partner with his own name,6 at least if such individual name is not the name in which the firm does business. He can not be held liable as indorser upon an indorsement by his agent in his own name.7 One who has assumed and agreed to pay a note is not liable on the note itself.8 l9 For a discussion of such instruments see, Grand Lodge v. Emporia National Bank, 101 Kan. 369, 166 Par. 490; Hill v. McCrow, 88 Or. 299, 170 Pac. 306.
A business name is not the name of a fictitious person. Hill v. McCrow, 88 Or. 299, 170 Pac. 306.
If the maker does not know that the name of the payee is the name of a fictitious person the instrument is not payable to bearer. Grand Lodge v Emporia National Bank, 101 Kan. 369, 166 Pac. 490.
1 United States. Cragin v. Lovell, 109 U. S. 194, 27 L. ed. 903.
Alabama. Merrell v. Witherby, 120 Ala. 418, 74 Am. St. Rep. 39, 23 So. 994, 26 So. 974.
Arkansas. Harnwell v. Arnold, 128 Ark. 10, 193 S. W. 506.
Colorado. Heaton v. Myers, 4 Colo. 60.
Connecticut. Pease v. Pease, 35 Conn. 131, 95 Am. Dec. 225.
Georgia. Burkhalter v. Perry, 127 Ga. 438, 119 Am. St. Rep. 343, 56 S. E. 631; Andrews Co. v. Bank, 129 Ga. 53, 121 Am. St. Rep. 186, 58 S. E. 633; Coaling Coal & C. Co. v. Howard, 130 Ga. 807, 21 L. R A. (N.S.) 1051, 61 S. E. 987.
Illinois. Bickford v. Bank, 42 111. 238, 89 Am. Dec. 436.
Iowa. Wing v. Glick, 56 Ia. 473. 41 Am. Rep. 118.
Kansas. Kansas National Bank v. Bay, 62 Kan. 692, 84 Am. St. Rep. 417, 54 L. R. A. 408, 64 Pac. 596; New York Life Ins. Co. v. Martindale, 75 Kan. 142, 121 Am. St. Rep. 362, 21 L. R. A. (N.S.) 1045, 88 Pac. 559.
Kentucky. Trask v. Roberts, 40 Ky. (1 B. Mon.) 201.
Louisiana. Dayrics v. Lindsly, 128 La. 259, 54 So. 791.
Massachusetts. Stackpole v. Arnold, 11 Mass. 27, 6 Am. Dec. 150; Bedford Commercial Ins. Co. v. Covell, 49 Mass. (8 Met.) 442; Williams v. Rob-bins, 82 Mass. (16 Gray) 77, 77 Am. Dec. 396.
Montana. Young v. Bray, 54 Mont. 415, 170 Pac. 1044.
Nebraska. Webster v. Wray, 19 Neb. 558, 56 Am. Rep. 754, 27 N. W. 644; Lewis v. Bank, 1 Neb. (Unoff.) 177, 95 N. W. 355.
Ohio. Anderton v. Shoup, 17 O. S. 125; Dank v. Cook, 38 O. S. 442.
Oregon. Logan v. Parson, 79 Or. 381, 155 Pac. 3C5.
Rhode Island. Manufacturers', etc., Bank v. Follett, 11 R. I. 92, 23 Am. Rep. 418.
South Carolina. Tarver v. Garling-ton, 27 S. Car. 107, 13 Am. St. Rep. 628, 2 S. E. 846.
The fact that the principal received the benefit of the transaction does not render him liable on the negotiable instrument.9 The principal, if unknown when the note was given, may be held liable on the original debt;10 but if the principal is known, taking such note is an election to hold the ajrent.11 Holding the principal on such debt is in the nature of quasi-contract.12
Vermont. Arnold v. Sprague, 34 Vt. 402.
Washington. Seattle Shoe Co. v. Packard, 43 Wash. 627, 117 Am. St. Rep. 1064, 86 Pac. 845.
"It is well settled that any person taking a negotiable promissory note contracts with those only whose names are signed to it as parties, and can not, therefore, maintain an action upon the note against any other person." Bartlett v. Tucker, 104 Mass. 336, 339, 6 Am. Rep. 240 [quoted in Kansas National Bank v. Bay, 62 Kan. 692, 695, 84 Am. St. Rep. 417, 54 L. R. A. 408, 64 Pac. 596].
Contra, Mechanics' Bank v. Bank, 18 U. S. (5 Wheat.) 326, 5 L. ed. 100; Hancock Bank v. Joy, 41 Me. 568; Sharpe v. Bellis, 61 Pa. St. 69, 100 Am. Dec. 618.
2Anderton v. Shoup, 17 O. S. 125.
3Burkhalter v. Perry, 127 Ga. 438, 119 Am. St. Rep. 343, 56 S. E. 631; Shuey v. Adair, 18 Wash. 188, 39 L. R. A. 473, 51 Pac. 388.
Contra, Kenyon v. Williams, 19 Ind. 44.
