Agency; an agent's liability to third parties; liability to undisclosed principals.
Facts: Andjel purchased airline tickets from Clarkson for $728. Andjel had previously purchased tickets from Clarkson, as a principal contracting party, and had been allowed time to pay. This time, Andjel did not say he was acting on behalf of anyone else but he did not pay Clarkson for the tickets when asked to. Then Petropoulos, a director of a company, informed Clarkson that the tickets in question had been bought for his company, and that the company alone was responsible for payment. However, the money was not paid, and Clarkson wrote to both Andjel and Petropoulos threatening legal action. When payment was not received Clarkson began an action against Petropoulos's company, but abandoned it when the company went into liquidation. Clarkson then sued Andjel for the $728. Clarkson relied on the argument that, since Andjel had not disclosed when buying the tickets that he had been acting for a principal, Andjel was personally bound by the agreement. Andjel argued that, even though he had not disclosed the existence of a principal, and had become liable on the contract, Clarkson had to choose to sue either him or the principal, but could not sue both. Having brought an action against Petropolous's company, argued Andjel, the choice had already been made.
Issue: By bringing an action against Petropoulos company, had Clarkson made a binding election that debarred him from later suing Andjel?
Decision: The court held that instituting proceedings against one of the alternative parties who are liable on a contract creates a presumption that the plaintiff has made a binding election as to whom to sue. But this presumption can be rebutted by appropriate facts.
Reason: In the particular circumstances of the present case, Clarkson had not withdrawn the threat to sue Andjel, or lulled him into any such belief, and had not made a binding election before abandoning his action against the company. Clarkson was therefore still entitled to sue Andjel.