4 Seattle Shoe Co. v. Packard, 43 Wash. 527, 117 Am. St. Rep. 1064, 86 Pac. 845.
5 Seattle Shoe Co. v. Packard, 43 Wash. 527, 117 Am. St. Rep. 1064, 86 Pac. 845.
6 Logan v. Parson, 79 Or. 381, 155 Pac. 365.
7 New York Life Ins. Co. v. Martin-dale, 75 Kan. 142, 121 Am. St. Rep. 362, 21 L. R. A. (N.S.) 1045, 88 Pac. 559.
8 Young v. Bray, 54 Mont. 415, 170 Pac. 1044.
9 Andrews Co. v. Bank, 129 Ga. 53, 121 Am. St. Rep. 186, 58 S. E. 633.
10 United States. Clark's Executors v. Van Riemsdyk, 12 U. S. (9 Cranch) 304, 3 L. ed. 688.
Georgia. Coaling Coal & Coke Co. v. Howard, 130 Ga. 807, 21 L. R. A. (N.8.) 1051, 61 S. E. 987.
Illinois. Chemical National Bank v. Bank, 156 111. 149, 40 N. E. 328.
Massachusetts. Lovell v. Williams, 125 Mass. 439.
Ohio. Harper v. Bank, 54 O. S. 425, 44 N. E.' 97.
Even in case of negotiable instruments, however, one who does business in the name of another or in a fictitious name and signs negotiable instruments by that name may be held liable thereon.13 If the maker, A, does his individual business in the name of a nonexistent corporation and signs the note in the name of the corporation by A as president, the payee, B, who knows such facts, may hold A personally liable upon the note.14 Where A did business under the name "Pompton Iron Works," and signed notes by such name, he may be held liable thereon.15 However, where a note was signed "H. R. Sloan, by C. M. Bay, attorney in fact," and the payee knew that Bay had no authority to sign Sloan's name, it was held that Bay was not liable on the note even if he did business under Sloan's name.16
In the absence of estoppel, one who signs an assumed name to a contract required by law to be in writing is liable on the contract only when such assumed name is used by him as his trade name under which he does business.17 Otherwise his liability is in tort. If A signs a name not his own to a note, either a fictitious name or the name of a real person which he has no right to use, and does not hold such name out as his own and it is not the name under which he does business, he can not be held on such note.18
If the instrument is executed in such a way as to show affirmatively that B is making the contract through his agent, A, extrinsic evidence that A was really acting for himself is inadmissible,19 as where A signs a non-negotiable contract "X, per A,"20 or where A signs a promissory note "X, by A, attorney in fact."21
11Merrell v. Witherby, 120 Ala. 418, 74 Am. St. Rep. 39, 23 So. 094, 26 So. 974; Bank v. Hooper, 71 Mass. (5 Gray) 567, 66 Am. Dec. 390.
12 See Sec. 1473 et seq.
13 Pease v. Pease, 35 Conn. 131, 95 Am. Dec. 225; Union Brewing Co. v. Interstate Bank & Trust Co., 240 111. 454, 88 N. E. 997; Melledge v. Iron Co., 59 Mass. (5 Cuah.) 158, 51 Am. Dec. 59; Tarver v. Garlington, 27 S. Car. 107, 13 Am. St. Rep. 628, 2 S. E. 846. See obiter in Chandler v. Coe, 54 N. H. 561.
14 Union Brewing Co. v. Interstate Bank and Trust Co., 240 111. 454, 88 N. E. 997.
15 Fuller v. Hooper, 69 Mass. (3 Gray) 334.
16 Kansas National Bank.v. Bay, 62 Kan. 692, 84 Am. St. Rep. 417, 54 L. R. A. 408, W Pac. 596.
17 Bartlett v. Tucker, 104 Mass. 336, 6 Am. Rep. 240.
18 Bartlett v. Tucker, 104 Mass. 336, 6 Am. Rep. 240.
19Heffron v. Pollard, 73 Tex. 96. 15 Am. St. Rep. 764, 11 S. W. 165.
20Heffron v. Pollard, 73 Tex. 96, 15 Am. St. Rep. 764, 11 S. W. 165.
21 Kansas National Bank v. Bay. 62 Kan. 692. 84 Am. St. Rep. 417, 54 L. R. A. 408, 64 Par. 596. To the same effect, see Liebscher v. Kraus 74 Wis.
A party can not be added to a negotiable contract by oral evidence, even where no liability is sought to be enforced against him. Thus in an action by indorsee against indorser on non-payment of the note, such evidence can not be used to show that one who signed as agent was in fact principal, and hence that as no demand had been made on him the indorser was discharged.23
In a jurisdiction in which the liability of an endorser attaches to one who signs his name in blank upon the back of a note before such note is negotiated, extrinsic evidence is inadmissible to show that such endorser was a joint maker24 It has, however, been held that equity will hold if a party to a negotiable instrument is one who has promised to sign it, although he has not in fact done so.25